NEW YORK, May 15 /Xinhua-PRNewswire/ -- Tiens Biotech Group (USA), Inc. (the ''Company’’ or ''Tiens’’), , 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. 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.’'
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.
CONTACT: Investor Relations of Tiens Biotech Group (USA), Inc., +86-22-
8213-7915, or fax, +86-22-8213-7667, or investor@tiens-bio.com; or Carl
Hymans of G. S. Schwartz & Co., +1-212-725-4500, or +1-212-725-9188, or
carlh@schwartz.com, for Tiens
Web site: http://www.tiens-bio.com/
