NEW YORK, May 15 /Xinhua-PRNewswire/ -- Tiens Biotech Group (USA), Inc. (the “Company” or “Tiens”), (Amex: TBV), http://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.
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. ( http://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.
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--
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
2007
2008 As Adjusted
(Unaudited) (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
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, December 31,
2008 2007
(unaudited) 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
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 2007
As Adjusted
(Unaudited) (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
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 2007
As Adjusted
(Unaudited) (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
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.
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%
For more information, please contact:
Investor Relations
Tiens Biotech Group (USA), Inc.
Tel: +86-22-8213-7915
Fax: +86-22-8213-7667
Email: investor@tiens-bio.com
Web: http://www.tiens-bio.com
Carl Hymans
G. S. Schwartz & Co.
Tel: +1-212-725-4500
Fax: +1-212-725-9188
Email: carlh@schwartz.com
