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Tiens Biotech Group (USA) Reports First Quarter Results

May 16, 2011

TIANJIN, China, May 16, 2011 /PRNewswire-Asia/ — Tiens Biotech Group (USA), Inc. (the “Company” or “Tiens”, NYSE AMEX: TBV), www.tiens-bio.com, a company dedicated to the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements, today announced financial results for the quarter ended March 31, 2011.

Revenue for the first quarter of 2011 was $13.1 million, compared to $11.4 million for 2010.

Net income for first quarter of 2011 was $2.9 million, or $0.04 per share, compared to $3.6 million, or $0.05 per share for 2010.

The 14.4% increase in revenue for the first quarter of 2011 mainly resulted from a 21.2% increase in domestic sales as compared to the year-ago period. There were two primary reasons for the robustness of the domestic market. First, distributors rushed to increase inventory in advance of the planned price increases for some products that were scheduled for March 2011. Additionally, Tiens began to see the effects of the long-awaited direct selling license that was awarded by the Ministry of Commerce of the People’s Republic of China on March 11, 2011. On the international front, Tiens experienced a modest 4.6% increase as a result of increased sales to South Africa.

Net income, however, was negatively impacted by an increase of $1.4 million in selling, general and administrative expenses. This increase was primarily responsible for the 18.3% decrease in net income for the quarter and was mainly due to increases in depreciation related to the transfer of construction in progress to fixed assets.

Other Highlights

Cost of sales were $4.1 million in 2011 compared to $3.4 million in 2010, an increase of 20.2%. This increase was primarily due to the corresponding increase in sales. However, cost of sales rose at a higher rate than sales overall, as a result of a reduction in sales of the Company’s higher margin products.

Gross profit increased by 11.9% to $8.9 million in 2011, compared to $8.0 million in 2010. The gross profit margin for 2011 was 68.3% compared to 69.8% for the same period in 2010.

Selling, general and administrative expenses increased by 39.3% to $4.9 million in 2011, compared to $3.5 million in 2010. The increase was primarily due to the aforementioned increases in depreciation.

As of March 31, 2011, Tiens had $130.7 million of retained earnings and total shareholders’ equity of $190.1 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, “We are pleased by the increase in sales this quarter and expect our new domestic selling license to be a growing contributor to revenue in the months and years ahead. In the international arena, we are confident that our operations will gradually improve as worldwide economic conditions continue to recover. Likewise, operational improvements made at the distributor level should also boost results over time. Our commitment to both domestic and international growth remains steadfast as we continue to manage our business through the economic recovery and look ahead toward further execution of our strategic growth plans in both China and abroad.”

About Tiens Biotech Group (USA), Inc. 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 45 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, Tianshi Engineering. Tianshi Engineering markets and sells Tiens’ products in China through chain stores, domestic affiliated companies, and its 87 branches. Outside of China, Tiens sells its products to affiliated companies in 45 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; and (v) 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.


    CONTACT:

    Investor Relations                        Debra Berliner
    Tiens Biotech Group (USA), Inc.           G. S. Schwartz & Co.
    Tel:   +86-22-8213-3118                   Tel: 212-725-4500
    Fax:  +86-22-8213-7914                    Fax: 212-725-9188
    Email: investor@tiens-bio.com             Email: dberliner@schwartz.com

http://www.tiens-bio.com

-Tables Follow-

              TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
       FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

                                                    Three months ended March
                                                               31,
                                                        2011             2010
                                                        ----             ----

    REVENUE-RELATED PARTIES                      $13,050,225      $11,403,363

    COST OF SALES-RELATED PARTIES                  4,136,399        3,440,881
                                                   ---------        ---------

    GROSS PROFIT                                   8,913,826        7,962,482

    SELLING, GENERAL AND ADMINISTRATIVE
     EXPENSES                                      4,870,886        3,497,547
                                                   ---------        ---------

    INCOME FROM OPERATIONS                         4,042,940        4,464,935
                                                   ---------        ---------

         Interest expense                           (131,636)               -
         Interest income                               7,992            1,872
         Other expense                              (529,185)        (253,710)
                                                    --------         --------
    OTHER EXPENSE, NET                              (652,829)        (251,838)
                                                    --------         --------

    INCOME BEFORE PROVISION FOR INCOME TAXES       3,390,111        4,213,097
                                                   ---------        ---------

    PROVISION FOR INCOME TAXES                       446,299          609,502
                                                     -------          -------

    NET INCOME                                     2,943,812        3,603,595

            LESS: Net income attributable to the
             noncontrolling interest                (190,204)        (342,057)
                                                    --------         --------

    NET INCOME ATTRIBUTABLE TO THE COMPANY         2,753,608        3,261,538

    OTHER COMPREHENSIVE INCOME:
         Foreign currency translation adjustment   1,012,022           14,970
                                                   ---------           ------

    COMPREHENSIVE INCOME ATTRIBUTABLE
    TO THE COMPANY                                 3,765,630        3,276,508

    COMPREHENSIVE INCOME ATTRIBUTABLE
    TO THE NONCONTROLLING INTEREST                   257,361          343,398
                                                     -------          -------

    COMPREHENSIVE INCOME                          $4,022,991       $3,619,906
                                                  ==========       ==========

    EARNINGS PER SHARE,
    BASIC AND DILUTED                                  $0.04            $0.05
                                                       =====            =====

    WEIGHTED AVERAGE NUMBER OF SHARES,
    BASIC AND DILUTED                             71,333,586       71,333,586
                                                  ==========       ==========
    The accompanying notes are an integral part of this statement.

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
        AS OF MARCH 31, 2011 (UNAUDITED) AND DECEMBER 31, 2010 (AUDITED)

                                                  March 31,  December 31,
                                                        2011         2010
                                                (Unaudited)    (Audited)
                                                -----------    ---------
                       ASSETS
                       ------
    CURRENT ASSETS:
       Cash                                       $9,691,411  $10,155,522
       Accounts receivable, trade-related
        parties, net of
          allowance for doubtful accounts of
           $4,152,284 and $3,869,617
          as of March 31, 2011 and December
           31, 2010, respectively                 11,279,779   10,012,861
       Inventories                                 6,801,856    5,703,349
       Other receivables                             942,959    1,045,952
       Other receivables-related parties          17,327,387   17,376,522
       Employee advances                             127,314      170,842
       Prepaid expenses, net                         356,817      415,208
       Prepaid taxes                               3,689,268    3,646,140
                                                   ---------    ---------
          Total current assets                    50,216,791   48,526,396
                                                  ----------   ----------

    PROPERTY, PLANT AND EQUIPMENT, net            72,098,917   72,037,542
                                                  ----------   ----------

    OTHER ASSETS:
       Construction in progress                  130,736,007  128,715,283
       Construction deposits                      20,177,749   12,490,855
       Intangible assets, net                     12,991,801   12,987,000
       Other assets                               10,302,761   10,721,040
                                                  ----------   ----------
          Total other assets                     174,208,318  164,914,178
                                                 -----------  -----------

             Total assets                       $296,524,026 $285,478,116
                                                ============ ============

        LIABILITIES AND SHAREHOLDERS' EQUITY
        ------------------------------------

    CURRENT LIABILITIES:
       Accounts payable                          $14,719,467  $14,120,791
       Advances from customers-related
        parties                                    7,546,016    8,688,877
       Wages and benefits payable                  1,584,986    1,613,782
       Short-term debt                             7,610,000    3,024,800
       Income taxes payable                          717,129      490,782
       Contractor deposits                           195,485      209,376
       Contractor payables                        26,888,982   28,134,711
       Other payables                              1,109,025    1,113,416
       Other payables-related parties              5,337,033    1,417,516
                                                   ---------    ---------
          Total current liabilities               65,708,123   58,814,051
                                                  ----------   ----------

    NON-CURRENT LIABILITIES
       Long term debt                             18,568,400   18,451,280
       Deferred income                            11,400,523   11,473,853
                                                  ----------   ----------
          Total non current liabilities           29,968,923   29,925,133
                                                  ----------   ----------

          Total liabilities                       95,677,046   88,739,184
                                                  ----------   ----------

    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                         18,428,796   18,349,908
          Statutory reserves                      16,465,144   16,465,144
          Retained earnings                      130,711,559  127,957,951
          Accumulated other comprehensive
           income                                 24,405,648   23,393,626
                                                  ----------   ----------
             Total shareholders' equity of the
              Company                            190,082,481  186,237,963
          Noncontrolling interest                 10,764,499   10,500,969
                                                  ----------   ----------
          Total equity                           200,846,980  196,738,932
                                                 -----------  -----------
             Total liabilities and equity       $296,524,026 $285,478,116
                                                ============ ============
    The accompanying notes are an integral part of this statement.

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

                                                Three months ended March
                                                            31,
                                                      2011            2010
                                                      ----            ----
    CASH FLOWS FROM OPERATING
     ACTIVITIES:
       Net income                               $2,943,812      $3,603,595
       Adjustments to reconcile net
        income to cash
          provided by (used in) operating
           activities:
             Deferred income                      (145,776)              -
             Provision for doubtful accounts       257,427         202,247
             Depreciation                        1,117,611         417,469
             Amortization                           85,020          83,557
             loss on assets written off            655,611               -
             Gain on sale of assets                      -         (15,082)
             Rental expense borne by a related
              party                                 84,834          81,749
           (Increase) decrease in assets:
             Accounts receivable, trade-
              related parties                   (1,457,625)      4,933,543
             Other receivables                     109,344          93,577
             Other receivables-related
              parties                              141,586     (1,200,159)
             Inventories                        (1,050,293)        304,560
             Employee advances                      44,495          13,935
             Prepaid expense                        60,774          64,017
          Increase (decrease) in
           liabilities:
             Accounts payable                      500,706        (819,926)
             Advances from customers-related
              parties                           (1,194,866)      4,034,448
             Wages and benefits payable            (38,897)       (416,798)
             Other taxes payable                   202,713         550,140
             Other payables                        (11,159)         19,487
             Other payables-related parties      3,900,777       1,079,414
                                                 ---------       ---------
                Net cash provided by operating
                 activities                      6,206,094      13,029,773
                                                 ---------      ----------

    CASH FLOWS FROM INVESTING
     ACTIVITIES:
       Investment in Life Resources                      -       3,000,000
       Proceeds from disposal of a
        subsidiary                                       -         700,000
       Construction deposits                    (7,783,013)       (562,642)
       Contractor deposits                         (15,180)              -
       Addition to construction in
        progress                                (2,729,380)    (9,112,590)
       Equipment deposits                         (427,179)    (1,558,192)
       Proceeds from sales of properties                 -       2,621,021
       Purchase of equipment and
        automobiles                               (163,060)        (88,505)
                                                  --------         -------
                Net cash used in investing
                 activities                    (11,117,812)    (5,000,908)
                                               -----------      ----------

    CASH FLOWS FROM FINANCING
     ACTIVITIES:
       Proceed from short term debt              4,554,000               -
                                                 ---------             ---
                Net cash provided by financing
                 activities                      4,554,000               -
                                                 ---------             ---

    EFFECT OF EXCHANGE RATE CHANGES
     ON CASH                                      (106,393)         (3,895)
                                                  --------          ------

    NET INCREASE (DECREASE) IN CASH               (464,111)      8,024,970

    CASH, beginning of period                   10,155,522       1,848,328
                                                ----------       ---------

    CASH, end of period                        $9 ,691,411      $9,873,298
                                               ===========      ==========

    Supplemental disclosures of cash
     flow information
       Cash paid during the period for:
          Interest                                $342,018              $-
          Income taxes                            $223,653        $213,625
    The accompanying notes are an integral part of this statement.

                    REVENUE BY REGION

                               Three months ended March
                                          31,
                              -------------------------
                                   2011             2010
                                   ----             ----

    China                    $8,218,691       $6,783,273
    International             4,831,534        4,620,090
                              ---------        ---------
    Total                   $13,050,225      $11,403,363
                            ===========      ===========

SOURCE Tiens Biotech Group (USA), Inc.


Source: newswire



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