Tiens Biotech Group (USA), Inc. Reports Third Quarter and Nine-Month Results

NEW YORK, Nov. 15, 2010, PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the “Company” or “Tiens”, NYSE AMEX: TBV), www.tiens-bio.com,todayannounced financial results for the third quarter and nine months ended September 30, 2010.

Revenue for the third quarter of 2010 was $10.4 million, compared to $9.4 million for the third quarter of 2009. Revenue for the nine months ended September 30, 2010 was $30.0 million, compared to $48.2 million for the first nine months of 2009.

Net income for the third quarter of 2010 was $1.9 million, or $0.02 per share, compared to net income of $2.9 million, or $0.03 per share, for the 2009 third quarter. For the nine months ended September 30, 2010, net income was $6.0 million, or $0.08 per share, compared to $22.2 million, or $0.29 per share for the first nine months of 2009.

The increase in revenue for the third quarter ended September 30, 2010 reflects an increase in domestic sales of 32%. The decrease in revenue for the nine months ended September 30, 2010 was mainly due to a decrease in international sales which reflects China‘s Administration of Quality Supervision, Inspection and Quarantine carrying out a national campaign against unsafe food and substandard products in 2008, which brought on a general slow-down and backlog of export clearances for Chinese food products. Upon the lifting of the regulations, overseas affiliated companies began to purchase more products, thereby increasing sales in the first three quarters of 2009. The decrease reflects no sales to Indonesian distributors during the first nine months of 2010 given they purchased more products in 2009 after the aforementioned 2008 product scarcity. The sales decline to Indonesia accounts for 57% of the total international revenue decrease for the nine months ended September 30, 2010.

In October, the Company relocated its corporate headquarters to its 250-acre Tiens International Health Industrial Park research and development, manufacturing and logistic facilities approximately four miles from its previous location. The Life Resources facility will incorporate manufacturing, warehouses, work plants, a power center and dormitories. The center positions the Company well to increase manufacturing capacity to meet future growth opportunities.

Other Highlights

Cost of sales for the third quarter of 2010 was $4.1 million compared to $3.1 million for the same period in 2009. For the nine months ended September 30, 2010, cost of sales was $10.6 million compared to $15.0 million for the same period in 2009. The increase in cost of sales for the third quarter of 2010, as compared to the like quarter of 2009, is due to the sale of products with higher costs.

Gross profit for the third quarter of 2010 was $6.2 million, a decrease of 0.9% compared to $6.3 million for the same period in 2009. The gross profit margin for the third quarter of 2010 was 60.1%, compared to 66.7% for the same period in 2009. For the nine months ended September 30, 2010, gross profit was $19.3 million, a decrease of 41.8% compared to $33.2 million for the same period in 2010, and the gross profit margin was 64.5% compared to 68.9% for the same period in 2009.

The decrease in profit margin for the third quarter of 2010 reflects Company products with more than 65% profit margins being 27.4% of revenues as compared to 31.1% in the third quarter of 2009 and the U.S. dollar depreciating approximately 2% between September 30, 2009 and September 30, 2010. The Company’s international sales are quoted in U.S. dollars and collected in RMB, therefore, gross profit margin decreased by the same percentage as the depreciation of the U.S. dollar.

Selling, general and administrative expenses were $4.1 million for the third quarter of 2010, an increase of 39.3% compared to $2.9 million for the same period in 2009. This increase was primarily due to a relative increase in bad debt expense. Selling, general and administrative expenses as a percentage of sales were 39.1% for the third quarter of 2010 compared to 30.9% for the same period in 2009. For the nine months ended September 30, 2010, selling, general and administrative expenses were $11.6 million, an increase of 15.6% compared to $10.1 million in the same period in 2009. This increase was mainly due to the aforementioned increase in bad debt expense. For the nine months ended September 30, 2010, selling, general and administrative expenses as a percentage of sales were 38.8%, compared to 20.9% for the same period in 2009.

As of September 30, 2010, Tiens had $128.5 million of retained earnings and total shareholders’ equity of $195.3 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, “We are pleased to report an increase in domestic sales which we believe will continue in the future. Our total revenue decline should be temporary since both our domestic and global affiliated companies have not witnessed significant declines in their overall revenue. We are committed to expanding our international customer base and generating long-term domestic and international growth.”

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 54 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 92 branches. Outside of China, Tiens sells its products to affiliated companies in 54 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; whether Tianshi Engineering, the Company’s affiliate which sells its products in China, obtains a direct selling license in China; 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 under “Search for Company Filings.”

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