Tiens Biotech Group (USA) Reports First Quarter Results

NEW YORK, May 15 /PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE Amex: TBV), http://www.tiens-bio.com , today announced financial results for the first quarter ended March 31, 2009.

Revenue for the first quarter of 2009 increased 42% to $18.2 million, compared to $12.8 million for the first quarter of 2008, reflecting a significant increase in international sales.

Net income attributable to the Company for the quarter rose 138.1% to $8.6 million, or $0.12 per share, compared to net income of $3.6 million, or $0.05 per share, for the 2008 first quarter.

For the first quarter of 2009, international revenue increased to $15.5 million, or 130.7% over $6.7 million for the same period in 2008, mainly due to greater sales in Indonesia and Vietnam. Additionally, export restrictions have been reduced since China's Administration of Quality Supervision, Inspection and Quarantine ended in late 2008 its national campaign against unsafe food and substandard products, which began in August 2007.

For the first quarter of 2009, revenue in China was $2.7 million, a 55.1% decrease from $6.1 million for the same period in 2008. This decrease of domestic revenue was due to the decrease of orders for wellness products, which management believes was due to customers stocking up on certain products during the third quarter of 2008 as a result of the price increase announcement by, Tianjin Tianshi Biological Engineering Co., Ltd. ("Tianshi Engineering") the affiliated company which markets and sells Tiens' products in China, during that quarter.

Other Highlights

Cost of sales for the first quarter of 2009 increased to $5.7 million, an increase of 42% compared to $4.0 million for the same period in 2008. Cost of sales for the period increased at a slightly lower rate than revenue, primarily due to fixed costs, which do not increase or decrease in line with revenue changes.

Gross profit for the first quarter of 2009 was $12.5 million, an increase of 42.4% compared to $8.8 million for the same period in 2008. This increase reflects the slightly lower rate of increase of cost of sales compared with that of revenue.

Selling, general and administrative expenses were $3.1 million for the first quarter of 2009, a decrease of 3.6% compared to $3.2 million for the same period in 2008. The decrease was primarily due to decreases in salary expenses as a result of salary reductions and reduced headcount and business tax expenses. The selling and administrative expenses as a percentage of sales declined to 17.2% in the 2009 first quarter from 25.3% for the same period in 2008.

In China, Tiens sells its products to Tianshi Engineering. To qualify for a direct selling license in China, Tianshi Engineering is required to produce a part of the products that it sells in China. As a result, in 2006, Tiens began to sell semi-finished products to Tianshi Engineering, which jointly shares licenses with Tiens to produce, manufacture and sell the products. The semi-finished products, which Tiens is now exclusively selling in China, have lower sales prices than the finished products Tiens had previously sold to Tianshi Engineering. The application of Tianshi Engineering for a direct selling license in China is still pending.

Tiens continues to strive to expand its market share in China through the branches, chain stores, and Chinese affiliated companies of Tianshi Engineering. To enhance its position in this competitive market, Tianshi Engineering continues to increase its marketing activities in China, including opening additional branches across China, developing a nation-wide advertising campaign, encouraging media coverage and strengthening the Tiens brand.

As of March 31, 2009, Tiens had $114.9 million of retained earnings and total shareholders' equity of $157.8 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased to report positive results which include significant increases in total revenue, net income and international revenue, and are confident that international sales will continue to be strong. As the decline in sales in China reflects customers buying in greater volume prior to a price increase, we are optimistic that domestic sales will return to, and potentially exceed, previous levels as customers begin to replenish stored up products. Tiens remains committed to gaining greater market share in China, continuing to expand our growing international customer base, and further implementing our strategic plans for long term growth."

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

Tiens Biotech Group (USA), Inc. (NYSE 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 supplements.

Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 46 countries. Since its establishment, Tiens has developed and produced 37 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, Tianjin Tianshi Biological Engineering Co., Ltd. ("Tianshi Engineering"). Tianshi Engineering markets and sells Tiens' products in China through chain stores, domestic affiliated companies, and its 98 branches. Outside of China, Tiens sells its products to affiliated companies that 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, 2009 AND 2008 (UNAUDITED)

Three months ended March 31,

2009 2008

REVENUE - RELATED PARTIES $18,237,545 $12,820,821

COST OF SALES - RELATED PARTIES 5,735,059 4,040,060

GROSS PROFIT 12,502,486 8,780,761

SELLING, GENERAL AND ADMINISTRATIVE

EXPENSES 3,130,936 3,247,199

INCOME FROM OPERATIONS 9,371,550 5,533,562

(Interest expense) (52,616) (52,584)

Interest income 85,768 237,332

Other (expense) income (45,288) 259,423

OTHER (EXPENSE) INCOME, NET (12,136) 444,171

INCOME BEFORE INCOME TAXES 9,359,414 5,977,733

INCOME TAXES 359,615 1,480,394

NET INCOME 8,999,799 4,497,339

LESS: Net Income attributable to

noncontrolling interest (406,974) (888,437)

NET INCOME ATTRIBUTABLE TO THE COMPANY 8,592,825 3,608,902

OTHER COMPREHENSIVE INCOME:

Foreign currency translation adjustment 200,003 4,423,860

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE

COMPANY 8,792,828 8,032,762

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE

NONCONTROLLING INTEREST 419,595 1,163,584

COMPREHENSIVE INCOME $9,212,423 $9,196,346

EARNINGS PER SHARE, BASIC AND DILUTED $0.12 $0.05

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, 2008

March 31, December 31,

2009 2008

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash $20,293,635 $20,992,573

Cash related to assets held for sale 23,857,787 23,861,938

Total cash 44,151,422 44,854,511

Accounts receivable, trade - related

parties, net of allowance for

doubtful accounts of $925,565 and

$1,108,789 as of March 31, 2009 and

December 31, 2008, respectively 25,648,895 23,941,431

Inventories 6,985,983 8,365,607

Other receivables 830,579 813,591

Other receivables - related parties 18,360,639 15,729,076

Employee advances 189,686 112,591

Prepaid expenses 892,240 301,898

Prepaid taxes 1,727,363 1,531,207

Assets held for sale 10,930,860 10,904,842

Total current assets 109,717,667 106,554,754

PROPERTY, PLANT AND EQUIPMENT, net 10,719,838 10,274,643

OTHER ASSETS:

Construction in progress 77,345,874 72,300,104

Construction deposits 3,517,428 2,586,302

Intangible assets, net 13,077,072 13,137,195

Other assets 80,345 87,541

Total other assets 94,020,719 88,111,142

Total assets $214,458,224 $204,940,539

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2009 AND DECEMBER 31, 2008

LIABILITIES AND SHARE HOLDERS' EQUITY

March 31, December 31,

2009 2008

(Unaudited)

CURRENT LIABILITIES:

Accounts payable $5,724,468 $6,283,849

Advances from customers - related parties 4,608,494 3,239,650

Wages and benefits payable 1,110,191 1,449,146

Other taxes payable -- 117,818

Contractor deposits 212,386 163,248

Contractor payables 12,261,342 11,871,456

Other payables 1,370,326 1,933,743

Other payables - related parties 6,367,301 6,373,900

Current portion of long term debt, related

party 2,130,000 2,130,000

Liabilities directly associated with assets

classified as held for sale 117,380 122,047

Total current liabilities 33,901,888 33,684,857

NON-CURRENT LIABILITIES

Long term debt, net of current portion,

related party 2,137,742 2,137,742

Deferred income 11,222,672 11,208,844

Total non current liabilities 13,360,414 13,346,586

Total liabilities 47,262,302 47,031,443

EQUITY:

Shareholders' equity of the Company:

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 9,302,605 9,234,123

Statutory reserves 9,420,783 9,420,783

Retained earnings 114,918,181 106,325,356

Accumulated other comprehensive income 24,051,065 23,851,062

Total shareholders' equity of the

Company 157,763,968 148,902,658

Noncontrolling interest 9,431,954 9,006,438

Total equity 167,195,922 157,909,096

Total liabilities and equity $214,458,224 $204,940,539

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED)

Three months ended March 31,

2009 2008

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $8,999,799 $4,497,339

Adjustments to reconcile net income

to cash provided by (used in)

operating activities:

Provision for doubtful accounts (184,568) (12,288)

Depreciation 544,811 683,155

Amortization 97,143 60,894

Interest income 1,372 (53,159)

Gain on sale of assets (11,652) (8,431)

(Increase) decrease in assets:

Accounts receivable, trade -

related parties (1,493,130) (3,914,933)

Accounts receivable, trade - third

parties -- 106,413

Other receivables (17,415) 255,386

Other receivables - related parties (2,567,169) (198,638)

Inventories 1,398,175 (441,968)

Employee advances (76,407) (48,871)

Prepaid expense (589,907) 112,341

Increase (decrease) in liabilities:

Accounts payable (567,056) (169,891)

Advances from customers - related

parties 1,364,661 1,102

Wages and benefits payable (393,303) (200,580)

Other taxes payable (270,424) 649,299

Other payables (565,726) 158,270

Other payables - related parties 106,916 125,300

Net cash provided by operating

activities 5,776,120 1,600,740

CASH FLOWS FROM INVESTING ACTIVITIES:

Repayment of loan from related parties -- 1,403,831

Construction deposits (1,163,628) 96,237

Contractor deposits 48,930 (284,016)

Addition to construction in progress (4,483,010) (4,257,203)

Proceeds from sales of properties 17,031 --

Purchase of equipment and automobiles (1,035,910) (123,344)

Net cash used in investing activities (6,616,587) (3,164,495)

CASH FLOWS FROM FINANCING ACTIVITIES:

Loan from related parties -- 3,489,184

Increase in paid in capital 81,626 --

Net cash provided by financing

activities 81,626 3,489,184

EFFECT OF EXCHANGE RATE CHANGES ON CASH 55,752 2,153,552

INCREASE (DECREASE) IN CASH (703,089) 4,078,981

CASH, beginning of period 44,854,511 54,081,848

CASH, end of period $44,151,422 $58,160,829

Supplemental disclosures of cash flow

information

Cash paid during the period for:

Interest -- --

Income taxes $447,440 $455,480

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

REVENUE BY REGION

Three months ended March 31,

2009 2008 Change

China $2,742,620 $6,105,779 -55.1%

International $15,494,925 $6,715,042 130.7%

Total $18,237,545 $12,820,821 42.2%

For more information, please contact:

Investor Relations

Tiens Biotech Group (USA), Inc.

Tel: +86-22-8213-3491

Fax: +86-22-8213-7914

Email: investor@tiens-bio.com

Carl Hymans

G. S. Schwartz & Co.

Tel: +1-212-725-4500

Fax: +1-212-725-9188

Email: carlh@schwartz.com

Web: http://www.tiens-bio.com