================================================================================

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

|X|  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 For the quarterly period ended June 30, 2005.

or

| |  Transition  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934 For the transition period from to .

                         Commission File Number 0-49666

                         TIENS BIOTECH GROUP (USA), Inc.
             (Exact name of registrant as specified in its charter)


           Delaware                                              75-2926439
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

                              No. 6, Yuanquan Road
                         Wuqing New Tech Industrial Park
                              Tianjin, China 301700
           (Address of Principal Executive Offices including zip code)

                               011-86-22-8213-7658
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange  Act during the  preceding 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.
Yes |X|  No | |

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined on Rule 12b-2 of the Exchange Act). Yes | |  No |X|

There  were  71,333,586  shares of the  Registrant's  Common  Stock  issued  and
outstanding on August 11, 2005.

================================================================================

================================================================================

<PAGE>

                         TIENS BIOTECH GROUP (USA), INC.
                               Index to Form 10-Q

Part I.   Financial Information

     Item 1. Condensed Financial Statements (unaudited)                        3

     Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004     4

     Consolidated  Statements of Income and Other Comprehensive  Income for
          the three  months ended June 30, 2005 and 2004 and the six months
          ended June 30, 2005 and 2004                                         5

     Consolidated  Statements  of  Shareholders'  Equity for the six months
          ended June 30, 2005 and 2004                                         6

     Consolidated  Statements  of Cash Flows for the six months  ended June
          30, 2005 and 2004                                                    7

     Condensed Notes to Consolidated Financial Statements                      8

     Item 2.  Management's  Discussion and Analysis of Financial  Condition
          and Results of Operations                                           22

     Item 3. Quantitative and Qualitative Disclosures About Market Risk       31

     Item 4. Controls and Procedures                                          32

Part II.  Other Information

     Item 1. Legal Proceedings                                                33

     Item 2. Unregistered Sales of Equity Securities and Use of Proceeds      33

     Item 3. Defaults Upon Senior Securities                                  33

     Item 4. Submission of Matters to a Vote of Security Holders              33

     Item 5. Other Information                                                33

     Item 6. Exhibits                                                         33

SIGNATURES

--------------------------------------------------------------------------------


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)












                                       3
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    AS OF JUNE 30, 2005 AND DECEMBER 31, 2004

                                   A S S E T S
                                   -----------

                                                                                 June 30        December 31
                                                                                   2005             2004
                                                                              -------------    -------------

                                                                               (Unaudited)       (Audited)
                                                                              -------------    -------------
<S>                                                                           <C>              <C>
CURRENT ASSETS:
    Cash                                                                      $  50,990,760    $  39,243,872
    Accounts receivable - related parties, net of allowance for doubtful
       accounts of $30,442 at June 30, 2005 and $30,442 at
       December 31, 2004, respectively                                            5,702,133        6,058,021
    Other receivables                                                               327,963          529,036
    Other receivables and note receivable - related parties                       7,207,506        8,144,740
    Inventories                                                                   8,866,290        4,567,418
                                                                              -------------    -------------
       Total current assets                                                      73,094,652       58,543,087
                                                                              -------------    -------------

BUILDINGS, EQUIPMENT AND AUTOMOBILES, net                                        22,638,072       20,200,806
                                                                              -------------    -------------

OTHER ASSETS:
    Intangible assets, net                                                          518,773          469,765
    Employee advances                                                               195,721           75,212
    Deposits                                                                      5,159,178        4,230,063
                                                                              -------------    -------------
       Total other assets                                                         5,873,672        4,775,040
                                                                              -------------    -------------
              Total assets                                                    $ 101,606,396    $  83,518,933
                                                                              =============    =============

        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
        -------------------------------------------------------------------

CURRENT LIABILITIES:
    Accounts payable                                                          $   4,977,166    $   1,791,019
    Accounts payable - related party                                                217,452          209,199
    Advances from customers - related parties                                     1,402,850          673,349
    Other taxes payable                                                           1,069,025          623,113
    Accrued liabilities                                                             632,908          428,839
    Other payable - related parties                                                 775,641          945,274
    Distribution payable to minority interest shareholder                         3,023,211             --
    Current portion of long term debt                                                27,727          155,442
                                                                              -------------    -------------
       Total current liabilities                                                 12,125,980        4,826,235

NON-CURRENT LIABILITIES:
    Note payable - related party                                                 10,657,742       10,657,742
                                                                              -------------    -------------

              Total liabilities                                                  22,783,722       15,483,977
                                                                              -------------    -------------

MINORITY INTEREST                                                                 5,098,577        7,512,057
                                                                              -------------    -------------

SHAREHOLDERS' EQUITY:
    Common stock, $0.001 par value, 260,000,000 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                                                            55,401,139       42,200,940
    Accumulated other comprehensive (loss)                                          (11,168)         (12,167)
                                                                              -------------    -------------
       Total shareholders' equity                                                73,724,097       60,522,899
                                                                              -------------    -------------
              Total liabilities and shareholders' equity                      $ 101,606,396    $  83,518,933
                                                                              =============    =============
</TABLE>




The accompanying notes are an integral part of this statement.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                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, 2005 AND 2004

                                                   3 months ended June 30         6 months ended June 30
                                                ----------------------------   ----------------------------
                                                   2005            2004           2005            2004
                                                (Unaudited)     (Unaudited)    (Unaudited)     (Unaudited)
                                                ------------    ------------   ------------    ------------
<S>                                             <C>             <C>            <C>             <C>
REVENUE - RELATED PARTIES                       $ 17,307,659    $ 16,526,193   $ 31,603,658    $ 28,015,887

COST OF SALES                                      4,197,812       3,888,329      7,655,230       6,617,466
                                                ------------    ------------   ------------    ------------

GROSS PROFIT                                      13,109,847      12,637,864     23,948,428      21,398,421

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES      2,465,676       1,480,224      5,099,551       2,618,919
                                                ------------    ------------   ------------    ------------

INCOME FROM OPERATIONS                            10,644,171      11,157,640     18,848,877      18,779,502

OTHER INCOME (EXPENSE), NET                         (224,103)         13,946       (687,164)        317,703
                                                ------------    ------------   ------------    ------------

INCOME BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST                             10,420,068      11,171,586     18,161,713      19,097,205

PROVISION FOR INCOME TAXES                           829,185            --        1,445,445            --
                                                ------------    ------------   ------------    ------------

INCOME BEFORE MINORITY INTEREST                    9,590,883      11,171,586     16,716,268      19,097,205

MINORITY INTEREST                                  1,995,963       2,342,687      3,516,069       3,855,960
                                                ------------    ------------   ------------    ------------

NET INCOME                                         7,594,920       8,828,899     13,200,199      15,241,245

OTHER COMPREHENSIVE INCOME
     Foreign currency translation adjustment             999            --              999            --
                                                ------------    ------------   ------------    ------------

COMPREHENSIVE INCOME                            $  7,595,919    $  8,828,899   $ 13,201,198    $ 15,241,245
                                                ============    ============   ============    ============

Weighted average number of shares outstanding     71,333,586      71,998,586     71,333,586      71,998,586
                                                ============    ============   ============    ============

Earnings per share, basic and diluted           $       0.11    $       0.12   $       0.19    $       0.21
                                                ============    ============   ============    ============
</TABLE>




The accompanying notes are an integral part of this statement.


                                       5
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004


                                           Number         Common         Paid-in       Statutory
                                         of shares         stock         capital        Reserve
                                        ------------    ------------   ------------   ------------
                                        (Unaudited)     (Unaudited)    (Unaudited)    (Unaudited)
                                        ------------    ------------   ------------   ------------
<S>                                     <C>             <C>            <C>            <C>
BALANCE December 31, 2003, audited      $ 71,998,586    $     71,334   $  8,842,009   $  3,730,137

    Net income                                  --              --             --             --
    Receipt of stock receivable                 --              --             --             --

                                        ------------    ------------   ------------   ------------
BALANCE, June 30, 2004, unaudited         71,998,586          71,334      8,842,009      3,730,137

    Cancellation of shares                  (665,000)           --             --             --
    Net income
    Adjustment to statutory reserve             --              --             --        5,690,646
    Foreign currency translation loss           --              --             --             --

                                        ------------    ------------   ------------   ------------
BALANCE, December 31, 2004, audited       71,333,586          71,334      8,842,009      9,420,783

    Net income                                  --              --             --             --
    Foreign currency translation gain           --              --             --             --

                                        ------------    ------------   ------------   ------------
BALANCE, June 30, 2005, unaudited       $ 71,333,586    $     71,334   $  8,842,009   $  9,420,783
                                        ============    ============   ============   ============


                                          Retained          Stock         comprehensive
                                          earnings        receivable      income (loss)        Totals
                                        -------------    -------------    -------------    -------------
                                         (Unaudited)      (Unaudited)      (Unaudited)      (Unaudited)
                                        -------------    -------------    -------------    -------------

BALANCE December 31, 2003, audited      $  20,453,290    $      (6,650)   $      (3,928)   $  33,086,192

    Net income                             15,241,245             --               --         15,241,245
    Receipt of stock receivable                  --              6,650             --              6,650

                                        -------------    -------------    -------------    -------------
BALANCE, June 30, 2004, unaudited          35,694,535             --             (3,928)      48,334,087

    Cancellation of shares
    Net income                             12,197,051             --               --         12,197,051
    Adjustment to statutory reserve        (5,690,646)            --
    Foreign currency translation loss            --               --             (8,239)          (8,239)

                                        -------------    -------------    -------------    -------------
BALANCE, December 31, 2004, audited        42,200,940             --            (12,167)      60,522,899

    Net income                             13,200,199             --               --         13,200,199
    Foreign currency translation gain            --               --                999              999

                                        -------------    -------------    -------------    -------------
BALANCE, June 30, 2005, unaudited       $  55,401,139    $        --      $     (11,168)   $  73,724,097
                                        =============    =============    =============    =============
</TABLE>




The accompanying notes are an integral part of this statement.


                                       6
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

                                                                      2005            2004
                                                                  ------------    ------------
                                                                   Unaudited       Unaudited
                                                                  ------------    ------------
<S>                                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                    $ 13,200,199    $ 15,241,245
    Adjustments to reconcile net income  to cash
      provided by operating activities:
        Minority interest income                                     3,516,069       3,855,960
        Depreciation                                                   795,972         699,629
        Amortization                                                    43,104          23,882
        Loss on sale of equipment                                       75,863         120,714
      (Increase) decrease in assets:
        Accounts receivable - related party                            355,888      (5,953,748)
        Other receivables                                              201,073        (168,226)
        Other receivables and note receivable - related parties        937,234       3,069,541
        Inventories                                                 (4,298,872)     (1,782,929)
        Intangible assets                                              (85,087)           --
        Employee advances                                             (120,509)        654,814
        Deposits                                                      (929,115)        166,649
      Increase (decrease) in liabilities:
        Accounts payable                                             3,186,147         397,748
        Accounts payable - related party                                 8,253        (758,570)
        Advances from customers - related parties                      729,501      (5,138,892)
        Other taxes payable                                            445,912         105,902
        Accrued liabilities                                            204,069         (43,465)
        Other payables - related parties                              (169,633)       (342,362)
                                                                  ------------    ------------
          Net cash provided by operating activities                 18,096,068      10,147,892
                                                                  ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Collections on note receivable - related parties                      --        12,100,000
    Decrease in long-term investment                                      --       (19,204,111)
    Proceeds from sales of equipment                                    49,466          66,388
    Purchase of equipment                                           (3,365,592)       (941,835)
                                                                  ------------    ------------
          Net cash used in investing activities                     (3,316,126)     (7,979,558)
                                                                  ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from receipt of stock receivable                             --             6,650
    Payments, net of borrowings on short term notes payable           (127,715)     (3,267,000)
    Payments on long term debt                                            --          (127,976)
    Payments to minority interest shareholder in subsidiary         (2,906,338)     (2,191,255)
                                                                  ------------    ------------
          Net cash used in financing activities                     (3,034,053)     (5,579,581)
                                                                  ------------    ------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    999            --
                                                                  ------------    ------------

INCREASE (DECREASE) IN CASH                                         11,746,888      (3,411,247)

CASH, beginning of period                                           39,243,872      12,725,043
                                                                  ------------    ------------

CASH, end of period                                               $ 50,990,760    $  9,313,796
                                                                  ============    ============
</TABLE>




The accompanying notes are an integral part of this statement.


                                       7
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Background

Tiens Biotech Group (USA),  Inc. (the "Company" or "Tiens "),  formerly known as
Strategika,  Inc.  ("Strategika"),  was  incorporated  on July 13, 1990 as Super
Shops,  Inc.  in the State of  Michigan.  In October  2000,  Super  Shops,  Inc.
reincorporated  in Delaware and changed its name to MIA Acquisition  Corp.,  and
subsequently to Strategika in February 2002.

In August 2003,  Strategika and Tianshi  International,  LI Jinyuan, JIAO Wenjun
and  YAN  Yupeng,  all  Chinese  Nationals  who  were  stockholders  of  Tianshi
International  (the  "Tianshi  Stockholders")  entered an Agreement  and Plan of
Reorganization  (the  "Agreement"),  which was effective  September 9, 2003 (the
"Effective  Date").  Pursuant to the  Agreement,  Strategika  received  from the
Tianshi  Stockholders all of the issued and outstanding  common stock of Tianshi
International,  in exchange for the issuance by Strategika of 68,495,000  shares
of its common stock to the Tianshi Stockholders,  representing 95% of the issued
and outstanding  common stock of Strategika,  giving effect to the issuance.  As
additional  consideration,  Rene  Larrave,  the sole  officer  and  director  of
Strategika prior to the reorganization, contributed all of his Strategika common
stock to Strategika without additional consideration.

The  purchase of Tianshi  International  and the issuance of  Strategika  common
stock  has  been  accounted  for  as  a  reverse  acquisition   presented  as  a
recapitalization,  except  no  goodwill  or other  intangible  assets  have been
recorded.  For  accounting  purposes,  the  original  Tianshi  International  is
considered the acquirer in the reverse  acquisition.  The  historical  financial
statements are those of the original Tianshi International.

Tianshi  International was incorporated  March 24, 2003, in the territory of the
British Virgin Islands. On June 18, 2003, Tianshi International  acquired 80% of
Tianjin Tianshi Biological Development Co., Ltd ("Biological").  Biological is a
Chinese-foreign  equity joint venture company  established under the laws of the
PRC on March 27, 1997.  Biological is subject to the Law on Sino Foreign  Equity
Joint Ventures ("Joint Venture Law"), its  implementation  regulations and other
related rules and regulations  ("Joint Venture  Regulations").  Biological is an
independent  legal  entity  having the legal  structure  of a limited  liability
company, similar to a regular corporation with limited liability organized under
state laws in the United  States of  America.  The  Articles of  Association  of
Biological  provides for a 50 year term with registered  capital of $10,000,000.
As an approved Chinese-foreign equity joint venture, Biological receives special
income tax incentive  treatment from both the local (Wuqing  County) and central
governments in China.  The original  partners in this joint venture were Tianshi
Hong Kong International Development Co., Ltd. ("Tianshi Hong Kong") incorporated
in Hong Kong which  owned 80% of the joint  venture,  and  Tianshi  Engineering,
which owned the remaining 20% of Biological.  Tianshi Hong Kong is owned 100% by
LI Jinyuan. Tianshi Engineering is 49% owned by Ms. Li Baolan and 51% by Tianshi
Group.  In June  2003,  Tianshi  Engineering  transferred  its 20%  interest  in
Biological  for  no  consideration  to  Tianshi   Pharmaceuticals   and  Tianshi
International  acquired  80%  of  Biological  from  Tianshi  Hong  Kong  for  no
consideration. This transfer was made for no consideration,  since LI Jinyuan is
president and sole shareholder of both companies.




                                       8
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Background, (continued)

As result of the above transactions, Tianshi International is now a wholly owned
subsidiary of the Company and Biological  remained as a 80% owned  subsidiary of
Tianshi  International.  The  summary of Tiens'  organization  is  described  as
follows:

Tiens is owned 4.91% by public stockholders,  2.8% by officers and 92.29% by Mr.
Li Jinyuan. Tiens USA owns 100% of Tianshi International.  Tianshi International
owns 80% of Biological and 99.4% of Tiens Yihai.

Tianshi  Group is owned 90% by Mr. Li Jinyuan  and 10% by his  daughter,  Ms. Li
Baolan. Tianshi Group owns 87.66% of Tianshi  Pharmaceuticals and 51% of Tianshi
Engineering.  Tianshi  Pharmaceuticals  owns 20% of Biological and 0.6% of Tiens
Yihai.

Ms.  Li  Baolan   owns  49%  of  Tianshi   Engineering   and  7.29%  of  Tianshi
Pharmaceuticals.

Tianjin Feishi Transportation Co., Ltd. owns 5.05% of Tianshi Pharmaceuticals.

Note 2 - Summary of significant accounting policies

The reporting entity
--------------------

The financial  statements in the Strategika  filings became those of Tiens.  The
consolidated  financial  statements  of  Tiens  reflect  the  activities  of the
following Company subsidiaries:


                                                                                     Pecentage
                         Subsidiary                                                 Of Ownership
------------------------------------------------------------------------------   ------------------
<S>                                                                              <C>
Tianshi International Holdings Group, Ltd           British Virgin Islands                  100.0%
Tianjin Tianshi Biological Development Co., Ltd     P.R.C.                                   80.0%
Tiens Yihai Co. Ltd.                                P.R.C.                                   99.4%
</TABLE>


Tianshi  International is a corporation  organized under the laws of the British
Virgin  Islands.  Tianshi  International  is a  holding  company  for  Tiens 80%
investment  in  Biological  and its 99.4%  investment  in Tiens Yihai Co.,  Ltd.
("Tiens Yihai").

Biological is a foreign investment joint venture which is incorporated under the
laws of PRC.  Biological is classified as a Foreign Investment  Enterprise (FIE)
in the PRC and is  subject to the FIE laws of the PRC.  Biological  is a Chinese
registered limited liability company with a legal structure similar to a regular
corporation and a limited  liability  company  organized under state laws in the
United  States of America.  The Articles of  Association  provides for a 50 year
term beginning on March 27, 1998 with registered capital of $10,000,000.




                                       9
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies, (continued)

The reporting entity, (continued)
---------------------------------

Tiens Yihai Co. Ltd. (Tiens Yihai) is a foreign  investment  joint venture which
is  incorporated  under the laws of PRC.  Tiens Yihai is classified as a Foreign
Investment  Enterprise  (FIE) in the PRC and is  subject  to the FIE laws of the
PRC. Tiens Yihai is a Chinese  registered limited liability company with a legal
structure  similar  to a regular  corporation  and a limited  liability  company
organized  under  state laws in the United  States of America.  The  Articles of
Association  provides  for a 50  year  term  beginning  on  May  27,  2004  with
registered capital of $200,000,000.

Tianshi  International  owns 80% of its  subsidiary  Biological and 99.4% of its
subsidiary  Tiens Yihai.  The remaining 20% and 0.6%  respectively  are owned by
Tianshi Pharmaceuticals whose majority shareholder is Tianshi Group.

Nature of operations
--------------------

The Company through its subsidiaries is primarily  engaged in the  manufacturing
and marketing of wellness products,  nutrition  supplement products and personal
care  products.  The  Company  sells its  products  to a sales  force of related
distributors  who in turn sell to  independent  distributors  and  managers  who
resell them to other  distributors or public consumers.  The Company markets its
products in China, South Korea, Japan,  India,  Thailand,  Malaysia,  Indonesia,
Canada, Peru, Brazil, Russia, Kazakhstan, Belarus, Mongolia, Finland, Lithuania,
Britain,  Germany, France, Romania, Ukraine,  Portugal,  Turkey, Italy, Nigeria,
Ghana, South Africa and Australia.

Revenue recognition
-------------------

The Company recognizes revenue from domestic sales by distributors in China, net
of sales  commissions  and  taxes  only  when the  related  Chinese  distributor
recognizes sales of the Company's  products to unaffiliated  third parties.  The
Company  recognizes  revenue  from  international  sales  (non-Chinese)  to both
affiliated and unaffiliated third parties, net of commissions and taxes as goods
are shipped and clear review by the international customs department.

The Company is generally not contractually obligated to accept returns. However,
on a case by case  negotiated  basis,  the Company  permits  customers to return
their products.  In accordance with SFAS No. 48, "Revenue  Recognition  when the
Right of Return  Exists",  revenue is recorded net of an allowance for estimated
returns.  Such  reserves are based upon  management's  evaluation  of historical
experience and estimated costs. The amount of the reserves  ultimately  required
could  differ  materially  in  the  near  term  from  amounts  included  in  the
accompanying consolidated financial statements.

In 2005 and  2004,  Tianshi  Engineering,  a related  company,  owned all of the
related party  distributors  which sell the Company's  products  domestically in
China.




                                       10
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies, (continued)

Foreign currency translation
----------------------------

The reporting  currency of the Company is the US dollar.  Biological's and Tiens
Yihai's financial records are maintained and the statutory financial  statements
are stated in its local currency,  Renminbi (RMB), as their functional currency.
Results of operations  and cash flow are  translated at average  exchange  rates
during the period,  and assets and  liabilities  are  translated  at the unified
exchange  rate  as  quoted  by the  People's  Bank of  China  at the end of each
reporting period.

This quotation of the exchange rates does not imply free  convertibility  of RMB
to other foreign currencies.  All foreign exchange transactions continue to take
place either through the People's Bank of China or other banks authorized to buy
and sell foreign  currencies at the exchange rate quoted by the People's Bank of
China.

Approval of foreign currency payments by the Bank of China or other institutions
requires submitting a payment application form together with invoices,  shipping
documents and signed contracts.

Translation  adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and  amounted to  $(11,168)  and  $(12,167) as of June 30, 2005 and December 31,
2004, respectively.

Transaction  gains and losses  that arise from  exchange  rate  fluctuations  on
transactions  denominated in a currency  other than the functional  currency are
included  in the  results of  operations  as  incurred.  These  amounts  are not
material to the consolidated financial statements.

Income taxes
------------

The Company has adopted  Statement of Financial  Accounting  Standards  No. 109,
"Accounting  for Income Taxes" (SFAS 109).  SFAS 109 requires the recognition of
deferred  income  tax  liabilities  and  assets  for  the  expected  future  tax
consequences  of temporary  differences  between  income tax basis and financial
reporting basis of assets and liabilities. Provision for income taxes consist of
taxes  currently due plus deferred  taxes.  There are no deferred tax amounts at
June 30, 2005 and 2004.

The charge for  taxation is based on the  results  for the year as adjusted  for
items, which are non-assessable or disallowed.  It is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.

Deferred  tax is  accounted  for using the  balance  sheet  liability  method in
respect of temporary  differences  arising from differences between the carrying
amount  of  assets  and   liabilities  in  the  financial   statements  and  the
corresponding tax basis used in the computation of assessable tax profit.

In principle,  deferred tax liabilities are recognized for all taxable temporary
differences,  and  deferred tax assets are  recognized  to the extent that it is
probably  that  taxable  profit  will  be  available  against  which  deductible
temporary differences can be utilized.




                                       11
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies, (continued)

Income taxes, (continued)
-------------------------

Deferred  tax is  calculated  at the tax rates that are expected to apply to the
period when the asset is realized or the  liability is settled.  Deferred tax is
charged or  credited  in the income  statement,  except when it related to items
credited or charged  directly to equity,  in which case the deferred tax is also
dealt with in equity.

Deferred tax assets and  liabilities are offset when they relate to income taxes
levied by the same  taxation  authority  and the  Company  intends to settle its
current tax assets and liabilities on a net basis.

The Company is subject to income taxes on an entity  basis on income  arising in
or derived  from the tax  jurisdiction  in which each entity is  domiciled.  The
Company's  subsidiary,  Tianshi  International,  was incorporated in the British
Virgin Islands and is not liable for income taxes.

The Company's  subsidiaries,  Biological and Tiens Yihai, are Sino-Foreign Joint
Ventures  incorporated in the People's Republic of China. Pursuant to the income
tax  laws of the PRC  concerning  Foreign  Investment  Enterprises  and  foreign
Enterprises   and  various  local  income  tax  laws  (the  "Income  Tax  Law"),
Sino-foreign joint venture enterprises generally are subject to income tax at an
effective  rate of 33% (30% state income  taxes plus 3% local  income  taxes) on
income as reported in their statutory financial statements unless the enterprise
is located in  specially-designated  regions or cities for which more  favorable
effective rates apply.

Biological  is located in Special  Economic  Zone and is subject to the  special
reduced income tax rate of 15%. Pursuant to the approval of the relevant PRC tax
authorities,  Biological  is fully  exempt  from PRC income  taxes for two years
starting  from the year  profits are first made,  followed by a 7.5% reduced tax
rate for the next three years.

Prior to the year ended December 31, 2002, Biological suffered operating losses.
Biological  started  generating  taxable  profits in the year ended December 31,
2003.  Effective  January 1, 2005,  the two-year 100% exemption for income taxes
expired for  Biological and it became subject to income tax at a reduced rate of
7.5%.

Tiens Yihai is located in a Special  Industry Zone and is subject to the special
reduced  income tax rate of 15%.  Pursuant to the approval of the relevant local
Chinese tax  authorities,  Tiens Yihai is fully exempt from PRC income taxes for
two years  starting  from the year  profits  are first  made,  followed by a 15%
reduced tax rate for the next three years.  In  addition,  in order to encourage
Tiens Yihai doing  business in the special  industry zone, the local Chinese tax
authorities agreed to refund 50% of the total income tax after the five-year tax
break.

Tiens  Yihai  was  established  for the  purposes  of being in the  business  of
research and development,  production and marketing of healthcare, home care and
personal care products. As of June 30, 2005, Tiens Yihai is in the developmental
stage of its organization and did not have any operating income.




                                       12
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies, (continued)

Income taxes, (continued)
-------------------------

The provision for income taxes at June 30 consisted of the following:



                                             2005           2004
                                         ------------   ------------
Provision for China Income Tax           $  1,445,445   $       --
                                         ------------   ------------
      Total provision for income taxes   $  1,445,445   $       --
                                         ============   ============



The  following  table  reconciles  the U.S.  statutory  rates  to the  Company's
effective tax rate:


                                                2005       2004
                                              --------   --------
U.S. Statutory rates                              34.0 %     34.0 %
Foreign income not recoginized in USA            (34.0)     (34.0)
China income taxes                                 7.5       --
                                              --------   --------
      Total provision for income taxes             7.5 %     --   %
                                              ========   ========


Plant and equipment, net
------------------------

Plant  and  equipment  are  stated  at  cost  less   accumulated   depreciation.
Depreciation  is computed  using the  straight-line  method  over the  estimated
useful lives of the assets.  Depreciation  expense for the six months ended June
30, 2005 and 2004 amounted to $795,972 and $699,629, respectively.

Estimated useful lives of the assets are as follows:


                                                           Estimated Useful Life
                                                           ---------------------
Buildings                                                        20 years
Machinery and equipment                                          10 years
Computer, office equipment and furniture                          5 years
Automobiles                                                       5 years


Construction  in progress  represents the costs incurred in connection  with the
construction of buildings or new additions to the Company's plant facilities. No
depreciation  is provided for  construction  in progress  until such time as the
relevant  assets  are  completed  and are  ready  for their  intended  use.  The
capitalization of interest  associated with the cost in construction in progress
is discussed in note 2, Capitalized interest.

The cost and  related  accumulated  depreciation  of  assets  sold or  otherwise
retired are eliminated from the accounts and any gain or loss is included in the
consolidated statements of operations.  Maintenance,  repairs and minor renewals
are charged directly to expenses as incurred.  Major additions and betterment to
buildings and equipment are capitalized.




                                       13
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies, (continued)

Plant and equipment, net, (continued)
-------------------------------------

Long-term  assets of the  Company  are  reviewed  annually  as to whether  their
carrying value has become impaired.  The Company considers assets to be impaired
if the  carrying  value  exceeds the future  projected  cash flows from  related
operations.  The  Company  also  re-evaluates  the  periods of  amortization  to
determine whether subsequent events and circumstances  warrant revised estimates
of useful  lives.  As of June 30, 2005,  the Company  expects these assets to be
fully recoverable.

Plant and equipment consist of the following at:


                                    June 30, 2005     December 31, 2004
                                  -----------------   -----------------
Buildings and improvements        $       8,290,054   $       7,962,799
Office facilities                           270,874             162,522
Computer equipment and software           1,201,760             782,846
Equipment                                 6,318,807           6,514,151
Vehicles                                  2,721,104           2,771,364
Construction in progress                  8,569,592           6,023,223
                                  -----------------   -----------------
              Total                      27,372,192          24,216,905
Less accumulated depreciation             4,734,120           4,016,099
                                  -----------------   -----------------
              Total               $      22,638,072         $20,200,806
                                  =================   =================


Cash and concentration of risk
------------------------------


Cash  includes  cash on hand and demand  deposits  in accounts  maintained  with
state-owned  banks  within  the  People's  Republic  of  China.  Total  cash  in
state-owned banks at June 30, 2005 and December 31, 2004 amounted to $50,990,760
and $39,243,872, respectively of which no deposits are covered by insurance. The
Company has not  experienced  any losses in such accounts and believes it is not
exposed to any risks on its cash in bank accounts.


Accounts receivable - related parties
-------------------------------------

The Company's trade accounts  receivables  are 100% due from related  companies.
Management believes that the accounts are fully collectible as these amounts are
being collected  throughout the year.  However,  the Company records a provision
for accounts  receivable trade which ranges from 0.3% to 0.5% of the outstanding
accounts  receivable  balance in accordance with generally  accepted  accounting
principles in the PRC.




                                       14
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies, (continued)

Use of estimates
----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  of the United States of America  requires  management to
make estimates and assumptions  that affect the amounts reported in the combined
financial  statements  and  accompanying  notes.  Management  believes  that the
estimates  utilized in preparing its financial  statements  are  reasonable  and
prudent. Actual results could differ from these estimates.

Reclassification
----------------

Certain  prior year  amounts  have been  reclassified  to conform to the current
presentation.

Note 3 - Consolidated financial statements and condensed footnotes

The interim condensed  consolidated  financial  statements presented herein have
been prepared by the Company and include the  unaudited  accounts of the Company
and its subsidiaries.  All significant  inter-company  accounts and transactions
have been eliminated in the consolidation.

These  condensed   consolidated  financial  statements  have  been  prepared  in
accordance with generally  accepted  accounting  principles in the United States
for interim financial  information and the instructions to Form 10-Q and Article
10 of Regulation  S-X.  Certain  information and footnote  disclosures  normally
included in financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted.  Management of the Company
believes the disclosures made are adequate to make the information presented not
misleading.  The condensed  consolidated  financial statements should be read in
conjunction  with  Tiens'  audited  financial  statements  for the  years  ended
December  31, 2004 and 2003 and notes  thereto  included in Tiens' Form  10-KSB,
dated March 31, 2005.

In the opinion of management,  the unaudited  condensed  consolidated  financial
statements   reflect  all  adjustments  (which  include  only  normal  recurring
adjustments)  necessary to present fairly the financial  position of the Company
as of June 30, 2005 and the results of operations  for the six months ended June
30, 2005 and 2004, respectively.  Interim results are not necessarily indicative
of full year  performance  because  of the  impact of  seasonal  and  short-term
variations.

Note 4 - Inventories

Inventories  are  stated  at the lower of cost or  market  using  the  first-in,
first-out basis and consist of the following:


                          June 30,     December 31,
                            2005           2004
                        ------------   ------------
                        (Unaudited)    (Audited)
                        ------------   ------------
Raw materials           $  3,852,461   $  2,246,493
Work-in-progress              97,983        284,458
Finished goods             4,915,846      2,036,467
                        ------------   ------------
                        $  8,866,290   $  4,567,418
                        ============   ============


                                       15
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 5 - Deposits-non current

The Company as of June 30, 2005 and December 31, 2004 had  outstanding  deposits
of $5,159,178  and  $4,230,063,  respectively.  The Company has deposited  $3.59
million with a local government agency to acquire the land use right for land in
Shanghai in connection with its joint venture project  described in note 10. The
land use right is for a term of 50 years and as of June 30,  2005,  the  Company
has not  legally  acquired  the right from the  government.  The  deposit is non
refundable.  The balance  represents  deposits  with  vendors for  purchases  of
equipment and construction in progress.

Note 6 - Supplemental disclosure of cash flow information

Income  taxes for the six months ended June 30, 2005  amounted to  $577,708.  No
income  taxes were paid for the six months ended June 30,  2004.  Interest  paid
amounted to $3,722 and $244,433 for the six months ended June 30, 2005 and 2004,
respectively.

Note 7 - Earnings per share

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings per Share" (SFAS 128). SFAS 128 requires the  presentation of earnings
per share (EPS) as Basic EPS and Diluted EPS. There are no  differences  between
Basic and Diluted EPS for the periods ended June 30, 2005 and 2004.

The weighted average number of shares used to calculate EPS for the period ended
June  30,  2005  (71,333,586)  and 2004  (71,998,586)  reflect  only the  shares
outstanding for those periods.

On July 31, 2004, the board of directors of the Company accepted the resignation
of one of the members of the Board. The resigning  director's  665,000 shares of
common  stock of the Company  were  returned to the  Company  and  cancelled  on
September 14, 2004.

Note 8 - Minority interest

Minority  interest  represents  the  outside   shareholders'  20%  ownership  of
Biological and 0.6% ownership of Tiens Yihai.












                                       16
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9 - Related party transactions

The  following  is a  description  of  the  various  individuals  and  companies
discussed in the footnotes and their relationship to the Company.

Tianshi  International  Holdings  Group Limited - British  Virgin Island Company
         owned 100% by Tiens Biotech Group (USA), Inc.

Li Jinyuan - individual - President and majority shareholder

Li Baolan - individual - daughter of Li Jinyuan

Tianjin Tianshi  Biological  Development  Co., LTD - Chinese joint venture which
         Tianshi International Holdings Group Limited owns 80%

Tianshi Hong Kong  International  Development  Co.,  Limited - Hong Kong Company
         owned 100% by Li Jinyuan

Tianjin Tianshi  Biological  Engineering Co., LTD - Chinese company owned 49% by
         Li Baolan and 51% by Tianjing Tianshi Group Co., Ltd.

Tianjin  Tianshi  Pharmaceuticals  Co., LTD - a Chinese company and the majority
         shareholder is Tianjin Tianshi Group Co., Ltd.

Tianjin Tianshi Group Co., Ltd. - owned 90% by Li Jinyuan and 10% by Li Baolan



Sales
-----

The  Company  sells  products  to  distributors  that are related to the Company
through common ownership. The related party distributors in turn market and sell
the Company's products to independent distributors or end users of the products.
The related  party  distributors  are solely  responsible  for all marketing and
payments of sales commissions to independent distributors.

Related party sales  amounted to  $31,603,658  and  $28,015,887  for the periods
ended June 30, 2005 and 2004 which represent 100% of total sales for the periods
then ended. Related party accounts receivable related to these sales amounted to
$5,702,133   and  $6,058,021  as  at  June  30,  2005  and  December  31,  2004,
respectively,  net of an allowance for doubtful accounts of $30,442 and $30,442,
respectively.




                                       17
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9 - Related party transactions, (continued)

Other receivables and note receivable
-------------------------------------

The Company  through its  Chinese  joint  venture,  Tianjin  Tianshi  Biological
Development  Co.,  Ltd.,  is  owed  additional   amounts   classified  as  other
receivables from various related parties  totaling  $7,207,506 and $8,144,740 as
of June 30, 2005 and  December  31,  2004,  respectively  and  consisted  of the
following:


                                                    June 30,      December 31,
                                                      2005           2004
                                                  ------------   ------------
Tianjin Juchao Commercial and Trading Co., Ltd    $    311,160   $    311,160
Tianjin Tianshi Biological Engineering Co., LTD      4,012,688      1,710,446
Tianjin Tianshi Pharmaceuticals Co., LTD                  --        2,590,630
Tianjin Tianshi Group Co., Ltd                       2,883,658      3,532,504
                                                  ------------   ------------
            Total                                 $  7,207,506   $  8,144,740
                                                  ============   ============


These  receivables are generated by the Company making various cash advances and
short term loans and the  allocation  of various  expenses  to related  parties.
These are recurring transactions.  The Company does not charge interest on these
receivables.

Accounts payable

Accounts  payable due to related  parties  amounted to $217,452  and $209,199 at
June 30, 2005 and December 31, 2004, respectively.  These amounts were generated
from  the   purchases  of  raw   materials,   rent  expense  and  the  Company's
transportation costs.

Other payables
--------------

The Company has amounts  classified  as other  payables  due to related  parties
which  amounted to $775,641  and  $945,274 as of June 30, 2005 and  December 31,
2004, respectively.  These amounts arose from cash advances from related parties
such as  management  fees due to related  parties  and  various  non-operational
transactions incurred with related parties.

The company  borrowed  $300,000 from a related  company during the quarter.  The
amount  borrowed  is  non-interest  bearing  and was due on June 25,  2005.  The
company has  extended  the due date and expects to pay back by the end of August
when receiving the dividend from Biological.




                                       18
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9 - Related party transactions, (continued)

Note payable
------------

On September 10, 2004, Tianshi  International entered into a loan agreement with
Tianyuan Capital  Development Corp. Ltd.  ("Tianyuan  Capital") to borrow $10.65
million in order to fund their capital  contribution  due to Tiens Yihai. Mr. Li
Jin Yuan, the president and major  shareholder of the Company,  is a director of
Tiens Yihai and a director of Tianyuan Capital.

The  principal  of  the  loan  will  be  paid  in  ten  consecutive   semiannual
installments of $1,065,742 on the last day of each June and December  commencing
December 31, 2006, and ending December 31, 2011. The first interest payment will
be paid on December 31, 2004 at an annual interest rate of 5%. Interest  expense
for the six  months  ended June 30,  2005  amounted  to  $266,433.  No  interest
payments  have been made as of June 30,  2005 and  accrued  interest  payable to
Tianyuan  Capital  amounted  $429,959 and $163,316 on June 30, 2005 and December
31, 2004,  respectively.  The principal  payment  requirements for the next five
years are as follows:


       Ending
      June 30,                        Amount
---------------------            -----------------
        2006                     $           --
        2007                            1,065,000
        2008                            2,130,000
        2009                            2,130,000
        2010                            2,130,000
     Thereafter                         3,202,742


Rent expense
------------

On June 30,  2003,  the Company  entered  into a written  lease  agreement  with
Tianshi  Group to pay  annual  rent on  these  facilities  at 1% of total  gross
revenues.  The term of this agreement is for five years commencing on January 1,
2003.

In addition,  the Company is obligated to pay insurance,  maintenance  and other
expenses  related to the premises.  The total amount paid on this lease amounted
to  $316,037  and  $287,618  for the six months  ended  June 30,  2005 and 2004,
respectively.




                                      19
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 10 - Investment in Tiens Yihai Co. Ltd.

On April 20, 2004, Tianshi  International  entered a joint venture contract (the
"Joint Venture Project") with Tianshi  Pharmaceuticals to establish Tiens Yihai.
On September 15, 2004, the board of directors of Tianshi International  ratified
the Joint Venture Project. Tiens Yihai is located in Shanghai, P.R.C., and is in
the  business  of  research  and   development,   production  and  marketing  of
healthcare, home care and personal care products.

In the footnotes of the  Company's  financial  statements  for the quarter ended
June 30, 2004, we described  this  investment as Tiens Ocean Going Co., Ltd. Due
to the translation from Chinese to English, the Company has officially confirmed
that the English name is Tiens Yihai Co., Ltd.

The total amount to be invested in Tiens Yihai will amount to $400  million,  of
which $200  million  will be  registered  capital.  Tianshi  International  will
contribute $198.8 million,  representing  approximately  99.4% of the registered
capital of Tiens Yihai, and Tianshi Pharmaceuticals will contribute $1.2 million
representing   0.6%  of  the   registered   capital  of  Tiens  Yihai.   Tianshi
International will secure additional financing for the remaining $200 million.

A total  of 15% or  approximately  $30,000,000,  of the  registered  capital  is
required to be  contributed by the joint venture  partners,  within three months
after the business  license has been issued.  The remaining  registered  capital
amounts are required to be  contributed  by each joint  venture  partner  within
three years of the issuance of the business  license or May 27, 2004. As of June
30, 2005,  Tianshi  International has made its required capital  contribution in
the amount of $29,861,853.











                                       20
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11 - Minority interest distributions

Minority  interest  represents  the  outside   shareholders'  20%  ownership  of
Biological  and 0.6%  ownership  of Tiens  Yihai.  The  board  of  directors  of
Biological has authorized the following  distributions to their  shareholders in
direct proportion to their ownership percentages.

                                            TIANSHI                      MINORITY
           Date                          INTERNATIONAL                  SHAREHOLDER                      Totals
----------------------------           ------------------         -----------------------         -------------------
<S>                                    <C>                        <C>                             <C>
March 22, 2004                  RMB           82,430,670    RMB               20,607,668    RMB          103,038,338
June 30, 2004                                 80,525,905                      20,131,476                 100,657,381
December 31, 2004                            100,000,000                      25,000,000                 125,000,000
                                       ------------------                                         -------------------
Total                           RMB          262,956,575    RMB               65,739,144    RMB          328,695,719
                                       ==================         =======================         ===================

Total                           USD           31,817,746    USD                7,954,436    USD           39,772,182
                                       ==================         =======================         ===================


June 30, 2005                   RMB          195,985,153    RMB               48,996,288    RMB          244,981,441
                                       ------------------         -----------------------         -------------------

Total                           USD           23,714,204    USD                5,928,551    USD           29,642,754
                                       ==================         =======================         ===================
</TABLE>


Prior to June 30, 2005, the amounts paid to Tianshi International have been used
to invest in its  investment  Tiens Yihai Co.,  Ltd  described in note 10. As of
December 31, 2004,  the minority  shareholder of Biological had been fully paid.
Dividends  were declared  during June 2005.  The  distribution  in the amount of
$23,714,204 to Tianshi  International has not been paid and it was eliminated in
the consolidation. As of June 30, 2005, the distribution payable to the minority
shareholder of Biological amounted to $3,023,211.











                                       21
<PAGE>

Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


FORWARD-LOOKING STATEMENTS:

The following  discussion  of the financial  condition and results of operations
should be read in conjunction  with the  consolidated  financial  statements and
related  notes  thereto.  The  following  discussion  contains   forward-looking
statements.  Tiens  Biotech  Group (USA),  Inc. is referred to herein as "we" or
"our." The words or phrases "would be," "will allow," "expect to", "intends to,"
"will likely  result,"  "are expected to," "will  continue,"  "is  anticipated,"
"estimate,"   "project,"  or  similar   expressions  are  intended  to  identify
"forward-looking  statements".  Such  statements  include those  concerning  our
expected  financial  performance,  our corporate strategy and operational plans.
Actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of risks and  uncertainties,
including:  (a) those  risks  and  uncertainties  related  to  general  economic
conditions in China,  including regulatory factors that may affect such economic
conditions; (b) whether we are able to manage our planned growth efficiently and
operate profitable operations,  including whether our management will be able to
identify,  hire, train,  retain,  motivate and manage required personnel or that
management  will  be  able to  successfully  manage  and  exploit  existing  and
potential market  opportunities;  (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations; and (d) whether
we are  able to  successfully  fulfill  our  requirements  for  cash  which  are
explained below under "Liquidity and Capital Resources".  Statements made herein
are as of the date of the  filing  of this Form  10-Q  with the  Securities  and
Exchange Commission and should not be relied upon as of any subsequent date.

Unless  otherwise  required  by  applicable  law,  we do not  undertake,  and we
specifically disclaim any obligation,  to update any forward-looking  statements
to reflect  occurrences,  developments,  unanticipated  events or  circumstances
after the date of such statement.

OVERVIEW

Tiens Biotech Group (USA),  Inc. (the "Company" or "Tiens USA"),  formerly known
as Strategika,  Inc. ("Strategika"),  was incorporated on July 13, 1990 as Super
Shops,  Inc.  in the State of  Michigan.  In October  2000,  Super  Shops,  Inc.
reincorporated  in Delaware and changed its name to MIA Acquisition  Corp.,  and
subsequently to Strategika in February 2002.



                                       22
<PAGE>

Tiens USA conducts its main business  operations  through its subsidiary Tianjin
Tianshi  Biological  Development  Co.,  Ltd.  ("Biological"),  which is based in
Tianjin,  People's Republic of China (PRC).  Biological primarily engages in the
research,  development,  manufacturing,  and  marketing of nutrition  supplement
products,  including  wellness  products and dietary  supplement  products,  and
personal care products.  Tiens USA derives its revenues principally from product
sales  to  affiliated  companies  in China  and  outside  of  China.  Since  its
establishment, Biological has developed and produced seven major product series,
of which six are comprised of nutrition supplement products,  and the seventh is
comprised of personal care products. Biological 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.  Biological has obtained all required certificates and approvals from
government regulatory agencies to manufacture its products in China, including a
Certificate  of Good  Manufacturing  Practices  (GMP)  issued by the State  Drug
Administration  and a Sanitary  Certificate for food maufacturers in China ("Jin
(Wuqing)  Wei Shi Zheng Zi" 2004,  No.0049)  and a  Sanitary  Certification  for
wellness products  manufacturers  ("Jin Wei Jian Zheng Zi" 2004, No.0006) issued
by the PRC Ministry of Health.  In addition,  all of Biological's  products have
been  certified by appropriate  government  regulatory  agencies,  including the
State  Food  and  Drug  Administration   (SFDA)  and  the  Bureau  of  Technical
Supervision, for manufacture and sale in China.

In China,  Biological  conducts the marketing and sales of its products  through
its  affiliated  company,  Tianjin  Tianshi  Biological  Engineering  Co.,  Ltd.
("Tianshi  Engineering"),  a company  incorporated in China. Tianshi Engineering
markets  and sells  Biological's  products  in China  through  its  twenty-three
branches,  representative offices and chain stores, and nine domestic affiliated
companies.  Six of the  nine  domestic  affiliated  companies  are 51%  owned by
Tianshi Engineering and 49% by Li Baolan, the daughter of Mr. Li Jinyuan,  Tiens
USA's  Chief  Executive  Officer  and  President.  The  other  three  affiliated
companies  are  owned by Ms. Li  Baolan  and Mr.  Li's  other  immediate  family
members.  Outside of China,  Biological  sells its products through an extensive
direct sales force, or multi-level marketing sales force, of overseas affiliates
and independent  distributors who use the products themselves and/or resell them
to  other   distributors   or  consumers.   These   affiliates  are  located  in
approximately  90  countries,  including  the United  States,  India,  Malaysia,
Indonesia,   Canada,  Peru,  Brazil,  Russia,  Kazakhstan,   Mongolia,  Finland,
Lithuania,  Britain, Germany, France, Romania, Ukraine, Portugal, Turkey, Italy,
Nigeria, Ghana, South Africa and Australia. Our direct sales marketing scheme is
subject to governmental regulation in each of these countries.

In  April  2004,  Tianshi  International  Holdings  Group  Ltd.,  a  corporation
organized   under   the   laws  of  the   British   Virgin   Islands   ("Tianshi
International"),  entered into a joint  venture  contract  with Tianjin  Tianshi
Pharmaceuticals  Co., Ltd.  ("Tianshi  Pharmaceuticals"),  a Chinese  company in
which the majority  shareholder  is Tianjin  Tianshi Group Co.,  Ltd.  ("Tianshi
Group"),  a company  organized  under the PRC laws, to establish Tiens Yihai Co.
Ltd.,  a   Chinese-Foreign   Equity  Joint  Venture  ("Tiens  Yihai").   Tianshi
International is a wholly-owned subsidiary of Tiens USA and Tianshi Group is 90%
owned by Mr. Li and 10% owned by Mr. Li's daughter,  Ms. Li Baolan. On September



                                       23
<PAGE>

15, 2004, the Board of Directors of Tianshi International  ratified and approved
the Tiens Yihai  Joint  Venture  Project.  Tiens Yihai is 99.4% owned by Tianshi
International and 0.6% owned by Tianshi Pharmaceuticals. Tiens Yihai, located in
Shanghai,   P.R.C.,   was  established  to  conduct  research  and  development,
production  and  marketing  of  nutrition  supplement  products,  home  care and
personal care  products.  As of June 30, 2005,  Tiens Yihai was a  developmental
stage company and had not yet conducted any operations.

Both  Biological and Tianshi  Engineering  receive  administrative  support from
Tianshi  Group.  Biological  pays  Tianshi  Group 1% of its annual  sales income
(excluding  value added taxes  "VAT") for  administrative  services  (except for
services  provided  by the  officers  of  Tianshi  Group) and the use of Tianshi
Group's administrative building.

The summary of Tiens USA's organization is described as follows:

Tiens USA is owned 4.91% by public stockholders,  2.8% by officers and 92.29% by
Mr.  Li  Jinyuan.  Tiens  USA  owns  100%  of  Tianshi  International.   Tianshi
Inernational owns 80% of Biological and 99.4% of Tiens Yihai.

Tianshi  Group is owned 90% by Mr. Li Jinyuan  and 10% by his  daughter,  Ms. Li
Baolan. Tianshi Group owns 87.66% of Tianshi  Pharmaceuticals and 51% of Tianshi
Engineering.  Tianshi  Pharmaceuticals  owns 20% of Biological and 0.6% of Tiens
Yihai.

Ms.  Li  Baolan   owns  49%  of  Tianshi   Engineering   and  7.29%  of  Tianshi
Pharmaceuticals.

Tianjin Feishi Transportation Co., Ltd. owns 5.05% of Tianshi Pharmaceuticals.

CRITICAL ACCOUNTING POLICIES

Management's  discussion and analysis of its financial  condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States. The Company's  financial  statements reflect the selection
and  application  of  accounting  policies  which  require  management  to  make
significant  estimates and judgments.  See note 2 to the Company's  consolidated
financial statements,  "Summary of Significant  Accounting Policies." Management
bases its estimates on historical  experience  and on various other  assumptions
that are believed to be reasonable under the  circumstances.  Actual results may
differ from these  estimates  under  different  assumptions or  conditions.  The
Company  believes  that  the  following  reflect  the more  critical  accounting
policies that currently affect the Company's  financial condition and results of
operations.

Revenue recognition
-------------------

The Company recognizes revenue from domestic sales by distributors in China, net
of sales  commissions  and taxes  only,  when the  related  Chinese  distributor
recognizes sales of the Company's products to unaffiliated third parties. The



                                       24
<PAGE>

Company  recognizes  revenue  from  international  sales  (non-Chinese)  to both
affiliated and unaffiliated third parties, net of commissions and taxes as goods
are shipped, and cleared by the international customs department.

The Company is generally not contractually obligated to accept returns. However,
on a case by case  negotiated  basis,  the Company  permits  customers to return
product. In accordance with SFAS No. 48, "Revenue  Recognition when the Right of
Return Exists",  revenue is recorded net of an allowance for estimated  returns.
Such reserves are based upon  management's  evaluation of historical  experience
and estimated costs. The amount of the reserves ultimately required could differ
materially  in  the  near  term  from  amounts   included  in  the  accompanying
consolidated financial statements.

As of June,  2005,  Tianshi  Engineering,  a related  company,  owned all of the
related party  distributors  which sell the Company's  products  domestically in
China.


Bad debts
---------

The  Company's  business  operations  are  conducted  primarily  in the People's
Republic of China.  During the normal  course of business,  the Company  extends
unsecured credit to its customers. Management reviews its accounts receivable on
a regular  basis to  determine  if the bad debt  allowance  is  adequate at each
fiscal  year  end.  However,  the  Company  records  a  provision  for  accounts
receivable  trade  which  ranges from 0.3% to 0.5% of the  outstanding  accounts
receivable balance in accordance with generally accepted  accounting  principles
in the PRC.

Inventories
-----------

The Company  reviews its inventory  annually for possible  obsolete  goods or to
determine if any reserves are necessary for potential  obsolescence.  As of June
30, 2005, the Company had built its inventory up to $8,866,290.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2004


                            Six Months Ended June 30,
                                         2005           2004          Change
                                     -----------    -----------    -----------
Revenue                              $31,603,658    $28,015,887         13%
COGS                                 $ 7,655,230    $ 6,617,466    $ 1,037,764
Gross Profit                         $23,948,428    $21,398,421    $ 2,550,007
Gross Profit Margin                       76%            76%
Selling, General and                 $ 5,099,551    $ 2,618,919    $ 2,480,632
Administrative Expenses
Selling, General and Administrative       16%             9%             7%
Expenses as a Percentage of Sales
Net Income                           $13,200,199    $15,241,245        (13%)
Net Profit Margin                         42%            54%           (12%)



                                       25
<PAGE>

REVENUE.  For  the  six  months  ended  June  30,  2005,  revenue  increased  by
$3,587,771,  or approximately 13%, compared to the corresponding period in 2004.
The reasons for the increase are further  detailed  below and discussed in terms
of domestic and international revenues. Revenue is categorized into revenue from
domestic and international sales as follows.

Domestic and International Revenue


---------------- ------------------- ------------------- ---------------
    Revenue             Six Months Ended June 30,
---------------- ------------------- ------------------- ---------------
                      2005                  2004          Increase in %
                   ---------- ---------- ----------         ----------

Domestic             $18,313,400        $17,238,110             6%
---------------- ------------------- ------------------- ---------------
International        $13,290,258        $10,777,777            23%
---------------- ------------------- ------------------- ---------------

Domestic  sales  for the six  months  ended  June 30,  2005  increased  slightly
compared to those in the corresponding  period in 2004. This slight increase was
mainly due to: (1) continuously increasing networking sales forces in China; (2)
the 70 newly established branches; and (3) the expansion of the Company's market
share in markets in which it is involved. Our international sales during the six
months ended June 30, 2005,  increased by 23% from the  corresponding  period of
2004.  This  increase in  international  sales is mainly  comprised of the sales
increase of the Company's branches in Greece, the Ukraine and Kenya. The Company
believes that this  increase was  primarily due to the continued and  successful
marketing of its products internationally since the end of 2002, and a continued
growth in worldwide  demand for its products.  During the fiscal year 2004,  the
Company  experienced a significant  sales growth in overseas  markets,  and this
growth was maintained during the first six months of fiscal 2005.

GROSS PROFIT.  Consolidated  gross profit  increased by  $2,550,077  for the six
months ended June 30, 2005,  compared to the  corresponding  period in 2004. The
gross profit  margin for the six months  ended June 30, 2005 was 76%,  which was
the same as the  percentage  for the six months ended June 30, 2004, as a result
of sales prices and unit costs remaining approximately the same.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative  expenses  increased by $2,480,632  for the six months ended June
30, 2005 from the corresponding  period in 2004. The selling and  administrative
expenses as a percentage of sales increased to 16% for the six months ended June
30, 2005. This increase was mainly attributable to the following items:

o        The increase in salary,  welfare and employee  insurance was mainly due
         to increased  recruiting efforts resulting in hiring new employees,  an
         increase in salary expense due to new hires and an increase in salaries



                                       26
<PAGE>

         of all current employees to meet market salary rates since August 2004.

o        The increase in low cost supplies expense was mainly due to an increase
         in new employees,  and a corresponding increase in the provision of new
         office space.  Meanwhile,  the monthly stationary consumption volume of
         each department also increased.

o        The  increase  in  transportation  cost was  mainly  the  result  of an
         increase  in  sales  volume  as well  as the  increased  cost of  fuel.
         Therefore,  the volume of products needed to be transported to domestic
         and overseas branches and ports increased.

o        The  increase  in R&D  expense  was  primarily  due  to  the  increased
         contribution to further developing new products.

o        The  increase  in  entertainment  expense  was mainly the result of the
         enlarged operating scale.

o        Fuel expense has increased because, to strengthen work efficiency,  the
         Company  started  encouraging  its middle and senior  management to buy
         cars by reimbursing up to $60 of related car expenses per month.

o        The  Company  has  been  actively   searching  for  relevant  qualified
         employees  with  the  help  of  professional  consulting  firms,  which
         directly resulted the incurrment of consultancy fees.

o        Tianshi Group  transferred four  manufacturing  workshops to Biological
         Development.    Therefore   the   property    taxes   paid    increased
         correspondingly.

The above 8  categories  amount to  approximately  93% of the total  increase in
SG&A, and miscellaneous  expenses,  such as rental expense and advertising fees,
represented the remaining 7% of the increase.

NET  INCOME.  Net income for the six months  ended June 30,  2005  decreased  by
$2,041,046  from  the  corresponding  period  in  2004.  This  decrease  was due
primarily to the provision of $1,445,445  for income taxes and $687,164 of other
expense.  The  increase  in  provision  for  income  taxes was the result of our
becoming subject to an annual income tax rate of 7.5%.  According to Chinese tax
regulation,  we were fully  exempted from PRC income taxes in 2003 and 2004, and
became  subject to income tax at a reduced  rate of 7.5% in 2005  through  2007.
From 2008  onwards,  we will be subject to a 15% income tax. One of the two main
items contained in other expense was $328,441 of additional  taxes and penalties
paid by Biological to the PRC government during the first quarter in 2005 as the
result of a VAT  examination  by the local  government,  and this was a one-time
charge.  Another  item was the  $265,508 of  interest  accrued for the first six
months  of the  2005  fiscal  year  according  to terms  of the  long-term  loan
agreement  between Tian Yuan  Investment  Ltd.  and the  Company,  as more fully
described  under the  caption  "Notes  Payable"  which is under  the  subsection
"Certain Relationships and Related Transactions."



                                       27
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  Company  markets  most  of  its  products   through  various  domestic  and
international  business  entities that are related to Biological  through common
ownership  by Mr.  Li,  Jinyuan,  our  Chairman,  Chief  Executive  Officer  and
President and his immediate family members. Related party sales amounted to 100%
of total sales.  Internationally,  Biological sells its products directly to its
overseas affiliates.  Due to the common ownership,  there are no formal sales or
administrative  agreements  among Biological and those overseas related parties.
The business  operations  among these  related  entities are  regulated  through
internal  ordinances.  For the  domestic  market,  Biological  sells  all of its
products  to  Tianshi  Engineering,  which in turn  sells  them  through  its 23
representative  offices, and 9 other affiliated  companies in China.  Biological
has a sales  contract  with Tianshi  Engineering.  According  to this  contract,
Tianshi Engineering accepted that it would purchase all of Biological's products
to be sold in China.

Other receivables and note receivable
-------------------------------------

Through our Chinese joint venture,  Biological,  the Company is owed  $7,207,506
and  $8,144,740  as of June  30,  2005  and  December  31,  2004,  respectively,
classified as other  receivables  from related parties.  These  receivables have
been generated by the Company making various cash advances, short-term loans and
the  allocation  of various  expenses to related  parties.  These are  recurring
transactions. The Company does not charge interest on these receivables.

Accounts payable
----------------

Accounts  payable due to related  parties were  $217,652 and $209,199 as of June
30, 2005 and December 31, 2004, respectively.  These amounts were generated from
the purchases of raw materials, rent expense and transportation cost.

Other payables
--------------

As of June 30,  2005 and  December  31,  2004,  we had  $775,641  and  $945,274,
respectively, classified as other payables due to related parties. These amounts
arose from cash advances from related parties for payment of management fees due
to related  parties  and  various  non-operational  transactions  incurred  with
related parties.

On March 25, 2005 Tianshi  International  entered into a loan  agreement  with a
company  owned by Mr.  Li,  Jinyuan,  pursuant  to which  Tianshi  International
borrowed $300,000. The loan is non-interest bearing and is due on June 25, 2005.
As of June 30,  2005,  this loan had not been  repaid.  The  Company  expects to
satisfy its repayment obligation after it receives a dividend from Biological.



                                       28
<PAGE>

Note Payable
------------

On September  10, 2004, in order to fund the capital  contribution  due to Tiens
Yihai Co.,  Ltd.  ("Tiens  Yihai"),  Tianshi  International  entered into a loan
agreement with Tianyuan Capital Development Corp. Ltd.  ("Tianyuan  Capital") to
borrow $10.65 million.  Mr. Li Jinyuan,  the president and major  shareholder of
the Company, is a director of Tiens Yihai and a director of Tianyuan Capital.

The  principal  of  the  loan  will  be  paid  in  ten  consecutive   semiannual
installments  of each US  $1,065,742  on the  last  day of each  June,  December
commencing  on December 31, 2006 and ended June 30, 2011.  The interest  payment
will be paid on the  outstanding and unpaid  principal  amount of the loan at an
annual  interest  rate of 5% on the last  business day of each June and December
commencing on December 31, 2004.  No interest  payments have made as of June 30,
2005 and accrued  interest  payable to Tianyuan  Capital  amounted  $428,824 and
$163,316 on June 30, 2005 and December 31, 2004, respectively.

Rent expense
------------

On June 30, 2003, we entered into a written lease  agreement  with Tianshi Group
to pay annual rent on facilities at 1% of total gross revenues. The term of this
agreement is for five years  commencing  on January 1, 2003.  In  addition,  the
Company is obligated to pay insurance, maintenance and other expenses related to
the  premises.  The total  amount paid on this lease  amounted  to $316,037  and
$287,618 for the six months ended June 30, 2005 and 2004, respectively.


LIQUIDITY AND CAPITAL RESOURCES

For the six  months  ended  June  30,  2005,  net  cash  provided  by  operating
activities  was  $18,096,068,   net  cash  used  in  investing   activities  was
$3,316,126, and net cash used in financing activities was $3,034,053.

For the six  months  ended  June  30,  2004,  net  cash  provided  by  operating
activities  was  $10,147,892,   net  cash  used  in  investing   activities  was
$7,979,558, and net cash used in financing activities was $5,579,581.

Net cash provided by operating activities increased by $7,948,176 to $18,096,068
for  the  six  months  ended  June  30,  2005,   representing   an  increase  of
approximately  78%  compared to  $10,147,892  of net cash  provided by operating
activities for the corresponding  period in 2004. The increase in cash flow from
operating    activities    primarily   reflects   the   decrease   in   accounts
receivable-related  party and the  increase  in advance  from  customers-related
party. Compared to the increase in accounts receivable-related party for the six
months ended June 30, 2004, $5,953,748,  the accounts  receivable-related  party
for the six months ended June 30, 2005 decreased by $6,309,636, since Biological
collected more money from  customers.  Management  believes that this was mainly
due to the Company's  strengthened  internal  control  procedures  and shortened
payoff  periods.  Compared to the  decrease in advances  from  customers-related
parties for the six months ended June 30, 2004, $5,138,892, the advances from



                                       29
<PAGE>

customers-related  parties for the six months  ended June 30, 2005  increased by
$5,868,393,  since more overseas  customers  made  prepayments  to Biological in
order to make sure that they could get enough  products  to meet the  increasing
overseas  market  demands.  The  increase  in net  cash  provided  by  operating
activities was also offset by the increase in inventories.

Compared to the six months ended June 30,  2004,  the net cash used in investing
activities as of June 30, 2005 decreased by $4,663,432,  since there was not any
long-term  investment  for the six months  ended June  30,2005.  The increase in
purchase  of  equipment  was  mainly  due to the  purchase  of fixed  assets and
construction in progress by Development and Yihai.

Net cash used in financing  activities decreased by $2,545,528 to $3,034,053 for
the six months ended June 30, 2005,  compared to  $5,579,581 of net cash used in
financing  activities  for the same  period  of 2004.  The main  reason  for the
decrease was due to the Company's  repayment of 90% of the  Company's  long term
debt.

As of June 30, 2005 and  December 31, 2004,  Tiens had cash of  $50,990,760  and
$39,243,872,  respectively,  an increase of  $11,746,888.  59.5% of the cash was
held in the bank account of  Biological  and 39.8% in the bank account of Yihai.
There was about $20 million in Yihai.  The balance of the cash split between the
two accounts was mainly in  Biological,  which balance is the retained  earnings
accumulated  from  the  previous  years.  Among  the  cash  held by  Biological,
approximately  $23.0  million is the dividend  payable by  Biological to Tianshi
International.  Biological is expected to pay  approximately  $23.0 million of a
dividend to Tianshi  International  upon the approval  from the Chinese  Foreign
Currency  Control  Bureau.  Once it receives the approval and  completes all the
necessary procedures, the dividend will be paid to Tianshi International,  which
may reinvest the money into Yihai.

The  inventories at June 30, 2005 increased  sharply by $4,298,872,  compared to
$4,567,418  for the twelve months ended  December 31, 2004.  From our historical
sales trend,  the third  quarter is normally the quarter with the highest  sales
revenue in the fiscal year. Furthermore,  we established 70 new branches for the
six months ended June 30, 2005,  which new branches  required  inventories to be
reserved. Therefore, more inventories,  including finished goods, raw materials,
packaging materials,  work-in-process,  and low cost supplies,  were built up at
the end of the second quarter in 2005.

Going forward,  our primary  requirements for cash consist of: (1) the continued
production  of existing  products  and general  overhead and  personnel  related
expenses to support  these  activities;  (2)  continued  promotion of networking
sales activities pertaining to our attempt to increase related revenues; and (3)
the development costs of new products; (4) construction and development of Tiens
Yihai;  (5) expansion of production  scale along with the Company's fast growing
market.  We anticipate that our current  operating  activities will enable us to
meet the anticipated cash requirements for the 2005 fiscal year.



                                       30
<PAGE>

MANAGEMENT ASSUMPTIONS

Management anticipates,  based on internal forecasts and assumptions relating to
our current  operations  that existing cash and funds  generated from operations
will be sufficient to meet working  capital for at least the next 12 months.  In
the event that plans change,  our assumptions  change or prove  inaccurate or if
other  capital   resources  and  projected  cash  flow  otherwise  prove  to  be
insufficient  to  fund  operations  (due  to  unanticipated  expense,  technical
difficulties,  or otherwise), we could be required to seek additional financing.
There can be no assurance that we will be able to obtain additional financing on
terms acceptable to it, or at all.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

EFFECTS OF INFLATION

We are subject to commodity  price risks arising from price  fluctuations in the
market  prices of the various raw materials  that  comprise our products.  Price
risks are managed by each business unit through  productivity  improvements  and
cost-containment  measures.  For the time being, the management does not believe
that  inflation risk is material to our business or our  consolidated  financial
position, results of operations or cash flows.

EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

The Company's operating  subsidiary,  Biological,  is located in China, and buys
all of its raw  materials  in China and sells 50% of the  Company's  products in
China using the Chinese  Renminbi ("RMB") as the functional  currency.  Based on
Chinese  government  regulations,  all foreign  currencies under the category of
current accounts are allowed to be freely exchanged with hard currencies.

On July 21, 2005, the Chinese government  approved the increase in the valuation
of RMB against the US dollar by 2%. The  increase  in the  valuation  of RMB may
increase the  Company's  reported net income since it is reported in US dollars.
Due to the  speculation  by the  management  of the Company that the RMB will be
re-valued upward against the US dollar,  it has exchanged most of its US dollars
into  RMB.  Therefore,  the  Company  is not much  affected  by the  revaluation
currently.  However,  in the future, it may have an adverse effect on the export
of products.  For example, a product of RMB 7000 was worth US$847 before RMB was
revalued,  and it is worth  $861 after the  revaluation.  If the  product  price
remains the same, the companies and  individuals who sell the product to the end
user would have to bear the difference  between these two prices. The net profit
would be lowered by 2% for each product. On the other hand, if the product price
is increased, the number of end users will decrease, which will adversely affect
our sales volume.



                                       31
<PAGE>

Currently, we have not entered into agreements or purchased instruments to hedge
our exchange rate risks, although we may do so in the future.

Item 4. CONTROLS AND PROCEDURES

Under the supervision and with the  participation  of our management,  including
our chief  executive  officer  and chief  financial  officer,  we  conducted  an
evaluation of the  effectiveness  of the design and operation of our  disclosure
controls and  procedures,  as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities  Exchange  Act of 1934,  as of June 30,  2005,  the end of the period
covered by this report (the "Evaluation  Date").  Based on this evaluation,  our
chief  executive  officer  and  chief  financial  officer  concluded  as of  the
Evaluation Date that our disclosure  controls and procedures were effective such
that the  material  information  required to be included in our  Securities  and
Exchange  Commission,  or SEC,  reports is recorded,  processed,  summarized and
reported  within the time periods  specified in the SEC rules and forms relating
to us, including our consolidating  subsidiaries,  and was made known to them by
others within those  entities,  particularly  during the period when this report
was being prepared.  There were no changes in our internal  controls or in other
factors  during the most recent  quarter  that has  materially  affected,  or is
reasonably  likely to materially  affect,  our internal  controls over financial
reporting.













                                       32
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

Item 5. OTHER INFORMATION

None

Item 6. EXHIBITS

(b)      Exhibits

31.1     Certification  of the Principal  Executive  Officer pursuant to Section
         302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification  of the Principal  Financial  Officer pursuant to Section
         302 of the Sarbanes-Oxley Act of 2002.

32.1     Certification  of the Principal  Executive  Officer and Chief Financial
         Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.






                                       33
<PAGE>

                                   Signatures

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


Dated:  August 15, 2005                    TIENS BIOTECH GROUP (USA), INC.

                                        By: /s/ Jinyuan Li
                                           -------------------------------------
                                           Jinyuan Li
                                           Chief Executive Officer and President
                                           (Principal Executive Officer)

Dated:  August 15, 2005
                                        By: /s/ Wenjun Jiao
                                           -------------------------------------
                                           Wenjun Jiao
                                           Chief Financial Officer
                                           (Principal Financial Officer)