EX-99.1 2 v114838_ex99-1.htm
 
Exhibit 99.1
 
FOR IMMEDIATE RELEASE
CONTACT:

Investor Relations  Carl Hymans
Tiens Biotech Group (USA), Inc.  G. S. Schwartz & Co.
Tel: +86-22-8213-7915 
Tel: 212-725-4500
Fax: +86-22-8213-7667  Fax: 212-725-9188
Email: investor@tiens-bio.com   Email: carlh@schwartz.com 
http://www.tiens-bio.com  
  
TIENS BIOTECH GROUP (USA) REPORTS FIRST QUARTER RESULTS

NEW YORK - May 15, 2008 -Tiens Biotech Group (USA), Inc. (the “Company” or “Tiens”), (Amex: TBV), www.tiens-bio.com, announced financial results for the first quarter ended March 31, 2008.

Revenue for the first quarter of 2008 was $12.8 million compared to $16.2 million for the first quarter of 2007.

Net income for the first quarter of 2008 was $3.6 million, or $0.05 per share, compared to net income of $6.5 million, or $0.09 per share for the first quarter of 2007.

Revenue by Region
 
For the first quarter of 2008, revenue in China was $6.1 million compared to $7.2 million for the first quarter of 2007. Sales in China reflect the continued uncertainty regarding the effect of direct selling regulations and the timing of the direct selling license application process and approval. The application of Tianshi Engineering for a direct selling license in China is still pending and until the application is approved, Tianshi Engineering will continue to sell Tiens’ products through its branches, affiliated companies and chain stores in China.
 
For the first quarter of 2008, international revenue was $6.7 million, compared to $9.0 million for the first quarter of 2007.
 
The change in international sales reflects China’s General Administration of Quality Supervision, Inspection and Quarantine’s (AQSIQ) ongoing national campaign in China against unsafe food and substandard products. As a result of this campaign by the AQSIQ, there has been a general slow-down and backlog of export clearances for Chinese food products. As a result of these delays, Tiens’ international affiliates were not able to purchase sufficient quantities of its products to meet their demand. However, it is important to note that to date, no problems have been identified with any of Tiens’ products. The campaign, which began in August 2007, was originally scheduled to finish at the end of 2007, is currently scheduled to continue throughout 2008.

Other Highlights

Cost of sales for the first quarter of 2008 was $4.0 million compared to $4.4 million for the same period in 2007. This decrease was primarily due to the decrease in sales revenue. The decrease in cost of sales was not in line with the decrease in revenue due to increases in the cost of our raw materials, and a strong remenbi compared to the dollar.
 
5

Gross profit for the first quarter of 2008 was $8.8 million compared to $11.8 million for the first quarter of 2007. The gross profit margin for the first quarter of 2008 was 68.5%, compared to 72.7% for the first quarter of 2007. The decreases reflect the aforementioned cost of raw materials which increased while the price at which products were sold remained constant.

Selling, general and administrative expenses were $3.2 million for the first quarter of 2008 and 2007. The selling and administrative expenses as a percentage of sales was 25.3% for the first quarter of 2008 compared to 20.1% for the same period in 2007. This increase reflects the fixed costs associated with selling, general and administrative expenses and the decline in revenue.

As of March 31, 2008, Tiens had $82.3 million of retained earnings and total shareholders' equity of $121.0 million.
 
Jinyuan Li, Chairman, President and CEO of Tiens, said, “We continue to face the challenges of the current direct selling environment in China and delays in exporting our products internationally. Our high quality products have remained beyond reproach by the national campaign in China to prevent the export of unsafe products. We see future opportunities including the development of new products and enhancing our current manufacturing capabilities as part of our strategic initiatives to best position Tiens for long term domesic and international growth.”

About Tiens Biotech Group (USA), Inc. www.tiens-bio.com.

Tiens Biotech Group (USA), Inc. (AMEX:TBV) conducts its business operations from Tianjin, People’s Republic of China. Tiens primarily engages in the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary nutrition supplement products, and personal care products.

Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 52 countries. Since its establishment, Tiens has developed and produced 33 nutrition supplements, which include wellness products and dietary supplements. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.

In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens’ products in China through chain stores, domestic affiliated companies, and its 100 branches. Outside of China, Tiens sells its products to affiliated companies in 52 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company’s direct sales marketing program is subject to governmental regulation in each of these countries.

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Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward-looking statements are not necessarily indicative of future financial results, and may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) the Company's ability to build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; (iv) whether the Company continues to experience delays in the export clearance of its products; (v) whether Tianshi Engineering, the Company’s affiliate which sells its products in China, obtains a direct selling license in China; and (vi) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission which are available for review at http://www.sec.gov under "Search for Company Filings."


-Tables Follow-
 
7

 
 
   
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
 
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 
   
            
   
 2008
(Unaudited)
 
2007
As Adjusted (See Note 1)
 
REVENUE - RELATED PARTIES
 
$
12,820,821
 
$
16,236,789
 
               
COST OF SALES - RELATED PARTIES
   
4,040,060
   
4,435,599
 
               
GROSS PROFIT
   
8,780,761
   
11,801,190
 
               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
   
3,247,199
   
3,264,907
 
               
INCOME FROM OPERATIONS
   
5,533,562
   
8,536,283
 
               
(Interest expense)
   
(52,584
)
 
(105,222
)
Interest income
   
237,332
   
629,913
 
Other expense income, net
   
259,423
   
(74,479
)
OTHER EXPENSE INCOME, NET
   
444,171
   
450,212
 
INCOME BEFORE PROVISION FOR INCOME TAXES
             
AND MINORITY INTEREST
   
5,977,733
   
8,986,495
 
               
PROVISION FOR INCOME TAXES
   
1,480,394
   
711,010
 
               
INCOME BEFORE MINORITY INTEREST
   
4,497,339
   
8,275,485
 
               
MINORITY INTEREST
   
888,437
   
1,753,218
 
               
NET INCOME
   
3,608,902
   
6,522,267
 
               
OTHER COMPREHENSIVE INCOME
             
Foreign currency translation adjustment
   
4,423,860
   
1,389,352
 
               
COMPREHENSIVE INCOME
 
$
8,032,762
 
$
7,911,619
 
               
EARNINGS PER SHARE, BASIC AND DILUTED
 
$
0.05
 
$
0.09
 
               
WEIGHTED AVERAGE NUMBER OF SHARES
   
71,333,586
   
71,333,586
 
 
8


 
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2008 AND DECEMBER 31, 2007
 
           
A S S E T S
 
   
   
March 31, 2008 (unaudited)
 
December 31,
2007
As Adjusted
(See Note 1)
 
CURRENT ASSETS:
          
Cash
 
$
58,160,829
 
$
54,081,848
 
Accounts receivable, trade - related parties, net of allowance for doubtful accounts of $59,412 and $71,700 as of March 31, 2008 and December 31, 2007, respectively
   
11,822,927
   
14,268,229
 
Accounts receivable, trade - third parties
   
---
   
104,398
 
Inventories
   
6,649,229
   
5,949,963
 
Other receivables
   
851,436
   
1,068,343
 
Other receivables - related parties
   
12,744,336
   
13,887,138
 
Employee advances
   
118,583
   
65,901
 
Prepaid expenses
   
533,330
   
623,638
 
Total current assets
   
90,880,670
   
90,049,458
 
               
PROPERTY, PLANT AND EQUIPMENT, net
   
16,135,968
   
16,071,900
 
               
OTHER ASSETS:
             
Construction in progress
   
46,332,756
   
39,792,774
 
Construction deposits
   
1,036,204
   
1,089,216
 
Intangible assets, net
   
9,576,608
   
9,246,879
 
Other assets
   
5,569,703
   
5,301,847
 
Total other assets
   
62,515,271
   
55,430,716
 
               
Total assets
 
$
169,531,909
 
$
161,552,074
 
               
 
9



 
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2008 AND DECEMBER 31, 2007
 
 
   
L I A B I L I T I E S    A N D    S H A R E H O L D E R S'    E Q U I T Y
 
           
   
March 31,
 
December 31,
 
   
2008
(Unaudited)
 
2007
As Adjusted
(See Note 1)
 
CURRENT LIABILITIES:
         
Accounts payable
 
$
4,085,944
 
$
4,070,906
 
Advances from customers - related parties
   
1,772,749
   
1,700,838
 
Wages and benefits payable
   
1,096,302
   
1,250,685
 
Other taxes payable
   
175,324
   
536,819
 
Income taxes payable
   
1,740,778
   
665,736
 
Contractor deposits
   
329,665
   
595,128
 
Contractor payables
   
8,666,740
   
7,820,285
 
Other Payables
   
1,342,448
   
1,133,539
 
Other payables - related parties
   
4,885,515
   
7,938,205
 
Dividend payable to minority interest
   
5,106,666
   
4,902,629
 
Current portion of long term debt, related party
   
2,130,000
   
2,130,000
 
Total current liabilities
   
31,302,131
   
32,744,760
 
               
NON-CURRENT LIABILITIES:
             
Long term debt, net of current portion, related party
   
4,267,742
   
4,267,742
 
Other payables-non-current
   
560,526
   
538,130
 
Deferred income
   
5098,771
   
4,895,049
 
Total non-current liabilities
   
9,927,039
   
9,700,921
 
               
Total liabilities
   
41,229,170
   
42,445,681
 
               
MINORITY INTEREST
   
7,307,647
   
6,144,063
 
           
SHAREHOLDERS' EQUITY:
             
Common stock, $0.001 par value, 250,000,000 shares authorized,
             
71,333,586 issued and outstanding, respectively
   
71,334
   
71,334
 
Paid-in-capital
   
8,842,009
   
8,842,009
 
Statutory reserves
   
9,420,783
   
9,420,783
 
Retained earnings
   
82,277,062
   
78,668,160
 
Accumulated other comprehensive income
   
20,383,904
   
15,590,044
 
Total shareholders' equity
   
120,995,092
   
112,962,330
 
Total liabilities and shareholders' equity
 
$
169,531,909
 
$
161,552,074
 
 
10

 
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 
           
   
Three months ended March 31
 
   
2008
(Unaudited)
 
2007
As Adjusted
(See Note 1)
 
CASH FLOWS FROM OPERATING ACTIVITIES:
         
Net income
 
$
3,608,902
 
$
6,522,267
 
Adjustments to reconcile net income to cash
             
provided by (used in) operating activities:
             
Provision for doubtful accounts
   
(12,288
)
 
(2,819
)
Minority interest
   
888,437
   
1,753,218
 
Depreciation
   
683,155
   
700,148
 
Amortization
   
60,894
   
58,597
 
Interest income
   
(53,159
)
 
(405,211
)
(Gain) loss on sale of assets
   
(8,431
)
 
--
 
(Increase) decrease in assets:
             
Accounts receivable, trade - related parties
   
(3,914,933
)
 
(3,633,193
)
Accounts receivable, trade - third parties
   
106,413
   
--
 
Other receivables
   
255,386
   
(16,831
)
Other receivables - related parties 
   
(198,638
)
 
599,858
 
Inventories
   
(441,968
)
 
653,771
 
Employee advances
   
(48,871
)
 
18,164
 
Prepaid expense 
   
112,341
   
(107,382
)
Increase (decrease) in liabilities:
             
Accounts payable
   
(169,891
)
 
(902,938
)
Advances from customers - related parties
   
1,102
   
(43,110
)
Wages and benefits payable
   
(200,580
)
 
(11,718
)
Other taxes payable
   
649,299
   
398,094
 
Other payables
   
158,270
   
(152,536
)
Other payables - related parties
   
125,300
   
(297,067
)
Net cash provided by operating activities
   
1,600,740
   
5,131,312
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
             
Loan to (from) related parties
   
1,403,831
   
(1,032,080
)
Acquisition of intangible assets
   
--
   
(127,996
)
Construction deposits
   
96,237
   
207,822
 
Contractor deposits
   
(284,016
)
 
--
 
Addition to construction in progress
   
(4,257,203
)
 
(5,926,815
)
Purchase of equipment and automobiles
   
(123,344
)
 
(296,416
)
Net cash used in investing activities
   
(3,164,495
)
 
(7,175,485
)
               
CASH FLOWS FROM FINANCING ACTIVITIES:
             
Loan from related parties
   
3,489,184
   
374,129
 
Increase in registered share capital
   
--
   
5,500,010
 
Payments to minority interest shareholder
   
--
   
(6,676,102
)
Net cash provided by (used in) financing activities
   
3,489,184
   
(801,963
)
               
EFFECT OF EXCHANGE RATE CHANGES ON CASH
   
2,153,552
   
509,087
 
               
INCREASE IN CASH
   
4,078,981
   
(2,337,049
)
               
CASH, beginning of year
   
54,081,848
   
55,214,540
 
               
CASH, end of year
 
$
58,160,829
 
$
52,877,491
 
               
Supplemental disclosures of cash flow information
             
Cash paid during the year for:
             
Interest (net of amount capitalized)
 
$
--
 
$
--
 
Income taxes
 
$
455,480
 
$
700,941
 

11


Note 1.

On December 20, 2007, the Company’s subsidiary, Tianshi International Holdings Group Ltd (“Tianshi Holdings”), entered into a Sale and Purchase Agreement with Tianshi International Investment Group Co., Ltd. (“Tianshi Investment”). Pursuant to the Sale and Purchase Agreement, Tianshi Holdings agreed to buy all of the registered share capital of Tianjin Tiens Life Resources Co., Ltd. (“Life Resources”) for $64.2 million. The closing of the transaction was subject to government approval of transfer of all of the share capital of Life Resources to Tianshi Holdings. On March 13, 2008, the Chinese government approved the transfer. As Tianshi Holdings and Life Resources were under common control by Jinyuan Li before the combination, the combination was treated for accounting purposes as a pooling of interests. The balance sheet of the Company at December 31, 2007 and comparative interim financial statements for the corresponding periods of the preceding fiscal year were adjusted as if Life Resources had been combined before January 1, 2007.

12


TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
REVENUE BY REGION
 
               
   
Three months
     
   
ended March 31,
     
               
   
2008
 
2007
 
Change
 
               
China
 
$
6,105,779
 
$
7,210,301
   
-15.3
%
International
 
$
6,715,042
 
$
9,026,488
   
-25.6
%
Total
 
$
12,820,821
 
$
16,236,789
   
-21.0
%
 
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