UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE


ACT
OF 1934





For the
quarterly period ended: June 30, 2009





or





 ̈    TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(D) OF
THE SECURITIES EXCHANGE


ACT
OF 1934





For the
transition period from _______ to _______





Commission
File Number: 000-51497





BIO-BRIDGE
SCIENCE, INC.


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





Delaware
            
            20-1802936(State or Other jurisdiction of
            
            (IRS Employerincorporation or organization)
            
            Identification No.)1211 West 22nd Street, Suite 615Oak Brook, Illinois
            
            60523(Address of principal executive offices)
            
            (Zip Code)





630-928-0869


(Issuer's
telephone number including area code)





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





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
 See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer  ̈
            Accelerated filer  ̈Non-accelerated filer  ̈   (Do not check if a smaller reporting company)
            Smaller reporting company x





Indicate by
check mark whether the registrant is a shell company:  Yes o
   Nox





State the
number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date.





Common
Stock Outstanding as of June 30, 2009: 35,201,009 shares











Bio-Bridge
Science, Inc.


Index to
Form 10-Q




PageItem
      1.
                                                
                                                Financial
      StatementsCondensed
      Consolidated Balance Sheets as of June 30, 2009 (Unaudited) and
      December 31, 2008
                                                
                                                3Unaudited
      Condensed Consolidated Statements of Operations for the three month
      and six months periods ended June 30, 2009 and 2008
                                                
                                                4Unaudited
      Condensed Consolidated Statements of Changes in Shareholders' Equity for
      the six months period ended June 30, 2009
                                                
                                                5Unaudited
      Condensed Consolidated Statements of Cash Flows for the six month periods
      ended June 30, 2009 and 2008
                                                
                                                6Notes
      to Unaudited Condensed Consolidated Financial Statements
                                                
                                                8Item
      2.
                                                
                                                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operation
                                                
                                                16Item
      3.
                                                
                                                Quantitative
      and Qualitative Disclosure About Market Risk
                                                
                                                22Item
      4.
                                                
                                                Controls
      and Procedures
                                                
                                                22Part
      II
                                                
                                                Other
      Information
                                                
                                                23Item
      1.
                                                
                                                Legal
      Proceedings
                                                
                                                23Item
      1A.
                                                
                                                Risk
      Factors
                                                
                                                23Item
      2.
                                                
                                                Unregistered
      Sales of Equity Securities and Use of Proceeds
                                                
                                                23Item
      3.
                                                
                                                Defaults
      Upon Senior Securities
                                                
                                                23Item
      4.
                                                
                                                Submission
      of Matters to a Vote of Security Holders
                                                
                                                23Item
      5.
                                                
                                                Other
      Information
                                                
                                                23Item
      6.
                                                
                                                Exhibits
                                                
                                                23SIGNATURES
                                                
                                                24





2




BIO-BRIDGE
SCIENCE INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





June 30,2009
                        
                        
                        December 31,(Unaudited)
                        
                        
                        2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                        
                        $
                        1,468,322
                        
                        
                        $
                        1,486,252Accounts
      receivable, net
                        
                        
                        442,467
                        
                        
                        
                        340,633Inventories
                        
                        
                        490,135
                        
                        
                        
                        491,347Trading
      securities, at fair value
                        
                        
                        134,820
                        
                        
                        
                        115,634Prepaid
      expenses and other current assets
                        
                        
                        53,866
                        
                        
                        
                        38,364Total
      Current Assets
                        
                        
                        2,589,610
                        
                        
                        
                        2,472,230Property,
      plant, and equipment, net
                        
                        
                        560,928
                        
                        
                        
                        243,507Construction
      in progress
                        
                        
                        2,700,328
                        
                        
                        
                        2,676,938Land
      use right, net
                        
                        
                        363,280
                        
                        
                        
                        372,696Goodwill
                        
                        
                        243,248
                        
                        
                        
                        243,248Total
      Long-term Assets
                        
                        
                        3,867,784
                        
                        
                        
                        3,536,389TOTAL
      ASSETS
                        
                        $
                        6,457,394
                        
                        
                        $
                        6,008,619LIABILITIES
      AND SHAREHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
                        
                        $
                        255,346
                        
                        
                        $
                        265,682Accrued
      expenses and other payables
                        
                        
                        67,839
                        
                        
                        
                        158,686Payable
      to contractors
                        
                        
                        114,002
                        
                        
                        
                        185,929Due
      to related parties
                        
                        
                        12,311
                        
                        
                        
                        32,189Derivative
      liability
                        
                        
                        62,951
                        
                        
                        
                        -Total
      Current Liabilities
                        
                        
                        512,449
                        
                        
                        
                        642,486Commitments
      and contingenciesSHAREHOLDERS’
      EQUITYPreferred
      stock, $0.001 par value, 5,000,000 shares authorized, 4,000,000 shares
      issued and outstanding
                        
                        
                        4,000
                        
                        
                        
                        4,000Common
      stock, $0.001 par value, 100,000,000 shares authorized, 35,201,009 and
      34,931,009 shares issued and outstanding, respectively
                        
                        
                        35,201
                        
                        
                        
                        34,931Additional
      paid-in capital
                        
                        
                        11,719,607
                        
                        
                        
                        12,912,545Preferred
      stock dividend, payable in common shares
                        
                        
                        120,550
                        
                        
                        
                        137,000Subscription
      receivable
                        
                        
                        (934,900
                        )
                        
                        
                        (2,062,670
                        )Stock
      to be issued, 5,741,076 and 5,818,276 shares, respectively
                        
                        
                        4,517,256
                        
                        
                        
                        4,559,056Accumulated
      other comprehensive gain
                        
                        
                        261,763
                        
                        
                        
                        259,892Accumulated
      deficit
                        
                        
                        (10,327,548
                        )
                        
                        
                        (11,000,931
                        )Total
      shareholders’ equity
                        
                        
                        5,395,929
                        
                        
                        
                        4,843,823Noncontrolling
      interests
                        
                        
                        549,016
                        
                        
                        
                        522,310Total
      equity
                        
                        
                        5,944,945
                        
                        
                        
                        5,366,133TOTAL
      LIABILITIES AND SHAREHOLDERS’EQUITY
                        
                        $
                        6,457,394
                        
                        
                        $
                        6,008,619




See
accompanying notes to the condensed consolidated financial
statements.





3





BIO-BRIDGE
SCIENCE INC. AND SUBSIDIARIES


UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS





Three
                      Months
                      Ended
                      June 30,
                      2009
                    
                    
                    Three
                      Months
                      Ended
                      June 30,
                      2008
                    
                    
                    Six Months
                      Ended
                      June 30,
                      2009
                    
                    
                    Six Months
                      Ended
                      June 30,
                      2008Revenue
                    
                    $
                    174,895
                    
                    
                    $
                    5,142
                    
                    
                    $
                    439,024
                    
                    
                    $
                    7,427Cost
      of goods sold
                    
                    
                    (121,469
                    )
                    
                    
                    (1,957
                    )
                    
                    
                    (283,728
                    )
                    
                    
                    (2,848
                    )Gross
      profit
                    
                    
                    53,426
                    
                    
                    
                    3,185
                    
                    
                    
                    155,296
                    
                    
                    
                    4,579Research
      and development costs
                    
                    
                    (46,840
                    )
                    
                    
                    (20,467
                    )
                    
                    
                    (79,652
                    )
                    
                    
                    (56,873
                    )Selling
      and distribution expenses
                    
                    
                    (61,621
                    )
                    
                    
                    (21,281
                    )
                    
                    
                    (90,962
                    )
                    
                    
                    (33,610
                    )General
      and administrative expenses
                    
                    
                    (290,872
                    )
                    
                    
                    (243,031
                    )
                    
                    
                    (499,405
                    )
                    
                    
                    (448,875
                    )Loss
      from operations
                    
                    
                    (345,907
                    )
                    
                    
                    (281,594
                    )
                    
                    
                    (514,723
                    )
                    
                    
                    (534,779
                    )Interest
      (expense) income
                    
                    
                    (23
                    )
                    
                    
                    (1,521
                    )
                    
                    
                    (297
                    )
                    
                    
                    (1,671
                    )Change
      of fair value of derivative liability
                    
                    
                    1,055,141
                    
                    
                    
                    -
                    
                    
                    
                    1,226,418
                    
                    
                    
                    -Unrealized
      gain (loss) on trading securities
                    
                    
                    22,816
                    
                    
                    
                    (519
                    )
                    
                    
                    19,186
                    
                    
                    
                    (71,381
                    )Gain(loss)
      on sale of trading securities
                    
                    
                    -
                    
                    
                    
                    64,916
                    
                    
                    
                    -
                    
                    
                    
                    55,150Dividend
      income
                    
                    
                    3,799
                    
                    
                    
                    13,533
                    
                    
                    
                    8,107
                    
                    
                    
                    59,650Income
      (loss) before income taxes and noncontrolling interest
                    
                    
                    735,826
                    
                    
                    
                    (205,185
                    )
                    
                    
                    738,691
                    
                    
                    
                    (493,031
                    )Provision
      (benefit) for income taxes
                    
                    
                    (3,216
                    )
                    
                    
                    -
                    
                    
                    
                    17,751
                    
                    
                    
                    -Net
      income (loss)
                    
                    
                    739,042
                    
                    
                    
                    (205,185
                    )
                    
                    
                    720,940
                    
                    
                    
                    (493,031
                    )(Income)
      loss attributable to noncontrolling interest
                    
                    
                    7,968
                    
                    
                    
                    -
                    
                    
                    
                    (26,706
                    )
                    
                    
                    -Income
      (loss) attributable to controlling interest
                    
                    
                    747,010
                    
                    
                    
                    (205,185
                    )
                    
                    
                    694,234
                    
                    
                    
                    (493,031
                    )Preferred
      stock dividends
                    
                    
                    (90,000
                    )
                    
                    
                    (90,000
                    )
                    
                    
                    (145,550
                    )
                    
                    
                    (180,000
                    )Net
      income (loss) attributable to common shareholders
                    
                    $
                    657,010
                    
                    
                    $
                    (295,185
                    )
                    
                    $
                    548,684
                    
                    
                    $
                    (673,031
                    )Net
      income(loss) per share, attributable to common shareholders,
      basic
                    
                    
                    0.02
                    
                    
                    (0.02)
                    
                    
                    
                    0.02
                    
                    
                    (0.02)Net
      income(loss) per share, attributable to common shareholders,
      diluted
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.01
                    )Weighted
      average shares outstanding, basic
                    
                    
                    35,124,855
                    
                    
                    
                    34,516,907
                    
                    
                    
                    35,073,219
                    
                    
                    
                    34,249,109Weighted
      average shares outstanding,
                      diluted
                    
                    
                    39,725,066
                    
                    
                    
                    34,516,907
                    
                    
                    
                    42,004,564
                    
                    
                    
                    34,249,109




See
accompanying notes to the condensed consolidated financial
statements.





4





BIO-BRIDGE
SCIENCE, INC. AND SUBSIDIARIES


UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF EQUITY


FOR
THE SIX MONTHS ENDED JUNE 30. 2009





Common Stock
                    
                    
                    Preferred stockShares
                    
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    
                    Amount
                    
                    
                    
                    Preferred
                      Stock
                      Dividend
                      payable in
                      common
                      share
                    
                    
                    
                    Additional
                      Paid-in
                      Capital
                    
                    
                    
                    Accumulated
      Other
                      Comprehensive
                      Gain
                    
                    
                    
                    Common
                      Stock To be
                      Issued
                    
                    
                    
                    Subscriptions
                      Receivable
                    
                    
                    
                    Accumulated
                      Deficit
                    
                    
                    
                    Non
                      Controlling
                      interest
                    
                    
                    
                    TotalBalance
      ,
                      January
      1, 2009
                    
                    
                    34,931,009
                    
                    
                    
                    $
                    34,931
                    
                    
                    
                    4,000,000
                    
                    
                    
                    $
                    4,000
                    
                    
                    
                    $
                    137,000
                    
                    
                    
                    $
                    12,912,545
                    
                    
                    
                    $
                    259,892
                    
                    
                    
                    $
                    4,559,056
                    
                    
                    
                    $
                    (2,062,670
                    )
                    
                    
                    $
                    (11,000,931
                    )
                    
                    
                    $
                    522,310
                    
                    
                    
                    $
                    5,366,133Cumulative
      effect of change in accounting principle
                      January
      1,2009 for reclassification of  conversion feature and warrants
      to derivative liability
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,414,068
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    124,699
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,289,369
                    ))Sale
      of 12,800 shares of common stock for cash to be issued
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    17,600
                    
                    
                    
                    
                    (12,115
                    )
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    5,485Accrual
      of preferred stock dividend
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    145,550
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (145,550
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    -Payment
      of  preferred stock dividend through issuance of common
      shares
                    
                    
                    180,000
                    
                    
                    
                    
                    180
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (162,000
                    )
                    
                    
                    
                    161,820
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -Shares
      issued for stock awards previously granted
                    
                    
                    90,000
                    
                    
                    
                    
                    90
                    
                    
                    
                    -
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    59,310
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    (59,400
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    -Proceeds
      from previously issued stock
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,139,885
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,139,885Foreign
      currency translation gain
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,871
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,871Net
      income
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    694,234
                    
                    
                    
                    
                    26,706
                    
                    
                    
                    
                    720,940Balance
                      June
      30, 2009
                    
                    
                    35,201,009
                    
                    
                    
                    $
                    35,201
                    
                    
                    
                    4,000,000
                    
                    
                    
                    $
                    4,000
                    
                    
                    
                    $
                    120,550
                    
                    
                    
                    $
                    11,719,607
                    
                    
                    
                    $
                    261,763
                    
                    
                    
                    $
                    4,517,256
                    
                    
                    
                    $
                    (934,900
                    )
                    
                    
                    $
                    (10,327,548
                    )
                    
                    
                    $
                    549,016
                    
                    
                    
                    $
                    5,944,945




See
accompanying notes to the condensed consolidated financial
statements.




5





BIO-BRIDGE
SCIENCE, INC. AND SUBSIDIARIES


UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS





CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income (loss)
                    
                    $
                    720,940
                    
                    
                    $
                    (493,031
                    )Adjustments
      to reconcile net income (loss) to net cash used in operating
      activities:
                    
                    
                    
                    
                    
                    
                    -Depreciation
                    
                    
                    41,801
                    
                    
                    
                    10,133Amortization
      of land use right
                    
                    
                    9,415
                    
                    
                    
                    9,222Non
      cash stock compensation expense
                    
                    
                    -
                    
                    
                    
                    96,573Unrealized
      loss(gain) on trading securities
                    
                    
                    (19,186
                    )
                    
                    
                    71,381Change
      in fair value of derivative liability
                    
                    
                    (1,226,418
                    )Gain
      on sale of trading securities
                    
                    
                    -
                    
                    
                    
                    (55,150
                    )Change
      in operating assets and liabilities:Accounts
      receivable
                    
                    
                    (101,834
                    )Inventories
                    
                    
                    1,211
                    
                    
                    
                    -Prepaid
      expense and other assets
                    
                    
                    (15,500
                    )
                    
                    
                    (14,849
                    )Accounts
      payable
                    
                    
                    10,562Payable
      to contractors
                    
                    
                    (71,927
                    )Accrued
      expenses and other payables
                    
                    
                    (90,846
                    )
                    
                    
                    38,058Net
      cash used in operating activities
                    
                    
                    (741,782
                    )
                    
                    
                    (337,663
                    )CASH
      FLOWS FROM INVESTING ACTIVITIESIncrease
      in construction in progress
                    
                    
                    (44,288
                    )
                    
                    
                    (220,900
                    )Purchase
      of fixed assets
                    
                    
                    (359,223
                    )
                    
                    
                    (593
                    )Proceeds
      from sale of trading securities
                    
                    
                    -
                    
                    
                    
                    1,300,010Net
      cash (used in) provided by investing activities
                    
                    
                    (403,511
                    )
                    
                    
                    1,078,517CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from issuance of common stock
                    
                    
                    1,145,370
                    
                    
                    
                    29,985Advances
      from director
                    
                    
                    (19,878
                    )
                    
                    
                    61,233Net
      cash provided by financing activities
                    
                    
                    1,125,492
                    
                    
                    
                    91,218NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                    
                    
                    (19,801
                    )
                    
                    
                    832,072Effect
      of exchange rate changes on cash
                    
                    
                    1,871
                    
                    
                    
                    (4,424
                    )Cash
      and cash equivalents, beginning of period
                    
                    
                    1,486,252
                    
                    
                    
                    104,372CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                    
                    $
                    1,468,322
                    
                    
                    $
                    932,020SUPPLEMENTAL
      CASH FLOW INFORMATIONInterest
      Paid
                    
                    $
                    -
                    
                    
                    $
                    -Income
      taxes Paid
                    
                    $
                    46,897
                    
                    
                    $
                    -SUPPLEMENTAL
      NON-CASH FLOW INVESTING AND FINANCING ACTIVITIESAccrual
      of preferred stock dividend
                    
                    $
                    145,550
                    
                    
                    $
                    180,000Cumulative
      effect of change in accounting principle, January 1,2009 for
      reclassification of conversion feature and warrants to derivative
      liability
                    
                    $
                    1,289,369
                    
                    
                    $
                    -





See
accompanying notes to the condensed consolidated financial
statements.





6




BIO-BRIDGE
SCIENCE, INC. AND SUBSIDIARIES


NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL


STATEMENTS
AS OF JUNE 30, 2009




NOTE
1 - BASIS OF PRESENTATION





The
accompanying unaudited condensed consolidated financial statements of Bio Bridge
Science Inc. and Subsidiaries (the "Company") have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and pursuant to the requirements for reporting
on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting
companies. Accordingly, they do not include all the information and footnotes
required by accounting principles generally accepted in United States of America
for complete financial statements. However, such information reflects all
adjustments (consisting solely of normal recurring adjustments), which are, in
the opinion of management, necessary for the fair presentation of the
consolidated financial position and the consolidated results of operations.
Results shown for interim periods are not necessarily indicative of the results
to be obtained for a full fiscal year.





The
condensed consolidated balance sheet information as of June 30, 2009 was derived
from the audited consolidated financial statements included in the Company's
Annual Report on Form 10-K filed with the SEC on March 31, 2009. These interim
financial statements should be read in conjunction with that
report.




NOTE
2 - ORGANIZATION AND PRINCIPAL ACTIVITIES




Bio-Bridge
Science, Inc. ("the Company") was incorporated in the State of Delaware on
October 26, 2004.




On
December 1, 2004, the Company acquired all of the outstanding shares of
Bio-Bridge Science Corporation ("BBSC"), a Cayman Islands corporation, in
exchange for 29,971,590 shares of its common stock, and as a result, BBSC became
a wholly owned subsidiary of the Company. The acquisition was accounted for
as a reverse merger (recapitalization) with BBSC deemed to be the
accounting acquirer, and the Company the legal acquirer. Accordingly, the
historical financial information presented in the condensed consolidated
financial statements are that of BBSC.





BBSC was
incorporated in the Cayman Islands on February 11, 2002. At the time of the
exchange, BBSC held a 100% interest in Bio-Bridge Science (Beijing) Corp. ("BBS
Beijing"), a wholly-foreign funded enterprise of the People's Republic of China
("PRC") which was established on May 20, 2002. BBS Beijing is currently
engaged in the development and commercialization of several vaccine candidates,
such as HIV-PV vaccine I, cervical cancer vaccine, colon cancer vaccine, in
mainland China.





On July
31, 2008, the Company acquired 51 percent of the outstanding capital interest of
Huhhot Xinheng Baide Biotechnology Co., Ltd. (“XHBD”, see Note
4).  XHBD wasincorporated on May 17,
2006 under the laws of the PRC as a limited company, which is similar to a
limited liability company.  XHBD is located in the city of Huhhot in
Inner Mongolia of the PRC. The primary operations of the XHBD are the
manufacture and distribution of bovine serum products, which is used in
research, production of pharmaceuticals, and production of veterinary
medicines.  The results of XHBD are included in the accompanying
condensed consolidated financial statements from August 1,
2008.





Going
Concern





The
Company has incurred accumulated losses of $10,327,548 from February 11,
2002 (Inception) through June 30, 2009.  As a result, the Company’s
independent registered public accounting firm, in their report on the Company’s
2008 consolidated financial statements, raised substantial doubt about the
Company’s ability to continue as a going concern.





Our
operations have been funded through issuances of our common stock and preferred
stock whereby we raised an aggregate $9,511,258 from February 11, 2002
(inception) through June 30, 2009.  During the first quarter of 2009,
the Company sold 12,800 shares of its common stock to a 123 investors at $1.375
per share for a total consideration of $17,600.  During 2008, the
Company sold 5,841,609 shares of its common stock to seven individuals for a
total of $4,244,999.  Four of these individuals, who purchased
a total of 5,488,276 shares of common stock for a total of $3,980,000, are
members of our Board of Directors.  Some of the sales agreements also
included warrants to purchase common stock.





Based on
our current operating plan, we believe that we have sufficient cash and cash
equivalents to last approximately through June 2010. We will need to obtain
additional financing in addition to the funds already raised through the sale of
equity securities to fund our cash needs and continue our operations beyond
June 2010. Additional financing, whether through public or private equity
or debt financing, arrangements with stockholders or other sources to fund
operations, may not be available, or if available, may be on terms unacceptable
to us. Our ability to maintain sufficient liquidity is dependent on our ability
to raise additional capital. If we issue additional equity securities to raise
funds, the ownership percentage of our existing stockholders would be reduced.
New investors may demand rights, preferences or privileges senior to those of
existing holders of our common stock. Debt incurred by us would be senior to
equity in the ability of debt holders to make claims on our assets. The terms of
any debt issued could impose restrictions on our operations. If adequate funds
are not available to satisfy either medium or long-term capital requirements,
our operations and liquidity could be materially adversely affected and we could
be forced to cut back our operations.





7




NOTE
3 - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES





Principles
of Consolidation





The
accompanying consolidated financial statements include the accounts of
Bio-Bridge Science Inc. and our wholly owned subsidiaries, Bio-Bridge Science
Corp., Bio-Bridge Science (Beijing) Corp, Bio-Bridge Science Holding Co. and Bio
Bridge Science (HK), Co. and our 51% owned subsidiary Huhhot Xinheng Baide
Biotechnology Co. Ltd (“XHBD”). Intercompany accounts and transactions have been
eliminated in consolidation.





Change in
accounting principle




Effective
January 1, 2009, the Company adopted Emerging Issues Task Force Issue No. 07-5,
“Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity’s Own Stock” (EITF 07-5).  As a result of adopting EITF 07-5,
certain options and warrants and the  conversion feature of the
Company’s convertible preferred stock previously treated as equity are no longer
afforded equity treatment because the strike price of the warrants is
denominated in US dollars, a currency other than the Company’s functional
currency, the Chinese Renminbi.  As a result, these instruments are
not considered indexed to the Company’s own stock, and as such, all future
changes in the fair value of these instruments will be recognized currently in
earnings until such time as the options, warrants, or beneficial conversion
feature are exercised or expire (see Note 6).





Effective
January 1, 2009, the Company adopted SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements.” This statement amends
Accounting Research Bulletin No. 51, “Consolidated Financial Statements,”
to establish accounting and reporting standards for a noncontrolling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. This
statement clarifies that a noncontrolling interest in a subsidiary is an
ownership in the consolidated entity that should be reported as equity in the
consolidated financial statements. The adoption of SFAS No. 160 did not
have any material impact on the Company’s financial condition and results of
operations. However, it did impact the presentation and disclosure of
noncontrolling (minority) interests in the Company’s condensed consolidated
financial statements. The presentation and disclosure requirements were
retrospectively applied to the condensed consolidated financial
statements.  As such, all prior periods presented have been conformed
to current year’s presentation.  The noncontrolling (minority)
interest relates to third party shareholders of XHBD, who own 49% of XHBD as of
June 30, 2009.





Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Management makes these estimates using the best
information available and the best judgment at the time the estimates are made,
however actual results could differ materially from those
estimates.





Revenue
recognition





The
Company recognizes revenue from the sales of products when persuasive evidence
of an order arrangement exists, delivery has occurred, the sales price is fixed
or determinable and collectibility is reasonably assured.  Generally,
these criteria are met at the time the product is shipped to customers when
title and risk of loss have transferred.





Impairment
of Long-Lived Assets




We
account for long-lived assets in accordance with SFAS No. 144, “Accounting for
the Impairment or Disposal of Long-Lived Assets.”  We regularly
evaluate our long-lived assets for indicators of possible impairment whenever
events or changes in business circumstances indicate that the carrying amount of
the assets may not be fully recoverable. An impairment loss would be recognized
when estimated undiscounted future cash flows expected to result from the use of
an asset and its eventual disposition are less than its carrying
amount.  Impairment, if any, is measured using discounted cash
flows.





Goodwill





Goodwill
is related to the Company's acquisition of Huhhot Xinheng Baide Biotechnology
Co., Ltd on July 31, 2008 (see Note 4).  Goodwill and other intangible
assets are accounted for in accordance with the provisions of SFAS No. 142,
“Goodwill and Other Intangible Assets”. Under SFAS 142, goodwill is not
amortized. Rather, goodwill is assessed for impairment at least
annually.  The Company tests goodwill by using a two-step
process.  In the first step, the fair value of the reporting unit is
compared with the carrying amount of the reporting unit, including
goodwill.  If the carrying amount of the reporting unit exceeds its
fair value, goodwill is considered impaired and a second step is performed to
measure the amount of impairment loss, if any.





8




Financial
Assets and Liabilities Measured at Fair Value





Fair
Value Measurements are determined by the Company's adoption of Statement of
Financial Accounting Standards ("SFAS") No. 157, “Fair Value Measurements”
("SFAS 157") as of January 1, 2008, with the exception of the
application of the statement to non-recurring, non-financial assets and
liabilities as permitted. The adoption of SFAS 157 did not have a material
impact on the Company's fair value measurements.  SFAS 157 defines
fair value as the price that would be received to sell an asset or paid to
transfer a liability in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants at the
measurement date. SFAS 157 establishes a fair value hierarchy, which
prioritizes the inputs used in measuring fair value into three broad levels as
follows:





Level 1—Quoted
prices in active markets for identical assets or liabilities.


Level 2—Inputs,
other than the quoted prices in active markets, are observable either directly
or indirectly.


Level 3—Unobservable
inputs based on the Company's assumptions.





SFAS 157
requires the use of observable market data if such data is available without
undue cost and effort





The
following table presents certain investments and liabilities of the Company’s
financial assets measured and recorded at fair value on the Company’s condensed
consolidated balance sheets on a recurring basis and their level within the fair
value hierarchy as of June 30,2009 (unaudited):





Level 1
                  
                  
                  Level 2
                  
                  
                  Level 3
                  
                  
                  TotalInvestment
      in trading securities
                  
                  $
                  134,820
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  134,820Fair
      value of options and warrants
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  52,279
                  
                  
                  
                  52,279Fair
      value of  conversion feature
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,672
                  
                  
                  
                  10,672$
                  134,820
                  
                  
                  $
                  -
                  
                  
                  $
                  62,951
                  
                  
                  $
                  197,771





Foreign
Currency Translation





The
accompanying consolidated financial statements are presented in United States
dollars. The functional currency of the Company is the Renminbi (RMB). Capital
accounts of the consolidated financial statements are translated into United
States dollars from RMB at their historical exchange rates when the capital
transactions occurred. Assets and liabilities are translated at the exchange
rates as of balance sheet date. Income and expenditures are translated at the
average exchange rate of the period.




As of and for
                  the six months
                  ended June 30,
                  2009
                
                As of and for
                  the six months
                  ended June
      30,
                  2008Period
      end RMB : US$ exchange rate
                
                
                6.8319
                
                6.8591Average
      period RMB : US$ exchange rate
                
                
                6.8339
                
                7.0819




The RMB
is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US
dollars at the rates used in translation.





Research
and Development





Research
and development costs are expensed as incurred.  For the three and six
months ended June 30, 2009 and 2008, research and development expenses totaled
$46,825 and $20,467, and $79,652 and $56,873, respectively.





Comprehensive
Income





Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. The Company’s current
components of comprehensive income consist of foreign currency translation
adjustments:




Six
      months ended June 30,
                                                  
                                                  Three
      months ended June 30,Net
      income (loss)
                                                  
                                                  
                                                  2009
                                                  
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  
                                                  2009
                                                  
                                                  
                                                  
                                                  2008Foreign
      currency translation adjustment
                                                  
                                                  $
                                                  649,234
                                                  
                                                  
                                                  $
                                                  (493,031
                                                  )
                                                  
                                                  $
                                                  747,010
                                                  
                                                  
                                                  $
                                                  (205,185
                                                  )Comprehensive income
      ( loss)
                                                  
                                                  
                                                  1,871
                                                  
                                                  
                                                  
                                                  139,658
                                                  
                                                  
                                                  
                                                  2,758
                                                  
                                                  
                                                  
                                                  52,542$
                                                  696,105
                                                  
                                                  
                                                  $
                                                  (353,373
                                                  )
                                                  
                                                  $
                                                  749,768
                                                  
                                                  
                                                  $
                                                  (152,643
                                                  )


9




Income
(loss) per Share





SFAS No.
128, “Earnings Per Share”, requires presentation of basic earnings per share
(“Basic EPS”) and diluted earnings per share (“Diluted EPS”).  Basic
earnings (loss) per share is computed by dividing income (loss) available to
common shareholders by the weighted average number of common shares outstanding
during the period. The diluted earnings per share calculation gives effect to
all potentially dilutive common shares outstanding during the period using the
treasury stock method.  Common equivalent shares consist of shares
issuable upon the exercise of stock options or warrants.





As of
June 30, 2009, common stock equivalents were composed of options convertible
into 2,297,000 shares of the Company's common stock and warrants convertible
into 8,864,943 shares of the Company's common stock.





The
following is a reconciliation of the numerator and denominator used in the
calculation of basic and diluted earnings per share.





For
      the three
                          months
      ended
                          June
      30,
                        
                        
                        For
      the six
                          months
      ended
                          June
      30,2009
                        
                        
                        2009(Unaudited)
                        
                        
                        (Unaudited)NumeratorNet
      Income (loss)
                        
                        $
                        657,010
                        
                        
                        $
                        548,684DenominatorWeighted
      average shares outstanding-basic
                        
                        
                        35,124,855
                        
                        
                        
                        35,073,219Effect
      of dilutive instruments:Options
                        
                        
                        600,211
                        
                        
                        
                        1,469,940Warrants
                        
                        
                        -
                        
                        
                        
                        1,461,405Convertible
      preferred stock
                        
                        
                        4,000,000
                        
                        
                        
                        4,000,000Weighted
      average shares outstanding-basic and
      diluted
                        
                        
                        39,725,066
                        
                        
                        
                        42,004,564




Stock-Based
Compensation





The
Company periodically issues stock options and warrants to employees and
non-employees in capital raising transactions, for services and for financing
costs. The Company adopted SFAS No. 123R effective January 1, 2006, and is using
the modified prospective method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No. 123R
for all share-based payments granted after the effective date and (b) based on
the requirements of SFAS No. 123R for all awards granted to employees prior to
the effective date of SFAS No. 123R that remain unvested on the effective
date.  The Company accounts for stock option and warrant grants issued
and vesting to non-employees in accordance with EITF No. 96-18: “Accounting for
Equity Instruments that are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services” and EITF No. 00-18 “Accounting
Recognition for Certain Transactions involving Equity Instruments Granted to
Other Than Employees” whereas the value of the stock compensation is based upon
the measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete.





Concentrations





Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist principally of cash and unsecured trade accounts
receivable.





For the
three months ended June 30, 2009, five customers accounted for 95% of total
sales (23%, 20%, 20%, 20% and 12%, respectively).  For the six months
ended June 30, 2009, four customers accounted for 84% of total sales (26%, 25%,
20%, and 13%, respectively).  At June 30, 2009, three customers
accounted for 76% of total accounts receivable (33%, 31%, and 12%,
respectively).  For the three and six months ended June 30, 2008 and
as of June 30, 2008, there were no customers with over 10% of sales or accounts
receivable.




Recent
Accounting Pronouncements





In
December 2007, Financial Accounting Standards Board (FASB) Statement 141R,
“Business Combinations (revised 2007)” (SFAS 141R”) was issued.  SFAS
141R replaces SFAS 141 “Business Combinations”.  SFAS 141R requires
the acquirer of a business to recognize and measure the identifiable assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree at fair value. SFAS 141R also requires transactions costs related
to the business combination to be expensed as incurred. SFAS 141R applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008.  The effective date, as well as the adoption date
for the Company was January 1, 2009.  Although SFAS 141R may impact
our reporting in future financial periods, we have determined that the standard
did not have any impact on our historical consolidated financial statements at
the time of adoption.





10




In April
2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of
the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
142.  This pronouncement requires enhanced disclosures concerning a
company’s treatment of costs incurred to renew or extend the term of a
recognized intangible asset. FST 142-3 is effective for financial statements
issued for fiscal years beginning after December 15, 2008.  The
effective date, as well as the adoption date for the Company was January 1,
2009.  Although FSP 142-3 may impact our reporting in future financial
periods, we have determined that the standard did not have any impact on our
historical consolidated financial statements at the time of
adoption.





On June
29, 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles”,
which authorized the Codification as the sole source for authoritative U.S.
GAAP.   SFAS No. 168 replaces SFAS No. 162 to establish a new
hierarchy of GAAP sources for non-governmental entities under the FASB
Accounting Standards Codification.  SFAS No. 168 will be effective for
financial statements issued for reporting periods that end after September 15,
2009.  Once it's effective, it will supersede all accounting standards in
U.S. GAAP, aside from those issued by the SEC.





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not or are not believed by
management to have a material impact on the Company's present or future
consolidated financial statements.





NOTE4- ACQUISITION OF HUHHOT XINHENG
BAIDE BIOTECHNOLOGY CO., LTD. (“XHBD”)





On July
31, 2008, the Company acquired 51 percent of the outstanding capital interest of
Huhhot Xinheng Baide Biotechnology Co., Ltd. (“XHBD”).  XHBD is
located in the city of Huhhot in Inner Mongolia of the PRC and is organized
under the laws of the PRC.  XHBD manufactures and distributes bovine
serum products, which is used in research, the production of
pharmaceuticals, and production of veterinary medicines.  The Company
purchased 51 percent of the outstanding capital interest of XHBD in exchange for
cash of $881,058 (RMB 6,000,000).  The acquisition has been accounted
for as a purchase in accordance with SFAS No. 141Business
Combinations . As such, the results of XHBD's operations have been
included in the consolidated financial statements since August 1, 2008. The
components of the purchase price and the allocation of the purchase price are as
follows:





Purchase
      PriceCash
      consideration
                      
                      $
                      881,058Purchase
      price allocationFair
      value of tangible assets acquired, including cash of
    $487,118
                      
                      $
                      1,114,828Goodwill
                      
                      
                      243,248Net
      assets
                      
                      
                      1,358,076Historical
      cost of 49% minority interest
                      
                      
                      (477,018
                      )Net
      purchase price
                      
                      $
                      881,058





Allocation
of the purchase price may change based on final valuation
analysis.  In preparing the valuation, the Company consulted with
independent valuation experts.  Goodwill represents the excess of the
purchase price of XHBD over the fair value of the identifiable assets acquired
and liabilities assumed.   The Company accounts for minority interest
using a historical basis.





The
following unaudited pro forma operating data shown below presents the results of
operations for the three months ended June 30, 2008, as if the acquisition of
XHBD had occurred on the last day of the immediately preceding fiscal
period. Accordingly, transaction costs related to the acquisition are not
included in the loss from operations shown below. The pro forma results are not
necessarily indicative of the financial results that might have occurred had the
acquisition actually taken place on the respective dates, or of future results
of operations.




11





For the
                              three months
                              Ended
                              June
      30,
                            
                            
                            For the
                              six months
                              Ended
                              June
      30,2008
                            
                            
                            2008(Unaudited)
                            
                            
                            (Unaudited)Net
      sales
                            
                            $
                            58,387
                            
                            
                            
                            242,021Net
      Income (loss)
                            
                            $
                            (263,338
                            )
                            
                            
                            (704,648
                            )Net
      Income (loss) per share-basic and diluted
                            
                            
                            (0.008
                            )
                            
                            
                            (0.02
                            )Weighted
      average shares outstanding-basic and diluted
                            
                            
                            34,516,907
                            
                            
                            
                            34,429,109




In
addition, China Diamond, an entity controlled by Mr. Trevor Roy, a director of
the Company, purchased 14 percent of XHBD on April 30, 2008.





NOTE
5 - INVENTORIES





Inventories
consist of the following at:





June 30,
                    2009
                  
                  
                  December 31,
                    2008(
      unaudited)Raw
      materials
                  
                  $
                  97,153
                  
                  
                  
                  40,929Finished
      goods
                  
                  
                  392,982
                  
                  
                  
                  450,418Total
      inventories
                  
                  $
                  490,135
                  
                  
                  
                  491,347







NOTE
6 - DERIVATIVE LIABILITY





In June
2008, the FASB finalized Emerging Issues Task Force (“EITF”) 07-05, “Determining
Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own
Stock.” Under EITF 07-05, instruments which do not have fixed settlement
provisions are deemed to be derivative instruments.  The strike price
of options and warrants issued by the Company, and the  conversion
feature in the Company’s preferred stock are denominated in US dollars, a
currency other than the Company’s functional currency, RMB.  As a
result, the options and warrants and  conversion feature are not
considered indexed to the Company’s own stock.  In accordance with
EITF 07-05, the fair value of certain of the Company’s options and warrants, and
the  conversion feature of the Company’s convertible preferred stock,
have been re-characterized as derivative liabilities effective January 1,
2009.  SFAS 133, “Accounting for Derivative Instruments and Hedging
Activities,” requires that the fair value of these liabilities be re-measured at
the end of every reporting period with the change in value reported in the
statement of operations.




At
January 1, 2009, the Company had 2,297,000 options and 8,894,943 warrants
outstanding with a strike price denominated in US dollars, a currency other than
the Company’s functional currency, RMB.  The Company determined that
2,177,000 of the options and 5,488,276 of the warrants were issued pursuant to
SFAS 123R and therefore were not subject to the liability accounting required by
EITF 07-5.





The
derivative liabilities were valued using the Black-Scholes-Merton valuation
technique with the following assumptions:




June 30
                  2009
                
                
                December 31,
                  2008
                
                
                At dates of issuance
                  in 2007 and 2008Risk-free
      interest rate
                
                
                2.56
                %
                
                
                1.55
                %
                
                2.%
      to 3.4%Expected
      volatility
                
                
                81.0
                %
                
                
                80.3
                %
                
                50%
      to 56%Expected
      life (in years)
                
                1
      to 3 years
                
                
                1
      to 3 years
                
                
                2
      to 5 yearsExpected
      dividend yield
                
                
                0.00
                %
                
                
                0.00
                %
                
                
                0.00
                %Fair
      Value:Options
      and warrants
                
                $
                52,279
                
                
                $
                558,193
                
                
                $
                124,699conversion
      feature
                
                
                10,672
                
                
                
                731,176
                
                
                
                1,293,320$
                62,951
                
                
                $
                1,289,369
                
                
                $
                1,418,019





The
risk-free interest rate is based on the yield available on U.S. Treasury
securities.  The Company estimates volatility based on the historical
volatility if its common stock.  The expected life of the options and
warrants and  conversion feature are based on the expiration date of
the related options and warrants and convertible preferred stock.  The
expected dividend yield was based on the fact that the Company has not paid
dividends to common shareholders in the past and does not expect to pay
dividends to common shareholders in the future.





12




EITF
07-05 was implemented in the first quarter of 2009 and is reported as a
cumulative change in accounting principles.  The cumulative effect on
the accounting for the conversion feature of the notes and the warrants at
December 31, 2008 is as follows:




Derivative
      Instrument:
                
                Additional Paid-in
                  Capital
                
                
                Retained
                  Earnings
                
                
                Derivative
                  LiabilityOptions
      and warrants
                
                $
                682,892
                
                
                $
                (124,699
                )
                
                $
                558,193conversion
      feature
                
                
                731,176
                
                
                
                -
                
                
                
                731,176$
                1,414,068
                
                
                $
                (124,699
                )
                
                $
                1,289,369




The
warrants were originally recorded at their relative fair value as an increase in
additional paid-in capital.  The change in the accumulated deficit
includes gains resulting from decreases in the fair value of the derivative
liabilities through December 31, 2008.  The derivative liability
amounts reflect the fair value of each derivative instrument as of the January
1, 2009,date
of implementation.




On June
30, 2009, the Company measured the fair value of the options, warrants, and
conversion feature as of June 30, 2009 as $62,951, and recorded a gain in change
in the fair value of derivatives of $1,055,941 and $1,226,418, for the three and
six months ended June 30, 2009, respectively.





NOTE 7
- SHAREHOLDER'S EQUITY





Preferred
Stock




On
December 31, 2006, the Company amended its certificate of incorporation to
provide for 5,000,000 shares of Series A preferred stock. Pursuant to the
Company's certificate of incorporation, its board of directors has the
authority, without further action by the stockholders, to issue up to 5,000,000
shares of undesignated preferred stock, par value $0.001 per share. The
Company's board will also have the authority, without the approval of the
stockholders, to fix the designations, powers, preferences, privileges and
relative, participating, optional or special rights and the qualifications,
limitations or restrictions of any preferred stock issued, including dividend
rights, conversion rights, voting rights, terms of redemption and liquidation
preferences, any or all of which may be greater than the rights of the common
stock. Preferred stock could thus be issued with terms that could delay
or prevent a change in control of our company or make removal of management
more difficult.




On
January 30, 2007, the Company entered into a Securities Purchase Agreement with
three investors, whereby the Company agreed to sell 4,000,000 shares of Series A
Convertible Preferred Stock and warrants to purchase 3,000,000 shares of common
stock at $1.00 per share. On February 12, 2007, the preferred stock and warrants
were issued for $0.75 per unit, or $3,000,000 in aggregate.





The
preferred stock earns dividends at 12% annually, in common shares of the Company
valued at $1.00 per share, payable semiannually in arrears. The preferred stock
dividend is cumulative and non-participating.  During the six months
ended June 31, 2009 and 2008, the Company recorded $145,550 and $90,000 of
preferred stock dividends payable.  The preferred stock has
liquidation preference of $0.75 per share and no voting rights. The preferred
shares contain standard anti-dilution protection.





At the
holder’s option, the preferred stock is convertible into the Company’s common
stock on a one-for-one basis anytime up to January 30, 2010 (three
years).  At the Company’s option, the preferred stock is convertible
into the Company’s common stock (at the conversion price initially set at $0.75
per share) when the average closing price of the common stock for any 20
consecutive trading days is at least $2.00. On the third anniversary (January
30, 2010) of the closing, the Company shall have the right to convert all the
Preferred Stock then outstanding into shares of common
stock.   The warrants are exercisable through January 20, 2010,
into 3,000,000 shares of the Company’s common stock for $1.00 per
share.





Common
Stock





In the
first quarter of 2009, the Company sold 12,800 shares of common stock to 123
investors at $1.375 per share for a total consideration of $17,600.





13





NOTE 8
- STOCK OPTION AND WARRANTS





At June
30, 2009, stock options outstanding were as follows:





Options
                  Granted
                
                
                Weighted
                  Average
                  Exercise PriceOutstanding
      at January 1, 2009
                
                
                2,297,000
                
                
                $
                0.42Granted
                
                
                —
                
                
                
                —Exercised
                
                
                -Withdrawn
                
                
                -Exercisable
      at June 30, 2009
                
                
                2,297,000
                
                
                $
                0.42




The
following table summarizes information about stock options outstanding as of
June 30, 2009:





Options Outstanding
                  
                  
                  Options ExercisableRange of Exercise
                    Prices
                  
                  
                  Number of
                    Shares
                  
                  
                  Weighted Average
                    Exercise Price
                  
                  
                  Weighted Average
                    Remaining Contractual
                    Life (in years)
                  
                  
                  Number of
                    Shares
                  
                  
                  Weighted Average
                    Exercise Price$0.001 to $0.55
                  
                  
                  
                  2,297,000
                  
                  
                  $
                  0.42
                  
                  
                  
                  5.82
                  
                  
                  
                  2,297,000
                  
                  
                  $
                  0.422,297,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,297,000




Information
relating to stock options at June 30, 2009 summarized by exercise price is as
follows:





Outstanding
                            
                            
                            ExercisableExercise price per
                              Share
                            
                            
                            Number of
                              shares
                            
                            
                            Remaining
                              Life (years)
                            
                            
                            Exercise
                              price
                            
                            
                            Number of
                              Shares
                            
                            
                            Weighted
                              average
                              exercise price$0.001
                            
                            
                            
                            400,000
                            
                            
                            
                            6.33
                            
                            
                            $
                            0.001
                            
                            
                            
                            400,000
                            
                            
                            $
                            0.0001$0.001
                            
                            
                            
                            20,000
                            
                            
                            
                            2.75
                            
                            
                            $
                            0.001
                            
                            
                            
                            20,000
                            
                            
                            $
                            0.0001$0.5
                            
                            
                            
                            1,277,000
                            
                            
                            
                            6.25
                            
                            
                            $
                            0.50
                            
                            
                            
                            1,277,000
                            
                            
                            $
                            0.50$0.55
                            
                            
                            
                            600,000
                            
                            
                            
                            6.25
                            
                            
                            $
                            0.55
                            
                            
                            
                            600,000
                            
                            
                            $
                            0.55$0.001
      to $0.55
                            
                            
                            
                            2,297,000
                            
                            
                            
                            6.08
                            
                            
                            $
                            0.42
                            
                            
                            
                            2,297,000
                            
                            
                            $
                            0.42




At June
30, 2009, warrants outstanding were as follows:





Number of
                  Shares under
                  Warrants
                
                
                Weighted
                  Average
                  Exercise PriceWarrants
      outstanding at January 1, 2009
                
                
                8,864,943
                
                
                
                0.95Warrants
      granted
                
                
                -Warrants
      expired
                
                
                -Warrants
      outstanding at June 30, 2009
                
                
                8,864,943
                
                
                $
                0.95





The
following table summarizes information about warrants outstanding at June 30,
2009:





Warrants Outstanding and
      ExercisableNumber of Shares Under
    Warrants
                                      
                                      
                                      Exercise Price
                                      
                                      Expiration Date
                                      
                                      Weighted Average
                                        Exercise Price50,000
                                      
                                      
                                      $
                                      1.20
                                      
                                      November
      20, 2009
                                      
                                      $
                                      1.203,000,000
                                      
                                      
                                      $
                                      1.00
                                      
                                      January
      20, 2010
                                      
                                      $
                                      1.00183,334
                                      
                                      $
                                      0.75
                                      
                                      June
      4, 2011
                                      
                                      $
                                      0.75183,333
                                      
                                      
                                      $
                                      1.20
                                      
                                      June
      4, 2013
                                      
                                      $
                                      1.201,724,138
                                      
                                      
                                      $
                                      0.725
                                      
                                      July
      2, 2012
                                      
                                      $
                                      0.7251,724,138
                                      
                                      
                                      $
                                      1.10
                                      
                                      July
      2, 2013
                                      
                                      $
                                      1.101,000,000
                                      
                                      
                                      $
                                      0.725
                                      
                                      July
      9, 2012
                                      
                                      $
                                      0.7251,000,000
                                      
                                      
                                      $
                                      1.10
                                      
                                      July
      9, 2013
                                      
                                      $
                                      1.108,864,943
                                      
                                      
                                      $
                                      0.75-$1.20
                                      
                                      
                                      
                                      $
                                      0.95




14





The
aggregate intrinsic value of 2,297,000 options and 8,864,943 warrants
outstanding and exercisable as of June 30, 2009 was $1,639,756. The aggregate
intrinsic value for the options is calculated as the difference between the
price of the underlying awards and quoted price of the Company’s common shares
for the options that were in-the-money as of June 30, 2009. At June 30, 2009,
all options shares and warrant shares were vested, and there is no unamortized
cost to be recognized in future periods.





NOTE 9
- COMMITMENTS AND CONTINGENCIES




Construction
in Progress




In May
2003, the Company acquired a land use right for approximately 28 acres of land
in the Tianzhu Export Processing Zone, Shunyi District, Beijing, China, which
the Company plans to develop into a laboratory and bio-manufacturing facility in
compliance with Good Manufacturing Practices, or GMP, regulations primarily for
clinical trials of our vaccine candidates. The general plans for development
include the construction of a laboratory facility (“Phase One”) and construction
of an administrative office building (“Phase Two”). At June 30, 2009, the Phase
One construction and internal clean room are awaiting the inspections and
approval from the government, which is expected to be finished by the third
quarter of 2009, and is recorded as construction in progress. At June 30, 2009,
$114,002 was due to the contractors of Phase One for the completed construction
and internal clean room decoration and this obligation is recorded as due to
contractors.




The
Company estimates the cost of laboratory equipment for Phase One to be fully
operational will be approximately $400,000. As of June 30, 2009, the Company had
signed agreements with several parties for the purchase of the laboratory
equipment. The purchase and installation of the laboratory equipment is
estimated to be completed by the third quarter of 2009. At June 30, 2009, Phase
Two was still in the design stage. The Company estimates the total project costs
for Phase Two will be approximately $1,200,000. The Company estimates
that construction may begin on Phase Two in 2011 or later, but currently has no
plans for Phase Two construction.





Lease
Commitment




As of
June 30, 2009, we had future minimum lease payments of $10,850 and $19,004 due
in 2009 and 2010, respectively, related to the operating lease for our office in
Oak Brook, IL.




Royalty
and License Arrangements




Liang
Qiao, M.D., our co-founder and chief executive officer, is one of the two
co-inventors of our core technology that was assigned to Loyola University
Chicago in April 2001. Under an agreement with Loyola University Chicago, we
have obtained exclusive rights to this technology for use in its future products
within the United States, Japan and the People's Republic of China, including
mainland China, Hong Kong, Taiwan and Macau. The license continues perpetually
or for the maximum period of time permitted by law, unless terminated earlier
under the terms of the agreement. Pursuant to this agreement, Loyola receives a
royalty of 4% from the net profit for all uses of the licensed technology,
including uses under sublicenses. As of June 30, 2009, we had not generated any
revenues from the sale of any products under development, nor had we received
any revenues from sublicenses.




Joint
Venture




On June
9, 2009 Bio-Bridge Science (HK) Co., Ltd., a wholly-owned subsidiary of
Bio-Bridge Science, Inc. entered into an equity joint venture contract with JR
Scientific Inc., a California based manufacturer of classical and custom cell
culture medium and sera products (“JRS”) and several other investors, to form a
new cell culture medium joint venture in Beijing, China.  The
registered capital of the joint venture will be RMB 10,000,000 (approximately
US$ 1,464,000). We will invest RMB 5,100,000 (approximately US$732,000) in
cash in the joint venture for 51% of the equity and JRS will contribute certain
technology for 15% of the equity.  The balance of the equity will be
purchased by other investors.  The joint venture agreement requires
prior written Chinese governmental approval. The joint venture is expected to be
formed in September 2009.





15




Item 2. Management's Discussion and
Analysis of Financial
Condition and Results of Operation




Some of
the statements made by us in this Quarterly Report on Form 10-Q are
forward-looking in nature, including but not limited to, statements relating to
our future revenue and expenses, product development, future market acceptance,
levels of research and development, our management's plans and objectives for
our current and future operations, and other statements that are not historical
facts. Forward-looking statements include, but are not limited to, statements
that are not historical facts, and statements including forms of the words
"intend", "believe", "will", "may", "could", "expect", "anticipate", "plan",
"possible", and similar terms. Actual results could differ materially from the
results implied by the forward looking statements due to a variety of factors,
many of which are discussed throughout this Quarterly Report and in our SEC
filings. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. We
undertake no obligation to publicly release any revisions to these
forward-looking statements that may reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events, unless
required by law. Factors that could cause actual results to differ materially
from those expressed in any forward-looking statement made by us include, but
are not limited to:




·
            our
      ability to finance our activities and maintain our financial
      liquidity;





·
            our
      ability to attract and retain qualified, knowledgeable
      employees;





·
            our
      ability to complete product
development;





·
            our
      ability to obtain regulatory approvals to conduct clinical
      trials;





·
            our
      ability to design and market new products
  successfully;





·
            our
      failure to acquire new customers in the
future;




·
            deterioration
      of business and economic conditions in our
  markets;





·
            intensely
      competitive industry conditions.




In this
document, the words "we," "our," "ours," and "us" refers to Bio-Bridge Science,
Inc. and our wholly owned subsidiaries, including Bio-Bridge Science (Beijing)
Co. Ltd., a Wholly-Foreign Owned Enterprise of the People's Republic of China
("Bio-Bridge (Beijing)") , Bio-Bridge Science Corporation, a Cayman Islands
corporation, Bio-Bridge Science Holding Co. Ltd, a Cayman Islands corporation,
Bio-Bridge Science(HK) CO. Ltd, a Hong Kong company, and Xinheng Baide
Biotechnology Co. Ltd., a Chinese company.




OVERVIEW




Bio-Bridge
Science, Inc. is a biotechnology company whose subsidiaries are focused on the
commercial development of HIV-PV Vaccine I, HPV vaccine, colon cancer vaccine,
mucosal adjuvant. Also, we sell bovine serum through our 51% owned subsidiary,
XHBD. The pre-clinical testing of HIV-PV Vaccine I on laboratory animals in
Beijing, China was completed in June 2006. After the lab equipment is installed
and we are able to produce vaccine candidate samples, we will apply to China's
State Food and Drug Administration for approval to conduct clinical trials
of HIV-PV Vaccine I. As of December 31, 2005, we had completed the construction
of the outside body of our laboratory and bio-manufacturing facility in Beijing,
China. The internal clean room installation project has been substantially
completed as of end of 2006. We expect to pass the local government inspection
and receive the necessary licenses in the second quarter of 2009, and by then
the laboratory facility will be in operations. We acquired a 51% equity
interest in Huhhot Xinheng Baide Biotechnology Co. Ltd. at the end of July in
2008. XHBD produces and sells bovine serum, a major material used in the
production of vaccines. We expect XHBD will bring us increasing revenues in the
future.




Plan of Operations





Vaccine
Development





Our
primary corporate focus is on the commercial development of our potential
vaccine products through our subsidiaries. Our capital requirements,
particularly as they relate to product research and development, have been and
will continue to be significant. Our future cash requirements and the adequacy
of available funds will depend on many factors, including the pace at which we
are able to obtain regulatory approvals of vaccine candidates, whether or not a
market develops for our products and, if a market develops, the pace at
which it develops, and the pace at which the technology involved in making our
products changes.





The
pre-clinical testing of HIV-PV Vaccine I on laboratory animals was completed in
Beijing Institute of Radiation Medicine and the testing result was issued in
June 2006 and showed encouraging results. After the vaccine samples are produced
in our GMP facility, we will submit application for clinical trials with the
Chinese SFDA. The clinical trial for therapeutic vaccine is expected to last
three years. The clinical trial for preventive vaccine will last longer, most
likely five to seven years.





16




We also
plan to conduct the pre-clinical trials for colon cancer vaccine and HPV
vaccine. We estimate that we will complete the pre-clinical trial of colon
cancer vaccine by mid 2010 and that of HPV vaccine by late 2010. We expect to
enter clinical trials of colon cancer vaccine in the first half of 2011. As we
discussed previously, clinical trial for therapeutic vaccine is expected to last
three years. All the technology to make HIV vaccine and colon cancer vaccine is
based on the technology co-developed by our CEO, Dr. Liang Qiao. Because we use
the same technology to develop our potential vaccine products, we expect to use
the same GMP facility in Beijing, China, to produce the HIV vaccine and colon
cancer vaccine for pre-clinical and clinical trials.




To date
we have funded our operations from funds we raised in private offerings. In the
first quarter of 2009, the Company sold 12,800 shares of common stock to a
hundred twenty-three investors at $1.375 per share for a total consideration of
$17,600.





During
2008, we sold common stock and investment unit composed of common stock and
warrants to investors in several private placements in which we raised
$4,245,000 in total. During the next twelve months, we will need to raise
capital through an offering of our securities or from loans to continue research
and development of our various vaccine product candidates in China as well as
conducting the potential acquisition activities in China. We estimate that our
capital requirements for the next twelve months will be as follow:




o
approximately $1.0 million for preparatory work and Phase I clinical study of
HIV-PV Vaccine I;




o
approximately $1.0 million for working capital and general corporate needs;
and




o
approximately $0.7 million for pre-clinical trials on colon cancer vaccine and
HPV vaccine.




We expect
that the therapeutic vaccine can be brought to market in three years and the
preventive vaccine can be brought to market in five to seven years, if we are
successful in raising funds to complete development of the vaccines. As of June
30 of 2009, our cash and cash equivalents and trading securities position was
$1,468,322. Although we raised $ 4.245 million in 2008 in private placements, we
will still need to raise additional funds through the public or private sales of
our securities, loans, or a combination of the foregoing to meet our planned
operations. We cannot guarantee that financing will be available to us, on
acceptable terms or at all. We also may borrow from local banks in China given
that our land use right and laboratory facility could be used as collateral for
borrowing. If we fail to obtain other financing in the next 12 months, either
through an offering of our securities or by obtaining additional loans, we may
be unable to develop our planned projects as scheduled and may be forced to
scale back.




Distribution
of Xinhua surgical instruments





We signed
an exclusive agency agreement with Xinhua Surgical Instruments Co. Ltd. to
distribute its operational instruments in the United States at the end of 2005.
We are currently seeking collaboration with local distributors and developing
markets for Xinhua instruments. We built up a B2C website devoted to selling
Xinhua surgical instruments in 2008. Also, we initiated some marketing
campaigns, such as buying Google keywords. As a result of our efforts, our
surgical instrument sale has shown dramatic sales growth.





Acquisitions
of companies complementary to the Company




Another
major corporate focus is for the Company to acquire other profitable vaccine
companies or vaccine production related companies, such as those producing
materials for vaccine production, in China. Such an acquisition may help support
our development of our in-house vaccines candidates by providing us with
operating cash flows, lower cost for material used in our vaccine production,
skillful work force in vaccine production, and a distribution channel. We
believe these companies will be complementary to us and make us more
competitive.




On July
31, 2008, the Company completed the acquisition of Huhhot Xinheng Baide
Biotechnology Co. Ltd., (“XHBD”), in which the Company purchased 51% of the
outstanding capital interests of XHBD for RMB 6 million (approximately US$
881,000).  XHBD was incorporated on May 17, 2006 under the laws
of the People’s Republic of China (“PRC”) as a limited company. XHBD is
located in the city of Huhhot in Inner Mongolia, China. The primary operations
of the Company are the manufacture and distribution of bovine serum products,
which is used in research, and production of vaccines.   The
acquisition was accounted for as a purchase in accordance with Statement of
Financial Accounting Standards No. 141 “Business Combinations”. The assets
acquired and liabilities assumed were recorded at their fair values at the date
of acquisition. We completed the 51% acquisition of Xinheng Baide on July 31,
2008 and its operations are included in our consolidated financial statements
beginning August 1, 2008.




A new
Joint Venture





17




On June
9, 2009 Bio-Bridge Science (HK) Co., Ltd., a wholly-owned subsidiary of
Bio-Bridge Science, Inc. entered into an equity joint venture contract with JR
Scientific Inc., a California based manufacturer of classical and custom cell
culture medium and sera products (“JRS”) and several other investors, to form a
new cell culture medium joint venture in Beijing, China.  The
registered capital of the joint venture will be RMB 10,000,000 (approximately
US$ 1,464,000). We will invest RMB 5,100,000 (approximately US$732,000) in
cash in the joint venture for 51% of the equity and JRS will contribute certain
technology for 15% of the equity.  The balance of the equity will be
purchased by investors.  The joint venture agreement requires prior
written Chinese governmental approval. The joint venture is expected to be
formed in September 2009.





Results
of Operations





Three-month
period ended June 30, 2009 and June 30, 2008





During
the three-month period quarter ended June 30, 2009, we had revenue of $174,895.
The cost of revenue was $121,469, which was 69% of the total
revenue.  On July 31, 2008, the Company finished the acquisition of
Huhhot Xinheng Baide Biotechnology Co. Ltd., (“XHBD”).




During
the three-month period ended June 30, 2008, we had revenues of $5,142. The cost
of revenue was $1,957, which was 38% of the total revenue. The increase of the
revenue was mainly due to sales of bovine serum, which was $158,367 during the
three-month period ended June 30, 2009.  Also, the sale of surgical
instruments was increased to $16,528 during the three-month period ended June
30, 2009.





The
decrease of the gross margin was due to the gross margin of bovine serum was
lower, which was 40% during the three-month period ended June 30, 2009, compared
with 56% for sale of surgical instruments.





For the
quarter ended June 30, 2009, research and development expenses were $46,840, as
compared to $20,467 for the quarter ended June 30, 2008. The increase of $26,373
is due to the increase of the pre-clinical trial development of our vaccine
candidates.




For the
quarter ended June 30, 2009, general and administrative expenses were $290,872
as compared to $243,031 for the quarter ended June 30, 2008. The increase of
$47,841 is related to XHBD.





For the
quarter ended June 30, 2009, selling and distribution expenses were $61,621 as
compared to $21,281 for the quarter ended June 30, 2008. The increase of $40,340
is due primarily to increases in shipping and selling expense and selling and
distribution of XHBD.





For the
quarter ended June 30, 2009, interest expense was $21 as compared to
interest expense of $1,521 for the quarter ended June 30, 2008. The decrease of
$1,500 is due primarily to an increase in cash balance and a decrease of
financial cost.





However,
none of these revenues pertain to our core planned principal operations of
developing vaccine candidates. Therefore, we believe a separate analysis of
these revenues is not as helpful as an analysis of our liquidity and capital
resources.





Net
income attributable to common shareholders for the quarter ended June 30, 2009
was $657,010 as compared to net loss of $295,185 for the quarter ended June 30,
2008.  This increase of $952,195 in income is attributable primarily to
change of fair value of derivative liability, which was $1,055,141 in the second
quarter of 2009.





Six-month
period ended June 30, 2009 and June 30, 2008





During
the six-month period ended June 30, 2009, we had revenue of $439,024. The
cost of revenue was $283,728, which was 65% of the total revenue.  On
July 31, 2008, the Company finished the acquisition of Huhhot Xinheng Baide
Biotechnology Co. Ltd., (“XHBD”).




During
the six-month period ended June 30, 2008, we had revenues of $7,427. The cost of
revenue was $2,848, which was 38% of the total revenue. The increase of the
revenue was mainly due to sales of bovine serum, which was $404,917 during the
six-month period ended June 30, 2009. Also, the sale of surgical instruments was
increased to $35,107 during the six-month period ended June 30, 2009. The
decrease of the gross margin was due to the gross margin of bovine serum was
lower, which was 45% during the six-month period ended June 30, 2009, compared
with 61% for sale of surgical instruments.





For the
six-month period ended June 30, 2009, research and development expenses were
$79,652, as compared to $56,873 for the six-month period ended June 30, 2008.
The increase of $22,779 is due to the increase of the pre-clinical trial
development of our vaccine candidates.




For the
six-month period ended June 30, 2009, general and administrative expenses were
$499,405 as compared to $448,875 for the six-month period ended June 30, 2008.
The increase of $50,530 is related to XHBD.





18




For the
six-month period ended June 30, 2009, selling and distribution expenses were
$90,962 as compared to $33,610 for the six-month period ended June 30, 2008. The
increase of $57,352 is due primarily to increases in shipping and selling
expense and selling and distribution of XHBD.





For the
six-month period ended June 30, 2009, interest expense was $297 as compared
to interest expense of $1,671 for the six-month period ended June 30, 2008. The
decrease of $1,374 is due primarily to a decrease of financial
cost.





Net
income attributable to common shareholders for the six-month period ended
June 30, 2009 was $694,234 as compared to net loss of $493,031 for the six
months ended June 30, 2008. This increase of $1,187,265 in net income is
attributable primarily to change of fair value of derivative liability, which
was $1,226,418 for the six-months ended June 20, 2009.


.





Liquidity
and Capital Resources





Our
principal sources of liquidity are cash and cash equivalent balances, which were
$1,468,322 at June 30, 2009 and $1,486,252 at June 30, 2008. Also, we had
marketable securities valued at $134,820 as of June 30, 2009. These
marketable securities were classified as trading securities.





Net cash
used in operating activities was $741,782 for the six months ended June 30, 2009
and $337,663 for the six months ended June 30, 2008. The increase was due
primarily to an increase in operation activities and our acquisition of XHBB at
July 31, 2008.





Net cash
provided by (used in) investing activities was ($ 403,511) for the six months
ended June 30, 2009 and $1,078,517 for the six months ended June 30, 2008.
This change was due to the sale of our trading securities during the six months
ended June 30, 2008 and also the purchase of fixed assets for the six months
ended June 30, 2009.




Net cash
provided by financing activities was $1,125,492 for the six months ended June
30, 2009 compared to $91,218 for the six months ended June 30, 2008. This
increase was mainly due to proceeds from the issuance of commons stock during
the six months ended June 30, 2009.





To date,
our operations have been funded through issuances of our common stock and
preferred stock whereby we raised an aggregate $8,649,438 from inception through
June 30, 2009.





In the
first quarter of 2009, the Company sold 12,800 shares of common stock to a
hundred twenty-three investors at $1.375 per share for a total consideration of
$17,600.





During
2008, the Company sold 5,841,609 shares of its common stock to seven individuals
for a total of $4,245,000.  Four of these individuals, who purchased a
total of 5,488,276 shares of common stock for a total of $3,980,000, are members
of our Board of Directors.  Some of the sales agreements also included
warrants to purchase common stock.





During
2007, the Company sold 4,000,000 shares of Series A Convertible Preferred Stock
and warrants to purchase 3,000,000 shares of common stock at $1.00 per share to
three individuals for a total of $3,000,000.





The
Company has incurred accumulated losses of $10,327,548 from February 11,
2002 (Inception) through June 30, 2009.  As a result, the Company’s
independent registered public accounting firm, in their report on the Company’s
2008 consolidated financial statements, raised substantial doubt about the
Company’s ability to continue as a going concern.





Based on
our current operating plan, we believe that we have sufficient cash and cash
equivalents to last approximately through June 2010. We will need to obtain
additional financing in addition to the funds already raised through the sale of
equity securities to fund our cash needs and continue our operations beyond June
2010. Additional financing, whether through public or private equity or debt
financing, arrangements with stockholders or other sources to fund operations,
may not be available, or if available, may be on terms unacceptable to us. Our
ability to maintain sufficient liquidity is dependent on our ability to raise
additional capital. If we issue additional equity securities to raise funds, the
ownership percentage of our existing stockholders would be reduced. New
investors may demand rights, preferences or privileges senior to those of
existing holders of our common stock. Debt incurred by us would be senior to
equity in the ability of debt holders to make claims on our assets. The terms of
any debt issued could impose restrictions on our operations. If adequate funds
are not available to satisfy either medium or long-term capital requirements,
our operations and liquidity could be materially adversely affected and we could
be forced to cut back our operations.





Critical
Accounting Policies




Our
discussion and analysis of our financial condition and results of operations are
based on our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the U.S. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses for each period. The following represents a summary of our critical
accounting policies, defined as those policies that we believe are the most
important to the portrayal of our financial condition and results of operations
and that require management's most difficult, subjective or complex judgments,
often as a result of the need to make estimates about the effects of matters
that are inherently uncertain.





19




Revenue
recognition





The
Company recognizes revenue from the sales of products when persuasive evidence
of an order arrangement exists, delivery has occurred, the sales price is fixed
or determinable and collectibility is reasonably assured.  Generally,
these criteria are met at the time the product is shipped to customers when
title and risk of loss have transferred.





Stock-Based
Compensation





The
Company periodically issues stock options and warrants to employees and
non-employees in capital raising transactions, for services and for financing
costs. The Company adopted SFAS No. 123R effective January 1, 2006, and is using
the modified prospective method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No. 123R
for all share-based payments granted after the effective date and (b) based
on the requirements of SFAS No. 123R for all awards granted to employees prior
to the effective date of SFAS No. 123R that remain unvested on the effective
date. The Company accounts for stock option and warrant grants issued and
vesting to non-employees in accordance with EITF No. 96-18: “Accounting for
Equity Instruments that are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services” and EITF No. 00-18 “Accounting
Recognition for Certain Transactions involving Equity Instruments Granted to
Other Than Employees” whereas the value of the stock compensation is based upon
the measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete.





Construction
in Progress





Construction
in progress represents direct costs of construction or acquisition and design
fees incurred. Capitalization of these costs ceases and the construction in
progress is transferred to plant and equipment when substantially all the
activities necessary to prepare the assets for their intended use are completed.
No depreciation is provided until it is completed and ready for intended
use.





Impairment
of Long-Lived Assets




We
account for long-lived assets in accordance with SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.  We regularly
evaluate our long-lived assets for indicators of possible impairment whenever
events or changes in business circumstances indicate that the carrying amount of
the assets may not be fully recoverable. An impairment loss would be recognized
when estimated undiscounted future cash flows expected to result from the use of
an asset and its eventual disposition are less than its carrying
amount.  Impairment, if any, is measured using discounted cash flows.
In the period ended June 30, 2009, we performed an evaluation of our long-lived
assets and concluded there was no impairment.





Financial
Assets and Liabilities Measured at Fair Value





Fair
Value Measurements are determined by the Company's adoption of Statement of
Financial Accounting Standards ("SFAS") No. 157, “Fair Value Measurements”
("SFAS 157") as of January 1, 2008, with the exception of the
application of the statement to non-recurring, non-financial assets and
liabilities as permitted. The adoption of SFAS 157 did not have a material
impact on the Company's fair value measurements. SFAS 157 defines fair
value as the price that would be received to sell an asset or paid to transfer a
liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants at the
measurement date. SFAS 157 establishes a fair value hierarchy, which
prioritizes the inputs used in measuring fair value into three broad levels as
follows:





Level 1—Quoted
prices in active markets for identical assets or liabilities.


Level 2—Inputs,
other than the quoted prices in active markets, are observable either directly
or indirectly.


Level 3—Unobservable
inputs based on the Company's assumptions.





SFAS 157
requires the use of observable market data if such data is available without
undue cost and effort





At June
30, 2009, the Company’s financial assets and liabilities that were measured at
fair value include its investment in trading securities which have a cost of
$259,270, a gross unrealized loss of $124,450 and a fair value of $134,820. The
Company estimates the fair value of its trading securities based on unadjusted
quoted prices in active markets of identical assets. In accordance with SFAS No.
157, this is a Level 1 valuation.





Accounting
for equity-linked financial instruments denominated in currency other than
functional currency





On
January 1, 2009, the Company adopted Emerging Issues Task Force Issue No. 07-5,
“Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity’s Own Stock” (EITF 07-5).  As a result of adopting EITF 07-5,
certain options and warrants and the beneficial conversion feature of the
Company’s convertible preferred stock previously treated as equity are no longer
afforded equity treatment because the strike price of the warrants is
denominated in US dollars, a currency other than the Company’s functional
currency, the Chinese Renminbi.  As a result, these instruments are
not considered indexed to the Company’s own stock, and as such, changes in the
fair value of these instruments will be recognized currently in earnings until
such time as the options, warrants, or beneficial conversion feature are
exercised or expire.





20




Accounting
for noncontrolling interest





Effective
January 1, 2009, the Company adopted SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements.” This statement amends
Accounting Research Bulletin No. 51, “Consolidated Financial Statements,”
to establish accounting and reporting standards for a noncontrolling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. This
statement clarifies that a noncontrolling interest in a subsidiary is an
ownership in the consolidated entity that should be reported as equity in the
consolidated financial statements. The adoption of SFAS No. 160 did not
have any material impact on the Company’s financial condition and results of
operations. However, it did impact the presentation and disclosure of
noncontrolling (minority) interests in the Company’s condensed consolidated
financial statements. The presentation and disclosure requirements were
retrospectively applied to the condensed consolidated financial
statements.  As such, all prior periods presented have been conformed
to current year’s presentation.  The noncontrolling (minority)
interest relates to third party shareholders of XHBD, who own 49% of XHBD as
of June 30, 2009.





Recent
Accounting Pronouncements





In
December 2007, Financial Accounting Standards Board (FASB) Statement 141R,
“Business Combinations (revised 2007)” (SFAS 141R”) was issued.  SFAS
141R replaces SFAS 141 “Business Combinations”.  SFAS 141R requires
the acquirer of a business to recognize and measure the identifiable assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree at fair value. SFAS 141R also requires transactions costs related to
the business combination to be expensed as incurred. SFAS 141R applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008.  The effective date, as well as the adoption date
for the Company was January 1, 2009.  Although SFAS 141R may impact
our reporting in future financial periods, we have determined that the standard
did not have any impact on our historical consolidated financial statements at
the time of adoption.





In April
2008 the FASB issued FASB Staff Position (“FSP”) No. 142-3, “Determination of
the Useful Life of Intangible Assets” (“FSP 142-3”), which amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
142.  This pronouncement requires enhanced disclosures concerning a
company’s treatment of costs incurred to renew or extend the term of a
recognized intangible asset. FST 142-3 is effective for financial statements
issued for fiscal years beginning after December 15, 2008.  The
effective date, as well as the adoption date for the Company was January 1,
2009.  Although FSP 142-3 may impact our reporting in future financial
periods, we have determined that the standard did not have any impact on our
historical consolidated financial statements at the time of
adoption.





On June
29, 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles”,
which authorized the Codification as the sole source for authoritative U.S.
GAAP.   SFAS No. 168 replaces SFAS No. 162 to establish a new
hierarchy of GAAP sources for non-governmental entities under the FASB
Accounting Standards Codification.  SFAS No. 168 will be effective for
financial statements issued for reporting periods that end after September 15,
2009.  Once it's effective, it will supersede all accounting standards in
U.S. GAAP, aside from those issued by the SEC.





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not or are not believed by
management to have a material impact on the Company's present or future
consolidated financial statements.




Commitments




Construction
in Progress




In May
2003, the Company acquired a land use right for approximately 28 acres of land
in the Tianzhu Export Processing Zone, Shunyi District, Beijing, China, which
the Company plans to develop into a laboratory and bio-manufacturing facility in
compliance with Good Manufacturing Practices, or GMP, regulations primarily for
clinical trials of our vaccine candidates. The general plans for development
include the construction of a laboratory facility (“Phase One”) and construction
of an administrative office building (“Phase Two”). At June 30, 2009, the Phase
One construction and internal clean room are awaiting the inspections and
approval from the government, which is expected to be finished by the second
quarter or early third quarter of 2009, and is recorded as construction in
progress. At June 30, 2009, $114,002 was due to the contractors of Phase One for
the completed construction and internal clean room decoration and this
obligation is recorded as due to contractors.




The
Company estimates the cost of laboratory equipment for Phase One to be fully
operational will be approximately $400,000. As of June 30, 2009, the Company had
signed agreements with several parties for the purchase of the laboratory
equipment. The purchase and installation of the laboratory equipment is
estimated to be completed by the third quarter of 2009. At June 30, 2009, Phase
Two was still in the design stage. The Company estimates the total project costs
for Phase Two will be approximately $1,200,000. The Company estimates
that construction may begin on Phase Two in 2011 or later, but currently has no
plans for Phase Two construction.





21




Lease
Commitment




As of
June 30, 2009, we had future minimum lease payments of $10,850 and $19,004 due
in 2009 and 2010, respectively, related to the operating lease for our office in
Oak Brook, IL.




Royalty
and License Arrangements




Liang
Qiao, M.D., our co-founder and chief executive officer, is one of the two
co-inventors of our core technology that was assigned to Loyola University
Chicago in April 2001. Under an agreement with Loyola University Chicago, we
have obtained exclusive rights to this technology for use in its future products
within the United States, Japan and the People's Republic of China, including
mainland China, Hong Kong, Taiwan and Macau. The license continues perpetually
or for the maximum period of time permitted by law, unless terminated earlier
under the terms of the agreement. Pursuant to this agreement, Loyola
receives a royalty of 4% from the net profit for all uses of the licensed
technology, including uses under sublicenses. As of June 30, 2009, we had not
generated any revenues from the sale of any products under development, nor had
we received any revenues from sublicenses.




A new
Joint Venture




On June
9, 2009 Bio-Bridge Science (HK) Co., Ltd., a wholly-owned subsidiary of
Bio-Bridge Science, Inc. entered into an equity joint venture contract with JR
Scientific Inc., a California based manufacturer of classical and custom cell
culture medium and sera products (“JRS”) and several other investors, to form a
new cell culture medium joint venture in Beijing, China.  The
registered capital of the joint venture will be RMB 10,000,000 (approximately
US$ 1,464,000). We will invest RMB 5,100,000 (approximately US$732,000) in
cash in the joint venture for 51% of the equity and JRS will contribute certain
technology for 15% of the equity.  The balance of the equity will be
purchased by investors.  The joint venture agreement requires prior
written Chinese governmental approval. The joint venture is expected to be
formed in September 2009.




Contractual
Obligations




Payments
due under contractual obligations at June 30, 2009 mature as
follows:





Payments due by period ($ in thousands)Contractual Obligations
                
                Total
                
                
                Less than
                  1 year
                
                
                1 to 3
                  yearsLease obligation
                
                $
                29
                
                
                $
                10
                
                
                $
                19Payable
      to contractors
                
                
                114
                
                
                
                114R&D
      agreement obligation
                
                
                5
                
                
                
                5
                
                
                
                —Total
                
                $
                148
                
                
                $
                129
                
                
                $
                19




Item
3. Quantitative and Qualitative Disclosure about Market Risk





The
Company is a smaller reporting company and is not required to provide the
information required by this.





Item
4. Controls and Procedures





Evaluation
of disclosure controls and procedures. As of the end of the period covered by
this report, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were not effective as of
June 30, 2009 at the reasonable assurance level due to the material weaknesses
described below.





Management
concluded that an accounting error had been made in the Company’s historical
March 31, 2009 financial statements in relation to the adoption of provisions of
EITF 07-5, "Determining
Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own
Stock”.  As a result, the Company’s financial statements for
the quarter ended March 31, 2009 were restated.





Management
evaluated the impact of this restatement on our assessment of our disclosure
controls and procedures and concluded that the control deficiency that resulted
in the incorrect recording of the adoption of provisions of EITF 07-5
represented a material weakness.





22




During
the second quarter of 2009, there has been an ongoing focus on the
remediation activities to address the material weaknesses in disclosure and
financial reporting controls. The remedial actions undertaken include more
hiring of capable accounting personnel and periodical review of our accounting
treatments in accordance with the US GAAP and related accounting pronouncements.
As a result of these efforts, the management concluded that the material
weakness has been eliminated.





The
Principal Executive Officer and the Principal Financial Officer anticipate that
the remedial actions and resulting improvement in controls will generally
strengthen our disclosure controls and procedures, as well as our internal
control over financial reporting (as defined in Rules 13a-15(c) and
15d-15(e) under the Exchange Act).





Changes in Internal Controls over
Financial Reporting





Other
than the remediation activities noted above, there were no changes to the
Company’s controls over financial reporting during the quarter ended June 30,
2009 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal controls over financial
reporting.





PART
II - OTHER INFORMATION





Item 1.  Legal
Proceedings





Not
applicable.





Item
1A. Risk Factors




There
have been no material changes in the risk factors previously disclosed in Form
10-K we filed with the SEC on March 31, 2009.




Item 2.  Unregistered Sales of Equity Securities and Use of
Proceeds





Not
applicable.





Item 3.  Defaults Upon Senior
Securities





Not
applicable.





Item 4.  Submission of Matters to a Vote of
Security Holders





Not
applicable.





Item 5.  Other
Information





Not
applicable.





Item 6.  Exhibits





The
exhibits listed in the Exhibit Index are filed as part of this
report.





23




SIGNATURES





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




Bio-Bridge
      Science, Inc./s/ Dr. Liang Qiao
              
              Dated:
      August 14, 2009By:
      Dr. Liang QiaoChief
      Executive Officer




24




EXHIBIT
INDEX





3.1(i)*
                Certificate
      of incorporation of the registrant, as currently in
  effect3.1(ii)*
                Bylaws
      of the registrant, as currently in effect3.1(iii)**
                Certificate
      of Designation of Series A Preferred Stock4.1**
                Form
      of Common Stock Warrant Agreement dated January 20074.2**
                Registration
      Rights Agreement dated January 200710.1**
                Securities
      Purchase Agreement dated January 200731.1
                Certification
      of Chief Executive Officer31.2
                Certification
      of Chief Financial Officer32.1
                Section
      1350 Certifications of Chief Executive Officer and Chief Financial
      Officer





*
Previously filed with the Securities and Exchange Commission pursuant to
Registration Statement No. 333-121786.




**
Previously filed as an exhibit to the Registrant's Form 10-KSB for its year
ended December 31, 2006.





25