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Tiens Biotech Group (USA) Reports Second Quarter and Six-Month Results
Date:8/14/2008

NEW YORK, Aug. 14 /Xinhua-PRNewswire/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", AMEX: TBV), http://www.tiens-bio.com , announced financial results for the second quarter and six months ended June 30, 2008.

For the second quarter ended June 30, 2008, revenue was $19.7 million, an increase of 37.2% compared to $14.3 million for the same period in 2007.

Net income for the second quarter of 2008 was $4.6 million, compared to net income of $5.0 million for the second quarter of 2007. Earnings per share for the second quarter of each of 2008 and 2007 were $0.07.

For the six months ended June 30, 2008, revenue was $32.5 million, an increase of 6.3% compared to $30.6 million for the same period in 2007.

Net income for the six months ended June 30, 2008 was $8.3 million, compared to net income of $11.5 million for the first six months of 2007. Earnings per share for six months ended June 30, 2008 were $0.12 compared to $0.16 for the first six months of 2007.

The significant growth in revenue during the second quarter of 2008 includes an increase in both domestic and international revenue for the period. Revenue in China increased 65.6% to $8.5 million, compared to $5.1 million for the second quarter of 2007, reflecting successful marketing efforts in China and the increase in the value of the renminbi against the dollar. In addition, international revenue rose 21.4% to $11.1 million for the second quarter, compared to $9.2 million for the same period in 2007, reflecting a reduction on export restrictions in that period by China's Administration of Quality Supervision, Inspection and Quarantine ("AQSIQ") which announced an ongoing national campaign in China against unsafe food and substandard products in August 2007. It is important to note that to date, no problems have been identified with any of Tiens' products.

Results for the six months ended June 30, 572,767 538,130

Deferred income 5,210,120 4,895,049

Total non current liabilities 8,985,629 9,700,921

Total liabilities 42,012,449 42,445,681

MINORITY INTEREST 8,484,637 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 86,918,663 78,668,160

Accumulated other comprehensive income 23,059,672 15,960,044

Total shareholders' equity 128,312,461 112,962,330

Total liabilities and

shareholders' equity $ 178,809,547 $ 161,552,074

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)

June 30, June 30,

2008 2007

As Adjusted

(Note 1)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income $ 8,250,503 $ 11,512,659

Adjustments to reconcile net income

to cash provided by (used in)

operating activities:

Provision for doubtful accounts 37,715 547

Minority interest 1,887,079 3,122,579

Depreciation 1,373,096 1,426,271

Amortization 140,911 117,830

Interest income (92,523) (935,932)

(Gain) on sale of assets (8,554) --

(Increase) decrease in assets:

Accounts receivable, trade -

related parties (15,693,689) (4,062,388)

Accounts receivable, trade -

third parties 22,722 --

Other receivables 498,556 2,239,427

Other receivables - related

parties (526,327) (4,120,698)

Inventories 190,894 1,628,894

Employee advances (185,415) (49,889)

Prepaid expense 365,778 406,509

Increase (decrease) in liabilities:

Accounts payable 1,223,358 (648,583)

Advances from customers - related

parties 663,444 (67,035)

Wages and benefits payable (422,254) (289,033)

Other taxes payable 1,205,680 (40,345)

Other payables (67,118) (83,390)

Other payables - related parties 16,388 (299,389)

Net cash provided by operating

activities (1,119,756) 9,858,034

CASH FLOWS FROM INVESTING ACTIVITIES:

Repayment from (loans to) related

parties 2,133,222 (4,689,017)

Collections from loans to local

government 450,197 --

Acquisition of intangible assets -- (129,527)

Construction deposits (2,206,145) --

Contractor deposits 101,801 412,802

Addition to construction in progress (9,722,463) (12,961,091)

Proceeds from sale of equipment 61,152 --

Purchase of equipment and automobiles (360,192) (1,158,813)

Net cash used in investing (9,542,428) (18,525,646)

CASH FLOW FROM FINANCING ACTIVITIES:

Loan from (repayment to) related

parties 7,400,000 (843,115)

Payments on long term debt, related

party (1,065,000) --

Proceeds from share subscription in

subsidiary -- 18,000,130

Proceeds from joint venture investor

in Dongfeng 2,828 -

Payment to minority interest

shareholder (5,070,091) (6,676,102)

Net cash provided by (used

in) financing activities 1,267,737 10,480,913

EFFECTOF EXCHANGE RATE CHANGES ON CASH 3,053,932 1,272,215

INCREASE (DECREASE) IN CASH (6,340,515) 3,085,516

CASH, beginning of period 54,081,848 55,214,540

CASH, end of period $ 47,741,333 58,300,056

Supplemental disclosures of cash flow

information

Cash pain during the year for:

Interest (net of amount capitalized) $ 132,662 --

Income taxes $ 1,822,619 1,370,002

Note 1.

On December 20, 2007, the Company's subsidiary, Tianshi International

Holdings Group Ltd. (''Tianshi Holdings''), entered 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 (Unaudited)

Three months

ended June 30,

2008 2007 Change

China $ 8,509,932 $5,137,313 65.6 %

International $11,144,515 $9,183,169 21.4 %

Total $19,654,447 $14,320,482 37.2 %

Six months

ended June 30,

2008 2007 Change

China $14,615,711 $12,347,614 18.4 %

International $17,859,557 $18,209,657 -1.9 %

Total $32,475,268 $30,557,271 6.3 %

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 site: 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

2008 were affected by a 15% decrease in revenue in China during the first quarter of 2008. During the first quarter of 2008, we believe that sales in China were negatively impacted by continued uncertainty in China regarding the impact of direct selling regulations and uncertainty regarding the timing of the direct selling license application process and approval which has been submitted by Tianjin Tianshi Biological Engineering Co., Ltd. ("Tianshi Engineering"), an affiliated Chinese company.

Revenue by Region

As stated above, revenue in China for the second quarter of 2008 increased 65.6% to $8.5 million, compared to $5.1 million for the second quarter of 2007. International revenue for the second quarter of 2008 increased 21.4% to $11.1 million, compared to $9.2 million for the second quarter of 2007. For the six months ended June 30, 2008, revenue in China was $14.6 million, an 18.4% increase compared to $12.3 million for the same period in 2007. For the six months ended June 30, 2008, international revenue was $17.9 million, a decrease of 1.9% compared to $18.2 million for the same period in 2007. This decrease in international revenue reflects the impact of the export restrictions which were introduced in third quarter of 2007 and impacted results for subsequent quarters, including the first quarter of 2008. The increase in international revenue in the second quarter of 2008 reflects a reduction on the export restrictions in that period.

Background

In August 2007, AQSIQ announced an 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, and, from August 2007 through the first quarter of 2008, we experienced significant delays in obtaining export clearance for all of the products which we sell to our international affiliates. Beginning in the second quarter of 2008, these export restrictions were reduced for exports to countries in Africa and Asia, but remained in place for exports to countries in Europe and the Americas. To facilitate the export of our product in the future, in May 2008 we established a new subsidiary, Dongfeng Tianshi Biological Development Co., Ltd. ("Dongfeng Biological") in Liaoyuan, Jilin Province. To date, Dongfeng Biological has not yet conducted any operations.

In China, Tiens sells its products to Tianjin Engineering, an affiliated Chinese company. In order 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.

Other Highlights

Cost of sales for the second quarter of 2008 increased 39.3% to $6.2 million, compared to $4.5 million for the same period in 2007. The rise in cost of sales reflects increases in both sales and the value of the renminbi against the dollar. For the six months ended June 30, 2008, cost of sales increased 15.2% to $10.2 million, compared to $8.9 million for the same period in 2007. Cost of sales for the period reflects greater raw materials costs.

Gross profit for the second quarter of 2008 increased 36.3% to $13.5 million, compared to $9.9 million for the same period in 2007. For the six months ended June 30, 2008, gross profit increased 2.6% to $22.2 million, compared to $21.7 million for the same period in 2007. The gross profit margin for the second quarter of 2008 was 68.4%, compared to 68.9% for the same period in 2007. For the six months ended June 30, 2008, the gross profit margin was 68.5%, compared to 70.9% for the same period in 2007. This modest decrease reflects the increase in the cost of raw materials while the price at which we sell our products has remained constant.

Selling, general and administrative expenses were $5.1 million for the second quarter of 2008, an increase of 50.2% compared to $3.4 million for the same period in 2007. The selling and administrative expenses as a percentage of sales were 25.9% for the second quarter of 2008 compared to 23.7% for the same period in 2007. For the six months ended June 30, 2008, selling, general and administrative expenses were $8.3 million, an increase of 25.3% compared to $6.7 million in the same period in 2007. For the six months ended June 30, 2008, selling, general and administrative expenses as a percentage of sales was 25.7%, compared to 21.8% for the same period in 2007. This increase was primarily due to increases in general administration costs related to the construction of the Life Resources project, salary and insurance expenses, advertising, research and development expenses and the appreciation of the renminbi.

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 June 30, 2008, Tiens had $86.9 million of retained earnings and total shareholders' equity of $128.3 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased with the increase in both domestic and international revenues over last year's second quarter and our sequential growth compared to the first quarter of 2008. We are committed to gaining greater market share in China for our high quality products and are beginning to reap the benefit of reduced international export restrictions. The further reduction of these restrictions represents an opportunity for Tiens to meet the demands of its growing international customer base. We remain optimistic for long term domestic 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 supplements.

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."

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007 (Unaudited)

Three months ended June 30 Six months ended June 30

2008 2007 2008 2007

As Adjusted As Adjusted

(Note1) (Note 1)

REVENUE - RELATED

PARTIES $ 19,654,447 $ 14,320,482 $ 32,475,268 $30,557,271

COST OF SALES -

RELATED PARTIES 6,203,705 4,454,594 10,243,765 8,890,193

GROSS PROFIT 13,450,742 9,865,888 22,231,503 21,667,078

SELLING, GENERAL AND

ADMINISTRATIVE

EXPENSES 5,088,597 3,388,675 8,335,796 6,653,582

INCOME FROM

OPERATIONS 8,362,145 6,477,213 13,895,707 15,013,496

(Interest

expense) (80,078) (106,351) (132,662) (211,573)

Interest income 268,517 587,270 505,849 1,217,183

Other (expense), net (1,246,287) (42,984) (986,864) (117,463)

OTHER (EXPENSE),

INCOME, NET (1,057,848) 437,935 (613,677) 888,147

INCOME BEFORE

PROVISION FOR INCOME

TAXES AND MINORITY

INTEREST 7,304,297 6,915,148 13,282,030 15,901,643

PROVISION FOR

INCOME TAXES 1,664,054 555,395 3,144,448 1,266,405

INCOME BEFORE

MINORITY INTEREST 5,640,243 6,359,753 10,137,582 14,635,238

MINORITY INTEREST 998,642 1,369,361 1,887,079 3,122,579

NET INCOME 4,641,601 4,990,392 8,250,503 11,512,659

OTHER COMPREHENSIVE

INCOME

Foreign currency

translation

adjustment 2,675,768 2,383,905 7,099,628 3,773,257

COMPREHENSIVE

INCOME $ 7,317,369 $ 7,374,297 $ 15,350,131 $15,285,916

EARNINGS PER SHARE,

BASIC AND DILUTED $ 0.07 $ 0.07 $ 0.12 $ 0.16

WEIGHTED AVERAGE

NUMBER OF SHARES 71,333,586 71,333,586 71,333,586 71,333,586

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2008 AND DECEMBER 31, 2007 A S S E T S

June 30, December 31,

2008 2007

As Adjusted

(Unaudited) (Note 1)

CURRENT ASSETS:

Cash $ 47,741,333 $ 54,081,848 Accounts receivable, trade -

related parties, net of

allowance for doubtful accounts

of $109,415 and $71,700, as of

June 30, 2008 and December 31,

2007, respectively 23,176,490 14,268,229

Accounts receivable, trade -

third parties -- 104,398

Inventories 6,222,266 5,949,963

Other receivables 609,326 1,068,343

Other receivables - related
parties 11,844,719 13,887,138

Employee advances 260,974 65,901

Prepaid expense 285,677 623,638

Prepaid income taxes 734,772 --

Total current assets 90,875,557 90,049,458

PLANT AND EQUIPMENT, net 16,053,138 16,071,900

OTHER ASSETS:

Construction in progress 55,279,413 39,792,774

Construction deposits 1,615,659 1,089,216

Intangible assets, net 9,711,580 9,246,879

Other assets 5,274,200 5,301,847

Total other assets 71,880,852 55,430,716

Total assets $ 178,809,547 $ 161,552,074

TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 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

June 30, December 31,

2008 2007

As Adjusted

(Unaudited) (Note 1) CURRENT LIABILITIES:

Accounts payable $ 5,592,022 $ 4,070,906

Advances from customers - related

parties 2,493,135 1,700,838

Wages and benefits payable 892,276 1,250,685

Other taxes payable 451,829 536,819

Income taxes payable 2,803,788 665,726

Contractor deposits 738,208 595,128

Contactor payables 9,350,693 7,820,285

Other payables 1,137,420 1,133,539

Other payables - related parties 7,437,449 7,938,205

Dividend payable to minority interest -- 4,902,629

Current portion of long term debt,

related party 2,130,000 2,130,000

Total current liabilities 33,026,820 32,744,760

NON-CURRENT LIABILITIES

Long term debt, net of current

portion, related party 3,202,742 4,267,742

Other payables-non current
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SOURCE Tiens Biotech Group (USA), Inc.
Copyright©2008 PR Newswire.
All rights reserved

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