UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

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


                                   (Mark one)

     X Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934


                  For the quarterly period ended June 30, 2004

     Transition Report Under 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 small business issuer as specified in its charter)

       Delaware                                                75-2926439
------------------------                                ------------------------
(State of incorporation)                                (IRS Employer ID Number)

                      No. 6, Yuanquan Road, Wuqing New-Tech
                         Industrial Park, Tianjin, China
            --------------------------------------------------------
                    (Address of principal executive offices)

                              (011) 86-22-8213-7264
                       ----------------------------------
                           (Issuer's telephone number)

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

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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
                                                             ---   ---

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: June 30, 2004: 71,998.586.

Transitional Small Business Disclosure Format (check one): YES    NO X
                                                              ---   ---


<PAGE>

                         Tiens Biotech Group (USA), Inc.

                Form 10-QSB for the Quarter ended March 31, 2004

                                Table of Contents


                                                                            Page
                                                                            ----
Part I - Financial Information

  Item 1   Financial Statements

  Item 2   Management's Discussion and Analysis or Plan of Operation

  Item 3   Controls and Procedures

Part II - Other Information

  Item 1   Legal Proceedings

  Item 2   Changes in Securities

  Item 3   Defaults Upon Senior Securities

  Item 4   Submission of Matters to a Vote of Security Holders

  Item 5   Other Information

  Item 6   Exhibits and Reports on Form 8-K


Signatures



<PAGE>
<TABLE>
<CAPTION>

Part I - Financial Information

  Item 1- Financial Statements

                  TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS
             AS OF JUNE 30, 2004 AND DECEMBER 31, 2003

                                     ASSETS
                                     ------
                                                                           June 30,      December 31,
                                                                             2004            2003
                                                                         ------------    ------------
                                                                          (Unaudited)      (Audited)
                                                                         ------------    ------------
<S>                                                                      <C>             <C>
CURRENT ASSETS:
    Cash                                                                 $  9,313,796    $ 12,725,043
    Accounts receivable - related party, net of allowance for doubtful
      accounts of $39,204 at June 30, 2004 and $-0- at
      December 31, 2003, respectively                                       6,567,253           8,533
    Other receivables                                                         308,046         139,820
    Other receivables and note receivable - related party                  11,661,798      26,831,339
    Inventories                                                             5,787,145       4,004,216
                                                                         ------------    ------------
      Total current assets                                                 33,638,038      43,708,951
                                                                         ------------    ------------

Long-term investment                                                       19,204,111            --
                                                                         ------------    ------------

BUILDINGS, EQUIPMENT AND AUTOMOBILES, net                                  10,606,400      11,156,268
                                                                         ------------    ------------

OTHER ASSETS:
    Intangible asset, net                                                     339,448         363,330
    Employee advances                                                         166,722         821,536
    Deposits                                                                  884,908       1,051,557
                                                                         ------------    ------------
      Total other assets                                                    1,391,078       2,236,423
                                                                         ------------    ------------
        Total assets                                                     $ 64,839,627    $ 57,101,642
                                                                         ============    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
    Accounts payable                                                     $  2,929,577    $  2,531,829
    Accounts payable - related party                                             --           758,570
    Advances from customers - related parties                                   2,769       5,141,661
    Other taxes payable                                                       312,625         206,723
    Accrued liabilities                                                         9,233          52,698
    Other payable - related party                                             969,926       1,312,288
    Distribution payable to minority interest                               3,327,273
    Short term notes payable                                                2,057,000       5,324,000
    Current portion of long term debt                                         241,463         259,364
                                                                         ------------    ------------
      Total current liabilities                                             9,849,866      15,587,133

LONG TERM DEBT, net of current portion                                         45,516         155,591
                                                                         ------------    ------------

        Total liabilities                                                   9,895,382      15,742,724
                                                                         ------------    ------------

MINORITY INTEREST                                                           6,610,158       8,272,726
                                                                         ------------    ------------

SHAREHOLDERS' EQUITY:
    Common stock, $0.001 par value, 260,000,000 shares authorized,
      71,998,586 issued and outstanding, respectively                           6,851           6,851
    Paid-in-capital                                                         8,906,492       8,906,492
    Statutory reserves                                                      3,730,137       3,730,137
    Retained earnings                                                      35,694,535      20,453,290
    Stock receivable                                                             --            (6,650)
    Accumulated other comprehensive income (loss)                              (3,928)         (3,928)
                                                                         ------------    ------------
      Total shareholders' equity                                           48,334,087      33,086,192
                                                                         ------------    ------------
        Total liabilities and shareholders' equity                       $ 64,839,627    $ 57,101,642
                                                                         ============    ============
</TABLE>


The accompanying notes are an intergral part of this statement.

                                       2
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003


                                                    Three months ended           Six months ended
                                                -------------------------   -------------------------
                                                         June 30,                    June 30,
                                                -------------------------   -------------------------
                                                   2004          2003          2004          2003
                                                -----------   -----------   -----------   -----------
                                                (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                                                -----------   -----------   -----------   -----------
<S>                                             <C>           <C>           <C>           <C>
REVENUE - RELATED PARTIES                       $16,526,193   $ 9,671,634   $28,015,887   $17,785,566

COST OF SALES                                     3,888,329     4,400,018     6,617,466     7,028,913
                                                -----------   -----------   -----------   -----------

GROSS PROFIT                                     12,637,864     5,271,616    21,398,421    10,756,653

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES     1,480,224       687,200     2,618,919     1,360,845
                                                -----------   -----------   -----------   -----------

INCOME FROM OPERATIONS                           11,157,640     4,584,416    18,779,502     9,395,808

OTHER INCOME (EXPENSE)                               13,946       243,089       317,703        71,260
                                                -----------   -----------   -----------   -----------
    Interest income                                    --            --            --            --

INCOME BEFORE MINORITY INTEREST                  11,171,586     4,827,505    19,097,205     9,467,068

MINORITY INTEREST                                 2,342,687       965,501     3,855,960     1,893,414
                                                -----------   -----------   -----------   -----------

NET INCOME                                        8,828,899     3,862,004    15,241,245     7,573,654

OTHER COMPREHENSIVE INCOME
                                                -----------   -----------   -----------   -----------

COMPREHENSIVE INCOME                            $ 8,828,899   $ 3,862,004   $15,241,245   $ 7,573,654
                                                ===========   ===========   ===========   ===========

Weighted average number of shares outstanding    71,998,586    32,503,302    71,998,586    32,503,302
                                                ===========   ===========   ===========   ===========

Earnings per share, basic and diluted           $      0.12   $      0.12   $      0.21   $      0.23
                                                ===========   ===========   ===========   ===========
</TABLE>



The accompanying notes are an intergral part of this statement.



                                       3
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003




                                      Number         Common       Paid-in      Statutory
                                     of shares       stock        capital       Reserve
                                    -----------   -----------   -----------   -----------
                                    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                                    -----------   -----------   -----------   -----------
<S>                                 <C>           <C>           <C>           <C>
BALANCE, January 1, 2004, audited    71,998,586   $     6,851   $ 8,906,492   $ 3,730,137

  Net income                               --            --            --            --
  Receipt of stock receivable              --            --            --            --
                                    -----------   -----------   -----------   -----------
BALANCE, June 30, 2004               71,998,586   $     6,851   $ 8,906,492   $ 3,730,137
                                    ===========   ===========   ===========   ===========


BALANCE, January 1, 2003, audited    32,503,302   $         1   $ 8,906,492   $   399,173

  Net income                               --            --            --            --
                                    -----------   -----------   -----------   -----------
BALANCE, June 30, 2003               32,503,302   $         1   $ 8,906,492   $   399,173
                                    ===========   ===========   ===========   ===========

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

BALANCE, January 1, 2004, 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              $35,694,535   $      --      $    (3,928)  $48,334,087
                                    ===========   ===========    ===========   ===========


BALANCE, January 1, 2003, audited   $ 6,730,432   $      --      $    (3,928)  $16,032,170

  Net income                          7,573,654          --             --       7,573,654
                                    -----------   -----------    -----------   -----------
BALANCE, June 30, 2003              $14,304,086   $      --      $    (3,928)  $23,605,824
                                    ===========   ===========    ===========   ===========
</TABLE>











The accompanying notes are an intergral part of this statement.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003

                                                                  2004            2003
                                                              ------------    ------------
                                                               Unaudited       Unaudited
                                                              ------------    ------------
<S>                                                           <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                $ 15,241,245    $  7,573,654
    Adjustments to reconcile net income  to cash
      used in operating activities:
        Minority interest                                        3,855,960       1,893,414
        Depreciation                                               699,629         510,650
        Amortization                                                23,882          30,939
        Loss on sale of assets                                     120,714           1,778
      (Increase) decrease in assets:
        Accounts receivable - related party                     (5,953,748)     (4,333,749)
        Other receivables                                         (168,226)        101,378
        Other receivables - related party                        3,069,541      (4,632,534)
        Inventories                                             (1,782,929)     (1,309,875)
        Employee advances                                          654,814          60,546
        Decrease in deposits                                       166,649         331,923
      Increase (decrease) in liabilities:
        Accounts payable                                           397,748       1,224,443
        Accounts payable - related party                          (758,570)        161,534
        Advances from customers                                 (5,138,892)        (60,439)
        Other taxes payable                                        105,902        (210,788)
        Accrued liabilities                                        (43,465)     (1,207,706)
        Other payables - related party                            (342,362)      2,446,853
                                                              ------------    ------------
          Net cash provided by operating activities             10,147,892       2,582,021
                                                              ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Collections on note receivable - related party              12,100,000            --
    Increase in loans receivable - related party                      --          (289,371)
    Increase in long-term investment                           (19,204,111)           --
    Proceeds from sales of equipment                                66,388            --
    Purchase of equipment and automobiles                         (941,835)       (415,695)
                                                              ------------    ------------
          Net cash used in investing activities                 (7,979,558)       (705,066)
                                                              ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceed from receipt of stock receivable                         6,650
    Payments, net of borrowings on short term notes payable     (3,267,000)       (555,390)
    Payments on long term debt                                    (127,976)       (150,935)
    Payments to minority interest shareholder in subsidiary     (2,191,255)
                                                              ------------    ------------
          Net cash used in financing activities                 (5,579,581)       (706,325)
                                                              ------------    ------------

(DECREASE) INCREASE IN CASH                                     (3,411,247)      1,170,630

CASH, beginning of period                                       12,725,043         302,974
                                                              ------------    ------------

CASH, end of period                                           $  9,313,796    $  1,473,604
                                                              ============    ============
</TABLE>

The accompanying notes are an intergral part of this statement.

                                       5
<PAGE>

                       TIENS BIOTECH GROUP (USA), INC. AND
                                  SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies

Background
----------

On February 17,  2004,  Tiens  Biotech  Group  (USA),  Inc.  (referred to as the
Company  or TIENS)  formally  changed  it name from  Strategika,  Inc.  to Tiens
Biotech Group (USA), Inc.

On August 22, 2003, Strategika,  Inc., a corporation organized under the laws of
the State of Delaware ("STRATEGIKA"); Tianshi International Holdings Group Ltd.,
a  corporation   organized   under  the  laws  of  the  British  Virgin  Islands
("TIANSHI");  Li Jin Yuan,  Jiao Wen Jun and Yan Yu Peng, all Chinese  Nationals
who are  stockholders  of TIANSHI (the "TIANSHI  Stockholders")  entered into an
Agreement  and Plan of  Reorganization  (the  "Agreement").  The  Agreement  was
effective  on  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 in exchange for  68,495,000  shares of
restricted  (as defined in Rule 144 of the  Securities  Act of 1933, as amended)
common stock of STRATEGIKA. As additional  consideration,  the 29,000,000 shares
of the common stock of  STRATEGIKA  held by Rene  Larrave,  the sole officer and
director of STRATEGIKA prior to the reorganization,  were redeemed to STRATEGIKA
and dully cancelled by STRATEGIKA.

Pursuant to the Agreement and on the Effective  Date, as  consideration  for the
exchange  of  the  TIANSHI  Shares,   STRATEGIKA  issued  68,495,000  shares  of
restricted  common  capital  stock,  par value $0.001 per share,  to the TIANSHI
Stockholders,  representing  approximately  95% of the  issued  and  outstanding
common capital stock of STRATEGIKA following the time of the issuance. There are
currently  71,998,586  issued  and  outstanding  shares of  common  stock of the
reorganized STRATEGIKA.

STRATEGIKA was incorporated on July 13, 1990 as Super Shops, Inc. under the laws
of the State of Michigan.  In October 2000, Super Shops, Inc.  reincorporated in
Delaware and changed its name to MIA Acquisition  Corp. On February 11, 2002, in
connection with a change in control  transaction,  MIA Acquisition  Corp changed
its name to  Strategika,  Inc.  Until the Effective  Date,  STRATEGIKA  had only
nominal assets and liabilities and was a development stage company attempting to
provide network security services to Fortune 1000 listed companies.  As a result
of the  reorganization,  STRATEGIKA  will  continue the business  operations  of
TIANSHI.

TIANSHI was incorporated on March 24, 2003 in the territory of the British
Virgin Islands. The following is a description of the various individuals and
companies discussed in the footnotes and their relationship to TIANSHI.

Tianshi  International  Holdings  Group Ltd.  - British  Virgin  Island  company
         formerly  owned 100% by Li Jinyuan  and  currently  owned 100% by Tiens
         Biotech Group (USA), Inc.

Li Jin Yuan - individual - President and majority shareholder

Li Bao Lan - individual - Daughter of Li Jinyuan

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


                                        6

<PAGE>

                       TIENS BIOTECH GROUP (USA), INC. AND
                                  SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies (continued)

Background (continued)
----------------------

Tianshi Hong Kong International  Development Co., Ltd. - Hong Kong company owned
         100% by Li Jin Yuan

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

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

Tianjin Tianshi Group Co., Ltd. - Owned 90% by Li Jin Yuan and 10% by Li Bao Lan

On June 18, 2003,  Tianshi  International  Holdings  Group Ltd.  acquired 80% of
Tianjin Tianshi Biological Development Co., Ltd. ("BIOLOGICAL"). Tianjin Tianshi
Biological  Development Co., Ltd. is a foreign investment joint venture which is
incorporated  under the laws of the People's  Republic of China ("PRC") on March
27,  1998.  The original  partners in this joint  venture were Tianshi Hong Kong
International Development Co., Ltd. incorporated in Hong Kong which owned 80% of
the joint venture and Tianjin Tianshi Biological Engineering Co., Ltd, a Chinese
company incorporated in the People's Republic of China which owned the remaining
20% of the joint venture. Tianshi Hong Kong International  Development Co., Ltd.
is owned 100% by Li Jinyuan,  the  Company's  president  and major  shareholder.
Tianjin Tianshi Biological  Engineering Co., Ltd is 49% owned by Ms. Li Bao Lan,
the daughter of Li Jin Yuan and 51% by Tianjin  Tianshi  Group Co., Ltd. On June
18, 2003,  Tianjin Tianshi  Biological  Engineering Co., Ltd transferred its 20%
interest  in  the  joint  venture  for  no   consideration  to  Tianjin  Tianshi
Pharmaceuticals Co., Ltd, a Chinese company in which the majority shareholder is
Tianjin Tianshi Group Co., Ltd. On June 18, 2003, Tianshi International Holdings
Group Ltd. acquired 80% of Tianjin Tianshi Biological  Development Co., Ltd from
Tianshi Hong Kong International Development Co., Ltd. for no consideration. This
transfer was made for no  consideration  since Li Jin Yuan is president and sole
shareholder of both companies.

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

The financial statements in the filings of STRATEGIKA become those of TIENS. The
consolidated  financial  statements of TIENS reflect the  activities of its 100%
owned subsidiary,  Tianshi International  Holdings Group Ltd., and its 80% owned
subsidiary,  Tianjin Tianshi  Biological  Development Co., Ltd. The consolidated
financial  statements of TIANSHI have been  presented as if the  acquisition  of
BIOLOGICAL  occurred  at the  beginning  of 2002 due to  common  management  and
ownership.

The consolidated  financial  statements generally reflect only the activities of
Tianjin  Tianshi  Biological  Development  Co.,  Ltd. at its cost since  Tianshi
International  Holdings Ltd.,  had no operational  activities for the six months
ended June 30, 2003. Since STRATEGIKA's continuing operations and balance sheets
are insignificant,  a pro forma balance sheets at June 30, 2004 and December 31,
2003 and  statements of operations  for the periods then ended are not presented
herein.




                                       7
<PAGE>

                       TIENS BIOTECH GROUP (USA), INC. AND
                                  SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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

Tianjin Tianshi  Biological  Development Co., Ltd. is a foreign investment joint
venture which is incorporated  under the laws of the People's Republic of China.
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.

TIANSHI owns 80% of its  subsidiary  BIOLOGICAL.  The  remaining 20% is owned by
Tianjin  Tianshi  Pharmaceuticals  Co., Ltd, a Chinese  company and the majority
shareholder of this Chinese company is Tianjin Tianshi Group Co., Ltd.

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

The Company through its subsidiary is primarily engaged in the manufacturing and
marketing of herbal products, vitamin and mineral supplements, personal care and
other  products.  The  Company  sells its  products  to a sales force of related
distributors  who in turn sell to independent  distributors and managers who use
the products  themselves or resell them to other distributors or consumers.  The
Company markets its products in the United States,  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.

In December  2003,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No.  46(R),  Consolidation  of Variable  Interest  Entities,  an
Interpretation  of ARB No. 51 (FIN No. 46(R)),  which requires the consolidation
of certain variable interest  entities,  as defined.  FIN No. 46(R) is effective
for  reporting  periods  after March 15, 2004 for all  enterprises  that are not
small business  issuers.  The Company is in the process of reviewing the effects
of this statement on their operations.

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

The Company recognizes revenue from domestic sales by distributors, 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 clears the 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 2003,  Tianjin Tianshi  Biological  Engineering  Co., LTD, a related company,
owned all of the related party  distributors  which sell the Company's  products
domestically  in China.  The Company was  responsible for paying all the related
sales expenses incurred to sell their products to outside third parties.



                                       8
<PAGE>

                       TIENS BIOTECH GROUP (USA), INC. AND
                                  SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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

The  reporting  currency  of  the  Company  is the US  dollar.  Tianjin  Tianshi
Biological  Development  Co.,  Ltd'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 the 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 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  $(3,928)  as  of  June  30,  2004  and  December  31,  2003,
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.

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
Companys subsidiary, Tianshi, was incorporated in the British Virgin Islands and
is not liable for income taxes.

The  Company's   subsidiary,   BIOLOGICAL,   is  a  Sino-Foreign  Joint  Venture
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.


                                       9
<PAGE>

                       TIENS BIOTECH GROUP (USA), INC. AND
                                  SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies (continued)

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

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 10% reduced tax
rate for the next three years.

Prior to the year ended  December 31, 2002,  BIOLOGICAL  has 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 will expire for  BIOLOGICAL  and it will become subject to income tax at a
reduced rate of 10%.

Note 2 - Condensed financial statements and footnotes

The  interim  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  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-QSB 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, 2003 and 2002 and notes  thereto  included in TIENS' Form  10-KSB,
dated April 29, 2004.

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, 2004 and the results of operations  for the six months ended June
30, 2004 and 2003, respectively.  Interim results are not necessarily indicative
of full year  performance  because  of the  impact of  seasonal  and  short-term
variations.

Note 3 - Inventories

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



                             June 30,     December 31,
                                2004           2003
                           ------------   ------------
                            (Unaudited)    (Audited)
                           ------------   ------------
Raw materials              $  2,368,383   $  1,673,405
Work-in-progress                390,447        342,252
Finished goods                3,028,315      1,988,559
                           ------------   ------------
                           $  5,787,145   $  4,004,216
                           ============   ============




                                       10
<PAGE>


                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 4 - Long-term investment

On June 23, 2004, the Board of Directors of Tianshi International Holdings Group
Ltd. agreed to invest $28.8 million into a company, Tiens Ocean Going Co., Ltd.,
to  build a  manufacturing  plant in  Shanghai  China.  As of June 30,  2004 the
Company  has paid an initial  deposit of  $19,204,111  with the  remaining  $9.6
million  to be paid no later  than July 30,  2004.  On July 28,  2004,  the $9.6
million  dollars  was paid.  The $28.8  million has been  deposited  into a bank
account  under the name of Tiens Ocean Going Co.,  Ltd., as the company is still
in the  process of being  approved  by the  appropriate  government  agencies to
conduct business in China.

Note 5 - Supplemental disclosure of cash flow information

No income  taxes  were paid for the six  months  ended  June 30,  2004 and 2003,
respectively. Interest paid amounted to $244,433 and $123,319 for the six months
ended June 30, 2004 and 2003, respectively.

Non - cash financing and investing activities
---------------------------------------------

During the six months  ending June 30, 2004,  the Company sold  equipment  for a
total sales price of $671,359 and received  cash of $66,388 and a receivable  of
$604,971 which is non-interest bearing.

During the six months ending June 30, 2003,  the Company sold several  buildings
for the amount of $3,238,210 to a related party in exchange for  cancellation of
a payable due to the related party. The sale resulted in a gain of $1,791.

Note 6 - 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 six months ended June, 2004 and 2003. The weighted
average  number of shares used to calculate EPS reflect the 6.5 to 1 share split
retroactively  to January 1, 2002. The weighted average number of shares used to
calculate  EPS for the six months  ended  June 30,  2004  (71,998,586)  and 2003
(32,503,302) reflect only the shares outstanding for those periods.

Note 7 - Minority interest

Minority interest represents the outside  shareholders' 20% ownership of Tianjin
Tianshi Biological Development Co., Ltd.

Note 8 - Related party transactions

Sales
-----

The Company sells a majority of its 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.



                                       11
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 8 - Related party transactions (continued)

Sales
-----

Related party sales  amounted to  $28,015,887  and  $17,785,566  for the periods
ended June 30, 2004 and 2003 which represent 100% of total sales for the periods
then ended.

Related party accounts  receivable related to these sales amounted to $6,567,253
and $8,533 as at June 30, 2004 and December 31,  2003,  respectively,  net of an
allowance for doubtful accounts of $39,204 and $ - 0 - , respectively.

Other receivables and note receivable - related party
-----------------------------------------------------

The Company is owed  additional  amounts  classified as other  receivables  from
related  parties  totaling  $11,661,798  and $26,831,339 as of June 30, 2004 and
December  31, 2003,  respectively.  These  receivables  are  generated  from the
Company  making various cash advances and short term loans and the allocation of
various  expenses to related  parties.  These  transactions  are re-occurring in
nature and are paid off during the year. The Company does not charge interest on
these receivables.

On March 26, 2004, Tianjin Tianshi Biological Development Co., Ltd. entered into
an agreement  with Tianjin  Juchao  Commercial  and Trading Co., Ltd. to convert
various  receivable  amounts  into  a  note  receivable  in  the  amount  of RMB
200,000,000 or approximately USD $24,200,000.  The note will be paid off in four
quarterly  installments of RMB 50,000,000 (USD  $6,050,000)  beginning March 31,
2004 and ending December 31, 2004. Interest will be charged beginning January 1,
2004 at an annual  interest rate of 6.048%.  Total  interest  income for the six
months ended June 30, 2004 amounted to approximately $640,332.

The  receivable is secured by the personal  guarantee of Li Jin Yuan,  President
and major shareholder of Tiens Biotech Group (USA),  Inc., and the pledge of 20%
of his stock ownership in Tiens Biotech Group (USA), Inc. or 13,167,000  shares.
These shares are restricted  stock (as defined in Rule 144 of the Securities Act
of 1933, as amended) and can not be traded until  September 10, 2004. As of June
30, 2004,  Tianjin Tianshi  Biological  Development Co., Ltd. received its first
two principal  payments of RMB 100, 000,000 (USA  $12,100,000).  This amount was
distributed in turn to the parent company,  Tianshi International Holdings Group
Limited as a joint venture distribution.

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

Accounts  payable due to related  parties  amounted to $-0- and $758,570 at June
30, 2004 and December 31, 2003, 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 $969,926 and  $1,312,288 as of June 30, 2004 and December 31,
2003, respectively. These amounts arose from cash advances from related parties,
management fees due to related parties and various non-operational  transactions
incurred with related parties.



                                       12
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 8 - Related party transactions (continued)

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

As of January 1, 2003,  the Company had a verbal  agreement  with Tianshi Group,
which is a related  party  through  ownership,  to lease a portion of its office
building and manufacturing facilities. The Company has agreed to pay for certain
expenses of the Tianshi Group in lieu of a lease payment.  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  $287,618  and  $177,855  for the six months  ended  June 30,  2004 and 2003,
respectively.

Note 9 - Minority interest distributions

The Board of Directors of BIOLOGICAL has authorized the following  distributions
to their shareholders in direct proportion to their ownership percentages.

                                          MINORITY
   Date                 TIANSHI          SHAREHOLDER          Totals
------------         ------------       ------------       ------------

March 22, 2004   RMB   82,430,670   RMB   20,607,668   RMB  103,038,338

June 30, 2004         100,000,000         25,000,000        125,000,000
                     ------------       ------------       ------------

Totals           RMB  182,430,670   RMB   45,607,668   RMB  228,038,338
                     ============       ============       ============

Totals           USD $ 22,074,111       $  5,518,528       $ 27,592,639
                     ============       ============       ============


The amounts paid to TIANSHI have used to invest in their new Shanghai investment
described in note 4. As of June 30, 2004, the Minority Shareholder of BIOLOGICAL
has only been paid  $2,191,255 and the remaining  amount has been reflected as a
distribution payable on the accompanying balance sheet.









                                       13
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and Results
         of Operation


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,i+/-  or similar  expressions  are  intended  to  identify
"forward-looking  statementsi+/-  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 primary 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-QSB  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

On February 17, 2004,  Tiens  Biotech Group (USA),  Inc. (the Company)  formally
changed its name from Strategika, Inc. to Tiens Biotech Group (USA), Inc.

On August 22, 2003, Strategika,  Inc., a corporation organized under the laws of
the State of  Delaware  ("Strategika");  Tianshi  International  Holdings  Group
Limited,  a corporation  organized  under the laws of the British Virgin Islands
("TIANSHI");  LI Jinyuan,  JIAO Wenjun and YAN Yupeng, all Chinese Nationals who
are stockholders of TIANSHI (the i(degree)TIANSHI Stockholders") entered into an
Agreement and Plan of Reorganization  (the  i(degree)Agreement").  The Agreement
was effective on September 9, 2003 (the  i(degree)Effective  Date"). Pursuant to
the  Agreement,  Strategika  received from the TIANSHI  Stockholders  all of the
issued and outstanding common stock of TIANSHI in exchange for 68,495,000 shares
of restricted (as defined in Rule 144 of the Securities Act of 1993, as amended)
common stock of Strategika. As additional  consideration,  the 29,000,000 shares
of the common stock of  Strategika  held by Rene  Larrave,  the sole officer and
director of Strategika prior to the reorganization,  were redeemed to Strategika
and dully cancelled by Strategika.

Pursuant to the Agreement and on the Effective  Date, as  consideration  for the
exchange of the TIANSHI Shares,  Strategika issued 68,495,000  restricted common
capital  stocks,  par value  $0.001  per  share,  to the  TIANSHI  Stockholders,
representing  approximately  95% of the issued and  outstanding  common  capital
stock of  Strategika  following  the time of the  issuance.  There are currently
71,998,586  issued and  outstanding  shares of common  stock of the  reorganized
Strategika.

Strategika was incorporated on July 13, 1990 as Super Shops, Inc. under the laws
of the State of Michigan.  In October 2000, Super Shops, Inc.  reincorporated in
Delaware and changed its name to MIA Acquisition  Corp. On February 11, 2002, in
connection with a change in control  transaction,  MIA Acquisition  Corp changed
its name to  Strategika,  Inc.  Until the Effective  Date,  Strategika  had only
nominal assets and liabilities and was a development stage company attempting to
provide network security services to Fortune 1000 listed companies.  As a result
of the  reorganization,  Strategika  will  continue the business  operations  of
TIANSHI.

TIANSHI  was  incorporated  on March 24,  2003 in the  territory  of the British
Virgin  Islands.  On June 18,  2003,  TIANSHI  acquired  80% of Tianjin  Tianshi
Biological  Development Co. Limited ("Tianshi  China") which conducts  TIANSHI's
main business  operations.  Tianshi China is a foreign  investment joint venture
incorporated  in the  People's  Republic of China  ("PRC") on March 27,  1998. A
joint venture agreement was subsequently signed on July 13, 1998 between Tianshi
(HK) International  Limited ("HKCo."),  a company  incorporated in Hong Kong and
100% owned by Mr. LI Jinyuan;  and Tianjin Tianshi  Biological  Engineering Co.,
Limited  ("Tianshi  Engineering"),  a  Chinese  companies  49%  owned by Mr.  LI



                                       14
<PAGE>

Jinyuan's  daughter  Ms.  LI  Baolan  and 51%  owned by  Tianjin  Tianshi  Group
Co.,Ltd.("Tianshi  Group").  Tianshi Group is a company  organized under the PRC
laws,  located in Tianjin,  PRC and 90% owned by Mr. LI Jinyuan and 10% owned by
Ms. LI Baolan.  Tianshi  China is classified  as a Foreign  Invested  Enterprise
(FIE) in the PRC and is subject to the FIE laws of the PRC. Its legal  structure
is similar to a corporation  and a limited  liability  company  organized  under
state laws in the United States. The Articles of Association  provide for a term
of 50 years and registered  capital of $10,000,000.  Tianshi China was 80% owned
by HK Co.,  and 20% owned by  Tianshi  Engineering.  On June 18,  2003,  TIANSHI
acquired  80%  ownership  in Tianshi  China from HK Co.  The  remaining  20% was
acquired by Tianjin  Tianshi  Pharmaceuticals  Co., Ltd., a Chinese company with
Tianshi Group as its majority shareholder (51%).

Tianshi  China is engaged in the  manufacturing  and  production  of  healthcare
products and is based in Tianjin, PRC. Tianshi China is primarily engaged in the
research,  development,  manufacturing  and  marketing  of  healthcare  products
including  herbal  products,  vitamin and mineral  supplements and personal care
products.  Since its establishment,  Tianshi China has developed 7 major product
series and produced 45 types of healthcare  products.  Twenty-three  of them are
health food products,  all of which have obtained the "Health Food Certificates"
issued by the PRC Ministry of Health to be sold in the PRC. The 7 major  product
series are:  High-Calcium  Series,  Immune System  Adjustment  Series,  Nutrient
Supplements Series,  Cholesterol Adjustment Series, High-Fiber Series, Heart and
Brain  Improvement  Series and  Personal  Care  Series.  Under the  High-Calcium
series,  Tianshi China has conducted  extensive  research and developed  Tianshi
Hyperglycemia  High Calcium  Nutrient  Powder and Tianshi  Children High Calcium
Nutrient  Powder,  which  have been  awarded  patents  from  State  Intellectual
Properties  Office in China with respective  patent numbers of ZL97115067.2  and
ZL97115068.0.

Tianshi China has its own research and product  development  center.  It employs
professionals in research,  product  development and innovation.  On November 3,
2002,  Tianshi China was awarded Quality System  Certificate for compliance with
the standard "ISO9001:  2000" in the area of Design and Development,  Production
and Service of Food and Healthcare Food in China.

Tianshi  China has been  conducting  the  marketing  and  sales of its  products
through its affiliate company, Tianshi Engineering in China. Tianshi Engineering
is a limited  liability  company  duly  incorporated  under the laws of PRC, and
affiliated  with  Tianshi  China  through  common  ownership  of Mr. LI Jinyuan.
Tianshi  Engineering  markets and sells Tianshi  China's  products  domestically
through its 22 branches, representative offices and chain stores and 12 domestic
affiliate  companies.  The Company also markets its products to approximately 90
countries  worldwide  including the United States,  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.


RESULTS OF OPERATIONS

General Results of Operations for the six months ending June 30, 2004

As of June 30, 2004, we had  $35,694,535  of retained  earnings.  As of June 30,
2004,  we had cash of  $9,313,796  and reported  total  shareholders'  equity of
$48,334,087.  For the six  months  ending  June 30,  2004,  we had  revenues  of
$28,015,887 and general, administrative and sales expenses of $2,618,919.



                                       15
<PAGE>

1) SALES increased by $10,230,321, or approximately 57.52%, from $17,785,566 for
the six months ended June 30, 2003 to $28,015,887  for the six months ended June
30, 2004.  The 57.52%  increase was a result of directly  marketing our products
internationally  since the end of 2002. By the end of 2003, we sold our products
to  approximately 90 countries.  In addition,  we increased our networking sales
forces in China  during 2003.  For the six months ended June 30, 2004,  domestic
sales  in China  increased  to  $17,253,915  and  overseas  sales  increased  to
$10,761,972.

2) COST OF GOODS SOLD.  Consolidated  cost of goods sold  decreased by $411,447,
from $7,028,913 for the six months ended June 30, 2003 to $6,617,466 for the six
months  ended  June  30,  2004.  Cost of  goods  sold as a  percentage  of sales
decreased to 23.62% for the six months ended June 30, 2004,  from 39.52% for the
six  months  ended  June 30,  2003.  The  decrease  in cost of  goods  sold as a
percentage of sales was a result of continuing  stronger management control over
(1)  cost  of raw  material  purchases;  (2)  utilization  of raw  material  and
production  cost  efficiency;  (3) product quality  control;  (4) improvement of
manufacturing technology; and (5) economy of scale.

(3) GROSS  PROFIT.  Consolidated  gross profit  increased by  $10,641,768,  from
$10,756,653  for the six months ended June 30, 2003 to  $21,398,421  for the six
months ended June 30, 2004.  Gross profit as a percentage of sales  increased to
76.38% for the six months  ended  June 30,  2004 from  60.48% for the six months
ended June 30, 2003.  This increase in gross profit as a percentage of sales was
the results of increasing  sales both in the domestic and worldwide  markets and
successful control over production cost.

(4) SELLING AND ADMINISTRATIVE  EXPENSES.  Selling and  administrative  expenses
increased by $  1,258,074from  $1,360,845 for the six months ended June 30, 2003
to $  2,618,919for  the  six  months  ended  June  30,  2004.  The  selling  and
administrative  expenses as a percentage of sales increased to 9.35% for the six
months ended June 30, 2004 from 7.65% for the six months ended June 30, 2003.

(5)  NET  INCOME.   Consolidated   net  income   increased  by  $7,667,591,   or
approximately 101.24%, from $7,573,654 for the six months ended June 30, 2003 to
$ 15,241,245for  the six months ended June 30, 2004. The increase was mainly due
to increase in sales and decrease in production cost.

CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

TIANSHI markets most of its products through various domestic and  international
business  entities that are related to Tianshi China through  common  ownership.
Related  party  sales  amounted  to  100%  of  total  sales.  Due to the  common
ownership,  there  are no  formal  sales or  administrative  agreements  between



                                       16
<PAGE>

Tianshi China and those related  parties.  The business  operations  among these
related  entities are regulated  through internal  ordinances.  For the domestic
market, Tianshi China sells all of its products to Tianshi Engineering, which in
turn sells them through its 22 representative  offices,  and 12 other affiliated
companies in China. All of these  affiliated  companies are owned in whole or in
part by Li Jinyuan.

Other receivables

The Company  through its  Chinese  joint  venture,  Tianjin  Tianshi  Biological
Development  Co.,  Ltd.,  is  owed  additional   amounts   classified  as  other
receivables from related parties totaling $11,661,798 and $26,831,339 as of June
30, 2004 and December 31, 2003,  respectively.  These  receivables are generated
from the Company  making  various  cash  advances and  short-term  loans and the
allocation  of various  expenses  to related  parties.  These  transactions  are
re-occurring   in  nature.   The  Company  did  not  charge  interest  on  these
receivables, with the exception of the note receivable described below.

On March 26, 2004,  Tianjin Tianshi  Biological  Development Co., Ltd.  (Tianshi
China),  entered into an agreement  with Tianjin  Juchao  Commercial and Trading
Co., Ltd. to convert  various  receivable  amounts into a note receivable in the
amount of RMB200,000,000 or approximately USD$24,200,000.  The note will be paid
off in four quarterly  installments  of RMB 50,000,000  beginning March 31, 2004
and ending December 31, 2004. Interest will be charged beginning January 1, 2004
at an annual  interest  rate of 6.048%.  This note is  secured  by the  personal
guarantee of LI Jinyuan,  President and major shareholder of Tiens Biotech Group
(USA), Inc., and the pledge of 20% of his stock ownership in Tiens Biotech Group
(USA), Inc. or 13,167,000 shares.  These shares are restricted stock (as defined
in Rule 144 of the  Securities  Act of 1933,  as  amended)  and cannot be traded
until  September  10,  2004.Tianjin  Tianshi  Biological  Development  Co., Ltd.
received its first  principal  payment of  RMB50,000,000  during  March,2004 and
second payment of  RMB50,000,000  during June, 2004. This amount was distributed
in turn to the parent company, Tianshi International Holdings Group Limited as a
joint venture distribution.

Accounts payable

Accounts  payable due to related parties amounted to $0 and $758,570 at June 30,
2004 and December 31, 2003, respectively.  These amounts were generated from the
purchases of raw materials, rent expense and the Company's transportation costs.

Other payables

The  Company  also has  amounts  classified  as other  payables  due to  related
parties,  which  amounted to  $969,926  and  $1,312,288  as of June 30, 2004 and
December 31, 2003,  respectively.  These  amounts  arose from cash advances from
related  parties,  management  service  fees due to related  parties and various
non-operational transactions incurred with related parties.



                                       17
<PAGE>

Rent expense

At December 31, 2002,  the Company had a verbal  agreement  with Tianshi  Group,
which is a related  party  through  ownership,  to lease a portion of its office
building and manufacturing facilities. The Company had agreed to pay for certain
expenses of the Tianshi Group in lieu of a lease payment.  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 $287,618  and
$177,855 for the six months ended June 30, 2004 and 2003, respectively.

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended June 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.

For the six  months  ended  June  30,  2003,  net  cash  provided  by  operating
activities was $2,582,021,  net cash used in investing  activities was $705,066,
and net cash used in financing activities was $706,325.

Net cash provided by operating activities increased by $7,565,871 to $10,147,892
for  the  six  months  ended  June  30,  2004,   representing   an  increase  of
approximately  293.02%  compared to  $2,582,021  net cash  provided by operating
activities for the same period of 2003. The increase in cash flow from operating
activities  primarily  reflects  increasing in revenues for the six months ended
June 30, 2004. This increase was also due to our better management on collection
of other  receivables  from our related  party  during the first two quarters of
2004.

Net cash used in investing  activities increased by $7,274,492 to $7,979,558 for
the six months ended June 30, 2004,  representing a 1031.75% increase,  compared
to $705,066 net cash used by investing  activities  for the same period of 2003.
The  increase in net cash used in  investing  activities  was due to increase in
purchase  capital  assets and the  investment  in Tiens  Ocean Going CO. Ltd. in
Shanghai.  According to the Resolution of Board of Directors,  TIENS through its
wholly owned subsidiary,  Tianshi  International  Holdings Group Ltd.,  invested
$19,204,111  in Tiens Ocean Going CO.  Ltd.  during the second  quarter of 2004.
This was offset by the  collection  $12,100,000  which  represents the first two
payments due on the note receivable  from Tianjin Juchao  Commercial and Trading
Co., Ltd.

Net cash used in financing  activities increased by $4,873,256 to $5,579,581 for
the six months ended June 30, 2004, representing a 689.95% increase, compared to
$706,325 net cash used in financing  activities for the same period of 2003. The
increase in cash used in financing  was primarily due to increase in payments on
short term notes payable to banks and payments to minority interest  shareholder
in subsidiary.

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.  We anticipate that our current operating
activities will enable us to meet the anticipated cash requirements for the 2004
fiscal year.



                                       18
<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.


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

Our  operating  subsidiaries  are located in China.  This  Company  buys all raw
materials in China and sells 50% of our products in China using Chinese Renminbi
as the functional currency.  Based on China government  regulation,  all foreign
currencies  under the  category  of current  accounts  are  allowed to be freely
exchanged with hard  currencies.  During the past two years of operation,  there
were no significant changes in exchange rates; however,  unforeseen developments
may cause a significant change in exchange rates.





Item 3 - Controls and Procedures

As required by Rule 13a-15 under the Exchange  Act,  within the 90 days prior to
the filing date of this report,  the Company  carried out an  evaluation  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures.  This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's President
and Financial Officer.  Based upon that evaluation,  the Company's President and
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures  are  effective.  There  have  been  no  significant  changes  in the
Company's  internal  controls or in other  factors,  which  could  significantly
affect  internal  controls  subsequent  to the date the Company  carried out its
evaluation.



                                       19
<PAGE>

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that information  required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required to be  disclosed  in Company  reports  filed under the  Exchange Act is
accumulated and  communicated to management,  including the Company's  President
and  Financial  Officer as  appropriate,  to allow  timely  decisions  regarding
required disclosure.

The Company is in the process of outsourcing to an accredited accounting firm to
re-design  Internal  Control  system as well as Risk  Management  system for the
Company  to  be  in  compliance   with  rules  and   regulations  set  forth  in
Sarbanes-Oxley Act.



Part II - Other Information

Item 1 - Legal Proceedings

None

Item 2 - Changes in Securities

None

Item 3 - Defaults on Senior Securities

None

Item 4 - Submission of Matters to a Vote of Security Holders

None.


Item 5 - Other Information

None

Exhibits

31.1     Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2     Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


32.1     Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


                                       20
<PAGE>


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            Tiens Biotech Group (USA), Inc.

Dated: August 13, 2004                       /s/ LI Jinyuan
       --------------                       ------------------------------------
                                            LI Jinyuan
                                            Chairman and President