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Tiens Biotech Group (USA) Reports Record Twelve-Month Results

NEW YORK, March 31 /PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE AlternextUS: TBV), , today announced record financial results for the twelve months ended December 31, 2008.

For the twelve months ended December 31, 2008, revenue was $77.2 million, an increase of 40.7% compared to $54.9 million for the twelve months ended December 31, 2007.

Net income for the twelve months ended December 31, 2008 was $27.7 million, or $0.39 per share, compared to $17.9 million, or $0.25 per share for the twelve months ended December 31, 2007.

The increase in revenue for 2008, compared to 2007, reflects an increase in sales for both China and internationally. Tiens' strong sales growth in China was due to increased marketing efforts during 2008. In addition, during the third quarter of 2008, Tianshi Engineering, the affiliated company which markets and sells Tiens' products in China, announced plans to increase the prices of its products beginning in October 2008. Tiens believes this announcement prompted customers to stock up on certain products. The price increase of Tianshi Engineering products will not affect the price at which Tiens sells its products to Tianshi Engineering.

For the twelve months ended December 31, 2008, revenue in China was $33.7 million, a 50% increase compared to $22.5 million for the same period in 2007.

Tiens' increase in international sales reflects a sharp increase in sales to Russia and Indonesia during 2008. In addition, beginning in the second quarter of 2008, certain export restrictions imposed in 2007 by the Administration for Quality Supervision, Inspection and Quarantine (AQSIQ) of the Chinese government were reduced, and the campaign ended at the end of 2008.

Other Highlights

Cost of sales were $24.9 million in 2008 compared to $16.5 million in 2007, an increase of 50.5%. This increase was primarily due to the corresponding increase in sales revenue. Cost of sales increased at a higher rate than revenue because of increases in the costs of raw materials and packing materials, and an increase in the portion of the products we sold in 2008 bearing a higher cost of production, relative to our other products, than in 2007.

Gross profit increased by 36.5% to $52.4 million in 2008, compared to $38.4 million in 2007. The gross profit margin for 2008 was 67.8% compared to 69.9% in 2007. This decrease reflects an increase in the costs of raw materials and packing materials, and an increase in the portion of the products Tiens sold in 2008 bearing a higher cost of production, relative to other products, than in 2007.

Selling, general and administrative expenses were $18.6 million in 2008, compared to $14.9 million in 2007, an increase of 24.5%. The increase was primarily due to increases in salaries and insurance costs, allowance for bad debt, research and development, advertising expenses and house reserve funds. Selling and administrative expenses as a percentage of sales decreased to 24.1% in 2008 from 27.2% in 2007 because of the increase in sales.

In China, Tiens sells its products to Tianshi Engineering. 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.

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 December 31, 2008, Tiens had $106.3 million of retained earnings and total shareholders' equity of $148.9 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased to report record results for 2008 which reflect both a significant increase in our domestic and international revenue. We have generated sequential growth since the first quarter of 2008 and are optimistic that our international sales will further increase as additional export restrictions are lifted. We are 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 domestic and international growth."

About Tiens Biotech Group (USA), Inc.

Tiens Biotech Group (USA), Inc. (NYSE AlternextUS: 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, 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 in 46 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 under "Search for Company Filings."

                                -Tables Follow-


                 FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
                                                                As Adjusted
                                                    2008          (Note 1)
    REVENUE - RELATED PARTIES                   $77,247,898     $54,900,060

    COST OF SALES - RELATED PARTIES              24,870,178      16,526,695

    GROSS PROFIT                                 52,377,720      38,373,365

     EXPENSES                                    18,574,719      14,921,414

    INCOME FROM OPERATIONS                       33,803,001      23,451,951

      (Interest expense)                           (266,273)       (399,773)
      Interest income                               881,070       3,038,755
      Other (expense) income, net                (2,099,913)     (1,161,071)

    OTHER (EXPENSE) INCOME, NET                  (1,485,116)      1,477,911

     AND MINORITY INTEREST                       32,317,885      24,929,862

    PROVISION FOR INCOME TAXES                    2,345,474       2,026,875

    INCOME BEFORE MINORITY INTEREST              29,972,411      22,902,987

    MINORITY INTEREST                             2,315,215       4,966,397

    NET INCOME                                   27,657,196      17,936,590

      Foreign currency translation adjustment     7,891,018       9,915,740

    COMPREHENSIVE INCOME                        $35,548,214     $27,852,330

    EARNINGS PER SHARE, BASIC AND DILUTED             $0.39           $0.25

    WEIGHTED AVERAGE NUMBER OF SHARES            71,333,586      71,333,586


                           CONSOLIDATED BALANCE SHEETS
                  AS OF DECEMBER 31, 2008 AND DECEMBER 31, 2007
                                                                 As Adjusted
                                                   2008            (Note 1)

      Cash                                     $20,992,573       $54,081,848
      Cash related to assets held for sale      23,861,938                --
        Total cash                              44,854,511        54,081,848
      Accounts receivable, trade -
       related parties, net of allowance
       for doubtful accounts of $1,108,789
       and $71,700 as of December 31, 2008
       and 2007, respectively                   23,941,431        14,268,229
      Accounts receivable, trade -
       third parties                                    --           104,398
      Inventories                                8,365,607         5,949,963
      Other receivables                            813,591         1,068,343
      Other receivables - related parties       15,729,076        13,887,138
      Employee advances                            112,591            65,901
      Prepaid expenses                             301,898           623,638
      Prepaid income taxes                       1,531,207                --
      Assets held for Sale                      10,904,842                --
        Total current assets                   106,554,754        90,049,458

    PROPERTY, PLANT AND EQUIPMENT, net          10,274,643        16,071,900

      Construction in progress                  72,300,104        39,792,774
      Construction deposits                      2,586,302         1,089,216
      Intangible assets, net                    13,137,195         9,246,879
      Other assets                                  87,541         5,301,847
        Total other assets                      88,111,142        55,430,716

          Total assets                        $204,940,539      $161,552,074


                  FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

    LIABILITIES AND SHARE HOLDERS' EQUITY                            2007
                                                                 As Adjusted
                                                       2008        (Note 1)
      Accounts payable                              $6,283,849    $4,070,906
      Advances from customers - related parties      3,239,650     1,700,838
      Wages and benefits payable                     1,449,146     1,250,685
      Other taxes payable                              117,818       536,819
      Income taxes payable                                  --       665,726
      Contractor deposits                              163,248       595,128
      Contractor payables                           11,871,456     7,820,285
      Other payables                                 1,933,743     1,133,539
      Other payables - related parties               6,373,900     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
      Liabilities directly associated with assets
       classified as held for sale                     122,047            --
        Total current liabilities                   33,684,857    32,744,760

      Long term debt, net of current portion,
       related party                                 2,137,742     4,267,742
      Other payables-non current                            --       538,130
      Deferred income                               11,208,844     4,895,049
        Total non current liabilities               13,346,586     9,700,921

        Total liabilities                           47,031,443    42,445,681

    MINORITY INTEREST                                9,006,438     6,144,063


      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                                9,234,123     8,842,009
      Statutory reserves                             9,420,783     9,420,783
      Retained earnings                            106,325,356    78,668,160
      Accumulated other comprehensive income        23,851,062    15,960,044
        Total shareholders' equity                 148,902,658   112,962,330

          Total liabilities and shareholders'
           equity                                 $204,940,539  $161,552,074


                 FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
                                                                 As Adjusted
                                                    2008           (Note 1)

      Net income                                $27,657,196      $17,936,590
      Adjustments to reconcile net income
       to cash provided by (used in)
       operating activities:
        Provision for doubtful accounts           1,037,089          (15,076)
        Minority interest                         2,315,215        4,966,397
        Depreciation                              2,681,167        2,898,586
        Amortization                                323,276          384,464
        Interest income                              55,641          313,402
        (Gain) loss on sale of assets                39,208         (145,475)
        (Gain) loss on assets written off           192,833               --
        Inventory write off                              --           84,521
      (Increase) decrease in assets:
        Accounts receivable, trade -
         related parties                        (17,917,994)     (25,662,367)
        Accounts receivable, trade - third
         parties                                    109,674          (81,673)
        Other receivables                           314,367        1,824,205
        Other receivables - related parties       2,538,775        1,439,387
        Inventories                              (1,873,607)       1,211,822
        Employee advances                           (42,928)          81,239
        Prepaid expense                             356,136        1,586,652
      Increase (decrease) in liabilities:
        Accounts payable                          2,007,985         (313,235)
        Accounts payable - related parties               --               --
        Advances from customers - related
         parties                                  1,402,445           25,320
        Wages and benefits payable                  195,555          185,502
        Other taxes payable                      (2,654,720)         142,666
        Other payables                              459,357          576,205
        Other payables - related parties           (390,158)        (107,546)
          Net cash provided by operating
           activities                            18,806,512        7,331,586

      Payment of deposit on acquisition of
      Life Resource                                      --      (19,096,525)
      Increase in loans receivable -
       related party                                     --          493,941
      Increase in long-term prepaid expense              --         (209,087)
      Collections from loans to local
       government                                   457,329               --
      Increase in intangible assets              (6,068,759)        (132,027)
      Construction deposits                      (4,391,560)      (1,045,877)
      Contractor deposits                          (464,499)         346,934
      Addition to construction in progress      (25,714,095)     (25,196,562)
      Proceeds from sales  of properties            426,288       14,111,723
      Purchase of equipment and automobiles      (1,531,589)      (3,003,945)
        Net cash used in investing activities   (37,286,885)     (33,731,425)

      Loan from related parties                   6,080,385       27,900,609
      Increase (payment) in other
       payables-non current                        (282,664)         516,718
      Increased in additional paid in
       capital                                      482,516               --
      Increase in deferred income                 5,891,999               --
      Payments on long term debt, related
       party                                     (1,197,662)              --
      Payments to minority interest
       shareholder                               (5,150,414)      (6,676,102)
        Net cash provided by financing
         activities                               5,824,160       21,741,225

    EFFECT OF EXCHANGE RATE CHANGES ON CASH       3,428,876        3,525,922

    DECREASE IN CASH                             (9,227,337)      (1,132,692)

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

    CASH, end of year                           $44,854,511      $54,081,848

    Supplemental disclosures of cash flow
      Cash paid during the year for:

        Interest                                   $266,273         $399,773

        Income taxes                             $3,877,420       $2,215,159

    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
    transaction closed on March 13, 2008. 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 on January 1, 2007.

                               REVENUE BY REGION

                                   Twelve months ended
                                       December 31,

                                   2008            2007                Change

    China                      $33,711,474     $22,476,135             50.0 %
    International              $43,536,424     $32,423,925             34.3 %
    Total                      $77,247,898     $54,900,060             40.7 %

    For more information, please contact:

     Investor Relations
     Tiens Biotech Group (USA), Inc.
     Tel:   +86-22-8213-3491
     Fax:   +86-22-8213-7914

     Carl Hymans
     G. S. Schwartz & Co.
     Tel:   +1-212-725-4500
     Fax:   +1-212-725-9188

SOURCE Tiens Biotech Group (USA), Inc.
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