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

                     U.S. 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 March 31, 2006.

[ ] 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                            (I.R.S. Employer
   of Identification No.)                        incorporation or organization)

                               No. 6, Yuanquan Rd.
                         Wuqing New Tech Industrial Park
                              Tianjin, China 301700
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)

               Registrant's Telephone Number: 011 86-22-8213-7658

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 if the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of "accelerated
filer and larger accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

  Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ]  No [X]

There were 71,333,586 shares of the Company's common stock outstanding on
May 12, 2006.

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

<PAGE>

                         TIENS BIOTECH GROUP (USA), INC.
                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                           PAGE
                                                                                           ----
<S>                                                                                          <C>
Part I. Financial Information

Item 1. Financial Statements (unaudited)                                                      3

Consolidated Balance Sheets as of March 31, 2006 and December 31, 2005                        3

Consolidated Statements of Income and Other Comprehensive Income for the three
months ended March 30, 2006 and 2005                                                          4

Consolidated Statements of Shareholders' Equity for the three months ended March
31, 2006 and 2005                                                                             5

Consolidated Statements of Cash Flows for the three months ended March 31, 2006
and 2005                                                                                      6

Notes to Consolidated Financial Statements                                                    7

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations                                                                                23

Item 3. Quantitative and Qualitative Disclosures About Market Risk                           31

Item 4. Controls and Procedures                                                              31

Part II. Other Information

Item 1. Legal Proceedings                                                                    32

Item 1A. Risk Factors                                                                        32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                          32

Item 3. Defaults Upon Senior Securities                                                      32

Item 4. Submission of Matters to a Vote of Security Holders                                  32

Item 5. Other Information                                                                    32

Item 6. Exhibits                                                                             32
</TABLE>

                                        2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                   AS OF MARCH 31, 2006 AND DECEMBER 31, 2005

<TABLE>
<CAPTION>
                                                                     March 31      December 31
                                                                      2006             2005
                                                                  (Unaudited)       (Audited)
                                                                 --------------   --------------
<S>                                                              <C>              <C>
                          ASSETS
                          ------
CURRENT ASSETS:
  Cash                                                           $   35,470,512   $   77,545,991
  Short-term investment                                              13,728,000                -
  Accounts receivable, trade - related parties, net of
   allowance for doubtful accounts of $208,251 and $206,916
   as of March 31, 2006 and December 31, 2005, respectively           9,906,880        2,165,958
  Other receivables                                                     408,003          234,486
  Other receivables - related parties                                32,195,077        3,281,081
  Inventories                                                         5,790,819        7,516,352
                                                                 --------------   --------------
    Total current assets                                             97,499,291       90,743,868
                                                                 --------------   --------------

PLANT AND EQUIPMENT, net                                             26,534,605       24,877,688
                                                                 --------------   --------------

OTHER ASSETS:
  Intangible assets, net                                                484,680          476,637
  Employee advances                                                     267,101          145,071
  Deposits                                                            5,270,190        5,380,890
                                                                 --------------   --------------
    Total other assets                                                6,021,971        6,002,598
                                                                 --------------   --------------
    Total assets                                                 $  130,055,867   $  121,624,154
                                                                 ==============   ==============

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

CURRENT LIABILITIES:
  Accounts payable                                               $    2,326,621   $    2,698,813
  Advances from customers - related parties                           2,145,619        2,077,130
  Wages and benefits payable                                            511,614        1,045,052
  Other taxes payable                                                 1,215,316        1,413,054
  Other payables                                                        458,788          339,390
  Other payables - related parties                                    1,867,311        1,816,534
  Current portion of long term debt                                   2,130,000        2,130,000
                                                                 --------------   --------------
    Total current liabilities                                        10,655,269       11,519,973

LONG TERM DEBT, net of current portion                                8,527,742        8,527,742
                                                                 --------------   --------------
    Total liabilities                                                19,183,011       20,047,715
                                                                 --------------   --------------

MINORITY INTEREST                                                    13,737,921       11,929,040
                                                                 --------------   --------------

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                                                  75,848,769       69,079,060
  Accumulated other comprehensive income                              2,952,040        2,234,213
                                                                 --------------   --------------
   Total shareholders' equity                                        97,134,935       89,647,399
                                                                 --------------   --------------
     Total liabilities and shareholders' equity                  $  130,055,867   $  121,624,154
                                                                 ==============   ==============
</TABLE>

The accompanying notes are an integral part of this consolidated statement.

                                        3
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                        March 31           March 31
                                                          2006               2005
                                                       (Unaudited)        (Unaudited)
                                                     ---------------    ---------------
<S>                                                  <C>                <C>
REVENUE - RELATED PARTIES                            $    16,722,560    $    14,295,999
COST OF SALES                                              4,806,296          3,457,418
                                                     ---------------    ---------------
GROSS PROFIT                                              11,916,264         10,838,581
SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES              2,566,422          2,633,875
                                                     ---------------    ---------------
INCOME FROM OPERATIONS                                     9,349,842          8,204,706
OTHER (EXPENSE), net                                         (37,721)          (463,061)
                                                     ---------------    ---------------
INCOME BEFORE PROVISION FOR INCOME TAXES
 AND MINORITY INTEREST                                     9,312,121          7,741,645
PROVISION FOR INCOME TAXES                                   733,531            616,259
                                                     ---------------    ---------------
INCOME BEFORE MINORITY INTEREST                            8,578,590          7,125,386
MINORITY INTEREST                                          1,808,881          1,520,106
                                                     ---------------    ---------------
NET INCOME                                                 6,769,709          5,605,280
OTHER COMPREHENSIVE INCOME:
  Foreign currency translation adjustment                    717,827                999
                                                     ---------------    ---------------
COMPREHENSIVE INCOME                                 $     7,487,536    $     5,606,279
                                                     ===============    ===============
EARNINGS PER SHARE, BASIC AND DILUTED                $          0.09    $          0.08
                                                     ===============    ===============
WEIGHTED AVERAGE NUMBER OF SHARES                         71,333,586         71,333,586
                                                     ===============    ===============
</TABLE>

The accompanying notes are an integral part of this consolidated statement.

                                        4
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                                               Accumulated
                                                                                               other
                                                                                               compre-
                                                                                               hensive
                               Number      Common       Paid-in      Statutory    Retained     income
                               of shares   stock        capital      Reserve      earnings     (loss)       Totals
                              -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                            <C>         <C>          <C>          <C>          <C>          <C>          <C>
BALANCE, December 31, 2004,
audited                        71,333,586  $    71,334  $ 8,842,009  $ 9,420,783  $42,200,940  $   (12,167) $60,522,899
Net income                                                                          5,605,280                 5,605,280
Foreign currency translation
 gain                                                                                                  999          999
                              -----------  -----------  -----------  -----------  -----------  -----------  -----------
BALANCE, March 31, 2005,
unaudited                      71,333,586       71,334    8,842,009    9,420,783   47,806,220      (11,168)  66,129,178
Net income                                                                         21,272,840                21,272,840
Foreign currency translation
 gain                                                                                            2,245,381    2,245,381
                              -----------  -----------  -----------  -----------  -----------  -----------  -----------
BALANCE, December 31, 2005,
audited                        71,333,586       71,334    8,842,009    9,420,783   69,079,060    2,234,213   89,647,399
Net income                                                                          6,769,709                 6,769,709
Foreign currency translation
 gain                                                                                              717,827      717,827
                              -----------  -----------  -----------  -----------  -----------  -----------  -----------
BALANCE, March 31, 2006,
unaudited                      71,333,586  $    71,334  $ 8,842,009  $ 9,420,783  $75,848,769  $ 2,952,040  $97,134,935
                              ===========  ===========  ===========  ===========  ===========  ===========  ===========
</TABLE>

The accompanying notes are an integral part of this consolidated statement.

                                        5
<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                       March 31          March 31
                                                                         2006              2005
                                                                     (Unaudited)        (Unaudited)
                                                                   ----------------  ----------------
<S>                                                                <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                       $      6,769,709  $      5,605,280
  Adjustments to reconcile net income to cash
    provided by (used in) operating activities:
      Minority interest                                                   1,808,881         1,519,108
      Depreciation                                                          558,017           400,768
      Amortization                                                           20,111            15,895
      (Gain) loss on sale of assets                                           3,644             7,869
    (Increase) decrease in assets:
      Accounts receivable, trade - related parties                       (7,695,991)          524,167
      Other receivables                                                    (171,315)          100,108
      Other receivables - related parties                               (28,794,694)       (4,312,319)
      Inventories                                                         1,766,918          (998,088)
      Employee advances                                                    (120,609)            1,265
      Deposits                                                              144,834          (788,952)
    Increase (decrease) in liabilities:
      Accounts payable                                                     (388,043)        1,173,576
      Accounts payable - related parties                                          -            47,200
      Advances from customers - related parties                              54,866             8,361
      Wages and benefits payable                                           (538,016)         (137,478)
      Other taxes payable                                                  (206,025)          395,247
      Other payables                                                        117,313                 -
      Other payables - related parties                                       39,368           261,913
                                                                   ----------------  ----------------
        Net cash used by operating activities                           (26,631,032)        3,823,920
                                                                   ----------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Increase in short-term investment                                     (13,638,900)                -
  Increase in intangible assets                                             (25,059)                -
  Proceeds from sales equipment and automobiles                              34,891             9,071
  Purchase of equipment and automobiles                                  (2,086,972)       (1,424,265)
                                                                   ----------------  ----------------
        Net cash (used in) provided by investing activities             (15,716,040)       (1,415,194)
                                                                   ----------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments, net of borrowings on short term notes payable                         -           (63,337)
                                                                   ----------------  ----------------
        Net cash used in financing activities                                     -           (63,337)
                                                                   ----------------  ----------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                     271,593               999
                                                                   ----------------  ----------------

INCREASE/DEREASE IN CASH                                                (42,075,479)        2,346,388
CASH, beginning of year                                                  77,545,991        39,243,872
                                                                   ----------------  ----------------
CASH, end of year                                                  $     35,470,512  $     41,590,260
                                                                   ================  ================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes                                         $        757,394  $              -
                                                                   ================  ================
Cash paid for interest expense                                     $              -  $          2,362
                                                                   ================  ================
</TABLE>

The accompanying notes are an integral part of this consolidated statement.

                                        6
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BACKGROUND

Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens") 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, Inc. in February 2002.

Pursuant to an Agreement and Plan of Reorganization, dated August 22, 2003 (the
"Agreement"), among the Company, Tianshi International Holdings Group Limited
("Tianshi International"), and Jinyuan Li, Wenjun Jiao and Yupeng Yan, all
Chinese Nationals who were stockholders of Tianshi International (the "Tianshi
Stockholders"), on September 9, 2003 the Company received from the Tianshi
Stockholders all of the issued and outstanding common stock of Tianshi
International in exchange for the issuance by the Company of 68,495,000 shares
of its common stock to the Tianshi Stockholders, representing 95% of the issued
and outstanding common stock of the Company at such time, after giving effect to
the issuance.

The purchase of Tianshi International and the issuance of the Company's common
stock in connection with the purchase 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 on 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") from Tianshi
Hong Kong International Development Co., Ltd., which is 100% owned by the
Company's Chairman, Chief Executive Officer and President, Jinyuan Li.
Biological is a Chinese-foreign equity joint venture company established under
the laws of the PRC on March 27, 1998. Biological is subject to the Law on Sino
Foreign Equity Joint Ventures, its implementation regulations and other related
rules and 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
beginning 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 reporting entity
--------------------

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

                                        7
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

<TABLE>
<CAPTION>
                                                                               Percentage
                                Subsidiary                                    Of Ownership
--------------------------------------------------------------------------    ------------
<S>                                                 <C>                              <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 company 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.

Tiens Yihai Co. Ltd. ("Tiens Yihai") is a foreign investment joint venture which
is incorporated under the laws of People's Republic of China (the "PRC" or
"China"). 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.

RELATED PARTIES
---------------

Tianjin Tianshi Pharmaceuticals Co., Ltd. ("Tianshi Pharmaceuticals"), a Chinese
company, owns the remaining 20% of Biological. Tianshi Pharmaceuticals is 87.66%
owned by Tianjin Tianshi Group Co., Ltd. ("Tianshi Group"), a Chinese company,
and 7.29% owned by Mr. Li's daughter, Ms. Baolan Li. Tianshi Group is 90% owned
by Mr. Li and 10% owned by Ms. Li. Tianshi Group also owns 51% of Tianshi
Engineering, the entity to which the Company sells all of its products for
consumption in the PRC. Ms. Li owns the remaining 49% of Tianshi Engineering.
Tiens Yihai is 0.6% owned by Tianshi Pharmaceuticals.

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

The Company through its subsidiaries is primarily engaged in the manufacturing
of nutritional supplement products, including wellness products and dietary
supplement products, and personal care products. In the PRC, the Company sells
its products to Tianshi Engineering. Tianshi Engineering, in turn, sells the
products to end-users through its chain stores and Chinese affiliated companies.
Outside the PRC, the Company sells its products to an extensive direct sales
force of overseas affiliates and independent distributors who use the products
themselves and/or resell them to other distributors or consumers. The Company
sells to affiliated companies located in 54 countries.

                                        8
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

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 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
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.

As of March 31, 2006, Tianshi Engineering, a related company, continued to own
all of the related party distributors which sell the Company's products in
China.

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 $2,952,040 and $2,234,213 as of March 31, 2006 and December 31,
2005, respectively. The balance sheet amounts with the exception of equity at
March 31, 2006 were translated at 8.01 RMB to $1.00 USD as compared to 8.06 RMB
at December 31, 2005. The equity accounts were stated at their historical rate.
The weighted average translation rate of 8.04 RMB to 1.00 USD for the three
months ended March 31, 2006 was applied to income statement accounts.

                                        9
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Foreign currency translation, (continued)
-----------------------------------------

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
March 31, 2006 and December 31, 2005.

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
probable that taxable profit will be available against which deductible
temporary differences can be utilized.

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 related items are
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.

                                       10
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

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

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 a Special Economic Zone and is subject to the special
reduced income tax rate of 15%. Biological was fully exempt from PRC income
taxes for two years starting from the year profits were 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 first year profits are 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 March 31, 2006, Tiens Yihai is in the
developmental stage of its organization and did not have any operating income.

Provision for income taxes for the three months ending March 31, 2006 and 2005
were $733,531 and $616,259, respectively.

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

                                              2006          2005
                                           ----------    ----------
U.S. Statutory rate                              34.0%         34.0%
Foreign income not recognized in USA            (34.0)        (34.0)
China income taxes                               33.0          33.0
China income taxes savings                      (25.5)        (25.5)
                                           ----------    ----------
Total provision for income taxes                  7.5%          7.5%
                                           ----------    ----------

                                       11
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

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

The estimated tax savings due to the reduced tax rate for the three months
ending March 31, 2006 and 2005 amounted to $1,995,203 and $1,721,940,
respectively. The net effect on earnings per share if the income tax had been
applied would decrease earnings per share for March 31, 2006 and 2005 to $0.07,
and $0.05, respectively.

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 three months ended
March 31, 2006 and 2005 amounted to $558,017, and $400,768, 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 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.

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 March 31, 2006, the Company expects these assets to be
fully recoverable.

                                       12
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

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

Plant and equipment consist of the following at March 31, 2006 and December 31,
2005:
                                                March 31,      December 31,
                                                   2006            2005
                                               ------------    ------------
Buildings and improvements                     $ 14,054,761    $ 13,907,626
Office facilities                                   305,865         283,503
Computer equipment and software                   1,435,871       1,441,159
Equipment                                         7,724,708       7,352,056
Vehicles                                          3,712,912       3,619,837
Construction in progress                          5,589,731       3,991,285
                                               ------------    ------------
          Total                                  32,823,848      30,595,466
Less: Accumulated depreciation                    6,289,243       5,717,778
                                               ------------    ------------
          Plant and equipment, net             $ 26,534,605    $ 24,877,688
                                               ============    ============

Capitalized Interest
--------------------

The Company capitalizes a portion of its interest costs as a component of
building construction costs. For the three months ended March 31, 2006 and 2005,
the total interest expense amounted to $133,016 and $136,494, respectively, and
there was no capitalized interest expense during these periods.

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.

Fair value of financial instruments
-----------------------------------

The Company's financial instruments consist primarily of cash, trade
receivables, trade payables, advances, other receivables, and debt instruments.
The carrying values of these financial instruments approximate their fair
values. The estimated fair values have been determined using appropriate market
information and valuation methodologies. Long-term debt is carried at face value
less unamortized discount, and it approximates fair value since the interest
rates are commensurate with rates on debt with similar risk factors.

                                       13
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Recently issued accounting pronouncements
-----------------------------------------

In March 2005, the FASB published FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations," which clarifies that the term,
conditional asset retirement obligations, as used in SFAS No. 143, "Accounting
for Asset Retirement Obligations," refers to a legal obligation to perform an
asset retirement activity in which the timing and (or) method of settlement are
conditional on a future event that may or may not be within the control of the
entity. The uncertainty about the timing and (or) method of settlement of a
conditional asset retirement obligation should be factored into the measurement
of the liability when sufficient information exists. The interpretation also
clarifies when an entity would have sufficient information to reasonably
estimate the fair value of an asset retirement obligation. This interpretation
is effective no later than the end of the Company's fiscal year 2006. The
adoption of this Interpretation is not expected to have a material effect on the
Company's consolidated financial position or results of operations.

In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections". SFAS No. 154 replaces APB No. 20 ("APB 20") and SFAS No. 3,
"Reporting Accounting Changes in Interim Financial Statements," and applies to
all voluntary changes in accounting principle, and changes the requirements for
accounting for and reporting of a change in accounting principle. APB 20
previously required that most voluntary changes in accounting principle be
recognized by including in net income of the period of change a cumulative
effect of changing to the new accounting principle whereas SFAS No. 154 requires
retrospective application to prior periods' financial statements of a voluntary
change in accounting principle, unless it is impracticable.

SFAS No. 154 enhances the consistency of financial information between periods.
SFAS No. 154 will be effective beginning with the Company's first quarter of
fiscal year 2006. The Company does not expect that the adoption of SFAS No. 154
will have a material impact on its results of operations, financial position or
cash flows.

In June 2005, the EITF reached a consensus on Issue No. 05-06, "Determining the
Amortization Period for Leasehold Improvements". EITF 05-06 provides guidance
for determining the amortization period used for leasehold improvements acquired
in a business combination or purchased after the inception of a lease,
collectively referred to as subsequently acquired leasehold improvements. EITF
05-06 provides that the amortization period used for the subsequently acquired
leasehold improvements be the lesser of (a) the subsequently acquired leasehold
improvements' useful lives, or (b) a period that reflects renewals that are
reasonably assured upon the acquisition or the purchase. EITF 05-06 is effective
on a prospective basis for subsequently acquired leasehold improvements
purchased or acquired in periods beginning after the date of the FASB's
ratification, which was on June 29, 2005. The Company does not anticipate that
EITF 05-06 will have a material impact on its consolidated financial position or
results of operations.

                                       14
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Recently issued accounting pronouncements, (continued)
------------------------------------------------------

In July 2005, the Financial Accounting Standards Board (FASB) issued an Exposure
Draft of a proposed Interpretation "Accounting for Uncertain Tax Positions--an
interpretation of FASB Statement No. 109." Under the proposed Interpretation, a
company would recognize in its financial statements its best estimate of the
benefit of a tax position, only if the tax position is considered probable of
being sustained on audit based solely on the technical merits of the tax
position.

In evaluating whether the probable recognition threshold has been met, the
proposed Interpretation would require the presumption that the tax position will
be evaluated during an audit by taxing authorities. The proposed Interpretation
would be effective as of the end of the first fiscal year ending after December
15, 2005, with a cumulative effect of a change in accounting principle to be
recorded upon the initial adoption.

The proposed Interpretation would apply to all tax positions and only benefits
from tax positions that meet the probable recognition threshold at or after the
effective date would be recognized. The Company is currently analyzing the
proposed Interpretation and has not determined its potential impact on our
consolidated financial statements. While we cannot predict with certainty the
rules in the final Interpretation, there is risk that the final Interpretation
could result in a cumulative effect charge to earnings upon adoption, increases
in future effective tax rates, and/or increases in future interperiod effective
tax rate volatility.

In October 2005, FASB Staff Position (FSB) FAS 13-1, "Accounting for Rental
Costs Incurred during a Construction Period" was issued. This FSP concluded that
rental costs associated with ground or building operating leases that are
incurred during a construction period be expensed. The guidance in the FSP is
required to be applied to the first reporting period beginning after December
15, 2005. The adoption of this pronouncement is not expected to have a material
impact on the Company's consolidated financial position or results of
operations.

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

Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the PRC. Total cash in state-owned banks at March 31,
2006 and December 31, 2005 amounted to $35,261,108 and $77,603,398, 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. The difference between the total cash in state-owned
banks and cash in bank on balance sheet is due to the outstanding items between
the bank statements and bank accounts of the Company.

                                       15
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

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

The Company's trade accounts receivable are 100% due from related companies.
Management believes that the accounts are fully collectible as these amounts are
being collected throughout the year. Also, management reviews its accounts
receivable on a regular basis to determine if the bad debt allowance is adequate
at each year-end.

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

Inventories are stated at the lower of cost or market using the first-in,
first-out basis and consist of the following at March 31, 2006 and December 31,
2005, respectively:

                                                March 31,      December 31,
                                                   2006            2005
                                               ------------    ------------
Raw materials                                  $  4,146,913    $  4,654,596
Work-in-progress                                          -         129,144
Finished goods                                    1,643,906       2,732,612
                                               ------------    ------------
Total                                          $  5,790,819    $  7,516,352
                                               ============    ============

The Company reviews its inventory annually for possible obsolete goods or to
determine if any reserves are necessary for potential obsolescence. The Company
has written off the obsolete goods that amounted to $0 and $154,525 as of March
31, 2006 and December 31, 2005, respectively.

Intangible assets
-----------------

All the land located in the PRC is owned by the Chinese government and cannot be
sold to any individual or company. However, the government grants the user a
"land use right" to use the land. The Company acquired two land use rights for
fifty years from the PRC on December 1, 1999 and October 4, 2004 for $645,818 in
total. The costs of the rights are being amortized over ten years, using the
straight-line method

Amortization expense for the three months ended March 31, 2006 and 2005 amounted
to $20,111 and $15,895, respectively, and intangible assets consists of the
following as of March 31, 2006 and December 31, 2005:

                                                March 31,      December 31,
                                                   2006            2005
                                               ------------    ------------
Land use rights                                $    653,135    $    635,795
Other intangible assets                             161,779         150,965
less amortization                                  (330,234)       (310,123)
                                               ------------    ------------
Intangible assets, net                         $    484,680    $    476,637
                                               ============    ============

                                       16
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)

Deposits-non current
--------------------

The Company as of March 31, 2006 and December 31, 2005 had outstanding deposits
of $5,270,190 and $5,380,890, respectively. The Company has deposited $3.59
million with a local government agency to acquire the land use right for land
located in Shanghai. This is in connection with its joint venture project
described in Note 8. The land use right is for a term of 50 years and as of
March 31, 2006, 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.

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

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

NOTE 3 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

For the three months ended March 31, 2006, $757,394 of income taxes was paid for
the remaining unpaid balance of income taxes for the year ended December 31,
2005. No income taxes were paid for the three months ended March 31, 2005
because the Company was not taxed during the year 2004, and it started paying
income taxes from the second quarter of 2005. Interest paid amounted to $0 and
$2,362 for the three months ended March 31, 2006 and 2005, respectively.

NOTE 4 - 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 three months ended March 31, 2006 and 2005.

The weighted average number of shares used to calculate EPS for the three months
ended March 31, 2006 (71,333,586) and 2005 (71,333,586) reflect only the shares
outstanding for those periods.

NOTE 5 - LONG TERM DEBT, RELATED PARTY

In 2004, Tianshi International entered a term loan agreement with Tianyuan
Capital Development Corp. Ltd. ("Tianyuan Capital"), pursuant to which Tianyuan
Capital agreed to lend $10.65 million in the aggregate to Tianshi International,
at an interest rate of 5% per year. Tianshi International used the loan proceeds
in Tiens Yihai. Mr. Jinyuan Li owns 100% of Tianyuan Capital.

                                       17
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - LONG TERM DEBT, RELATED PARTY, (CONTINUED)

The principal of the loan is required to be paid in ten consecutive semi-annual
installments of each $1,065,000 on June 30 and December 31st of each year,
commencing on June 30, 2006 and ending June 30, 2011. Interest is required to be
paid on the outstanding and principal amount of the loan at an annual interest
rate of 5% on June 30 and December 31, commencing on December 31, 2004. In 2005,
$532,887 of interest was paid. Interest of $131,391 was accrued for the three
months ended March 31, 2006.

The following table shows the Company's long-term debt as of March 31, 2006 and
December 31, 2005:

                                                 March 31,      December 31,
                                                    2006            2005
                                                ------------    ------------
Long-term Debt to Tianyuan Capital
 Development Corp. Ltd., related party, total   $ 10,657,742    $ 10,657,742
Less current portion of long-term debt             2,130,000       2,130,000
                                                ------------    ------------
Long term portion of long-term debt, related
 party                                          $  8,527,742    $  8,527,742
                                                ============    ============

Total principal payments for the next five years and thereafter on all long-term
debt are as follows:

  Twelve
  Months
  Ending
 March 31,      Amount
-----------   -----------
   2007       $ 2,130,000
   2008         2,130,000
   2009         2,130,000
   2010         2,130,000
   2011         2,130,000
thereafter          7,742

NOTE 6 - MINORITY INTEREST

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

NOTE 7 - 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.

Jinyuan Li - individual - Chairman, Chief Executive Officer and President and
majority shareholder of Tiens Biotech Group (USA), Inc.

Baolan Li - individual - daughter of Jinyuan Li.

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

                                       18
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - RELATED PARTY TRANSACTIONS, (CONTINUED)

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

Tianjin Tianshi Biological Engineering Co., LTD - Chinese company owned 49% by
Baolan Li 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 Jinyuan Li and 10% by Baolan Li

Tianyuan Capital Development Corp, Limited - Hong Kong company owned 100% by
Jinyuan Li.

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 $16,722,560 and $14,295,999 for the three months
ended March 31, 2006 and 2005 which represent 100% of total sales for the years
then ended. Related party accounts receivable related to these sales amounted to
$9,906,880 and $2,165,958 as at March 31, 2006 and December 31, 2005,
respectively, net of an allowance for doubtful accounts of $208,251and $206,916,
respectively.

Other receivables - related party
---------------------------------

The Company through its 100% owned subsidiary, Tianshi International, and its
Chinese joint ventures, Biological and Tiens Yihai, is owed additional amounts
classified as other receivables - related party from various related parties
totaling $32,195,077 and $3,281,081 as of March 31, 2006 and December 31, 2005,
respectively and consisted of the following:

                                                   March 31,      December 31,
                                                      2006            2005
                                                  ------------    ------------
Tianjin Juchao Commercial and Trading  Co., Ltd   $  2,411,657    $  2,411,657
Tianjin Tianshi Biological Engineering Co., Ltd     25,328,719               -
Xongshi Real Estate Development                              -         620,000
JinMao (Group) Holding                                       -         101,044
Tianjin Tianshi Group Co., Ltd                          54,701         148,380
Tianyuan Development Corp. Ltd                       4,400,000               -
                                                  ------------    ------------
              Total                               $ 32,195,077    $  3,281,081
                                                  ============    ============

                                       19
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - RELATED PARTY TRANSACTIONS, (CONTINUED)

Other receivables - related party (continued)
---------------------------------------------

During the last quarter of 2005, Tianshi Engineering borrowed RMB 200,000,000
($24,960,000) from Biological. This amount was repaid to Biological by December
31, 2005. Then this amount was then loaned to Tianshi Engineering on January 1,
2006. The loan is due on March 31, 2006. The loan was non-interest bearing, and
the purpose of the loan was to enable Tianshi Engineering to increase its sales
and marketing efforts in the Chinese Market. The Company sells its products
exclusively through Tianshi Engineering in China. On April 1, 2006, Biological
extended the loan to Tianshi Engineering for another three months. The loan
remains non-interest bearing and is due on June 30, 2006. Depending on market
conditions at the time the loan is due, Biological may choose to extend the due
date on the loan.

On January 23, 2006, the Company made a $4,400,000 seven-day finance agreement
with Tianyuan Capital. The short-term financing rolls over automatically every
seven days until the Company calls the loan. The agreement bears an interest at
the rate of LIBOR minus five basis points. The purpose of the short-term
financing was to improve cash management, and increase the earnings from
short-term idle capital. The Company anticipates that this finance agreement
will remain in effect until the end of the year.

Other 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.

Other payables-related parties
------------------------------

The Company has amounts classified as other payables due to related parties
which amounted to $1,867,311 and $1,816,534 as of March 31, 2006 and December
31, 2005, 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.

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 $163,119 and $138,171 for the three months ended March 31, 2006 and 2005,
respectively.

NOTE 8 - 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.

                                       20
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - INVESTMENT IN TIENS YIHAI CO. LTD., (CONTINUED)

In the footnotes of the Company's consolidated financial statements for the
quarter ended June 30, 2004, the Company 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, 2007. Tianshi
International has made its required capital contribution in the amount of
$29,861,853.

In 2005, the Chinese central government issued its "Adjustment of Macro-Economic
Policy". This policy implements a new scheme of investment and use of
state-owned assets, including land. Pursuant to this policy, local government
organizations have been adjusting and re-allotting projects, including
investment, construction and reconstruction of state-owned resources. As a
result, projects and enterprises that have been affected, including Tiens Yihai,
which project is being constructed on state-owned property, are currently
awaiting further decisions by state and local government. Presently, the Company
is unable to forecast the direction, outcome and/or completion date of the Tiens
Yihai project. As of March 31, 2006, Tiens Yihai was a developmental stage
company and had not yet conducted any operations.

NOTE 9 - EMPLOYEE ADVANCES

Employee advances represents cash advances to various employees of the Company.
In the PRC, a majority of business transactions are completed in cash. These
cash advances represent monies advanced to certain employees to pay for various
expenses and purchases related to the Company's daily operations. Employee
advances amounted to $267,101 and $145,071 at March 31, 2006 and December 31,
2005, respectively.

NOTE 10 - RETIREMENT PLAN

Regulations in the PRC require the Company to contribute to a defined
contribution retirement plan for all employees. All Biological employees are
entitled to a retirement pension amount calculated based upon their salary at
their date of retirement and their length of service in accordance with a
government managed pension plan. The PRC government is responsible for the
pension liability to the retired staff.

                                       21
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - RETIREMENT PLAN, (CONTINUED)

Biological is required to make contributions to the state retirement plan at 20%
of the employees' monthly salary. Employees are required to contribute 7% of
their salary to the plan. Total pension expense incurred by the Company amounted
to $115,194 and $49,728 for the three months ended March 31, 2006 and 2005,
respectively.

The Company also has an unemployment insurance plan for its employees. The plan
requires each employee to contribute 1% of salary to the plan. The Company
matches the contributions in an amount equal to two times the contribution of
each participant. The Company made contributions to the unemployment insurance
plan of $11,278 and $12,589 for the three months ended March 31, 2006 and 2005,
respectively. All contributions are paid to a PRC insurance company, which in
turn, is responsible for the liability.

On January 1, 2002, the Company introduced a basic medical insurance plan for
its employees. Pursuant to the new medical insurance plan, the Company is
required to pay an amount equal to 10% of its employees' salary to a PRC
insurance company, which amounted to $65,027 and $24,932 for the three months
ended March 31, 2006 and 2005, respectively.

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.

<TABLE>
<CAPTION>
                                            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
Amount paid                            RMB  (182,430,670)        (65,739,144)        (248,169,814)
                                       -----------------    ----------------    -----------------
December 31, 2004 Balance              RMB    80,525,905    RMB            -    RMB    80,525,905

June 30, 2005                                112,862,432          48,996,288          161,858,720
Amount paid                                  (49,105,499)        (48,996,288)         (98,101,787)
                                       -----------------    ----------------    -----------------
September 30, 2005 Balance             RMB   144,282,838                   -    RMB   144,282,838

Amount paid                                  (16,171,200)                  -          (16,171,200)
                                       -----------------    ----------------    -----------------
December 31, 2005 Balance              RMB   128,111,638                   -    RMB   128,111,638
                                       =================    ================    =================

March 31, 2006 Balance                 RMB   128,111,638                   -    RMB   128,111,638

March 31, 2006 Balance                 $      15,885,843    $              -    $      15,885,843
                                       =================    ================    =================
</TABLE>

Prior to June 30, 2005, the amounts paid to Tianshi International had been used
to invest in Tiens Yihai described in Note 8. Dividends were declared during
June 2005 and $8,000,000 was paid to Tianshi International during the second
half of year 2005. In January 2006, Tianshi International loaned $4,400,000 to
Tianyuan Capital and rest of the amount paid remains in the cash accounts of
Tianshi International. The remaining amount of the dividend payable was
eliminated in the consolidation.

                                       22
<PAGE>

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

In this Quarterly Report on Form 10-Q, references to "dollars" and "$" are to
United States Dollars. References to "we", "us", the "Company" or "Tiens USA"
include Tiens Biotech Group (USA), Inc. and its subsidiaries, except where the
context requires otherwise.

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 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;

     (c)  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;

     (d)  whether we are able to generate sufficient revenues or obtain
          financing to sustain and grow our operations; and

     (e)  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-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.

                                       23
<PAGE>

The following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes thereto and other
financial information contained elsewhere in this Form 10-Q.

OVERVIEW

Tiens USA researches, develops, manufactures, and markets nutrition supplement
products, including wellness products and dietary supplement products, and
personal care products. Our operations are conducted from our headquarters in
Tianjin, People's Republic of China ("China") through our 80% owned subsidiary,
Tianjin Tianshi Biological Development Co. Ltd. ("Biological"). We sell our
products to affiliated companies in China and internationally.

Tiens USA is a Delaware corporation. We own 100% of Tianshi International
Holdings Group Ltd., a British Virgin Islands company ("Tianshi International").
Tianshi International owns 80% of Biological.

Tianjin Tianshi Pharmaceuticals Co., Ltd. ("Tianshi Pharmaceuticals"), a Chinese
company, owns the remaining 20% of Biological. Tianshi Pharmaceuticals is 87.66%
owned by Tianjin Tianshi Group Co., Ltd. ("Tianshi Group"), a Chinese company,
and 7.29% owned by Mr. Li's daughter, Ms. Baolan Li. Tianshi Group is 90% owned
by Mr. Li and 10% owned by Ms. Li. Tianshi Group also owns 51% of Tianjin
Tianshi Biological Engineering Co. Ltd. ("Tianshi Engineering"), the entity to
which we sell all of our products for consumption in China. Ms. Li owns the
remaining 49% of Tianshi Engineering.

In April 2004, Tianshi International entered a joint venture contract with
Tianshi Pharmaceuticals to establish Tiens Yihai Co. Ltd., a Chinese-Foreign
Equity Joint Venture ("Tiens Yihai"). Tiens Yihai is 99.4% owned by Tianshi
International and 0.6% owned by Tianshi Pharmaceuticals. Tiens Yihai is located
in Shanghai, China, and was established to build a new research and development
facility which would also produce our nutrition supplement, home care, and
personal care products. As of December 31, 2005, Tiens Yihai was a developmental
stage company and had not yet conducted any operations.

CRITICAL ACCOUNTING POLICIES

Management's discussion and analysis of its financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. Our financial statements reflect the selection and application of
accounting policies which require management to make significant estimates and
judgments. See note 2 to our 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. We believe that the following reflect the
more critical accounting policies that currently affect our financial condition
and results of operations.

                                       24
<PAGE>

REVENUE RECOGNITION

We recognize revenue from sales by distributors in China, net of sales
commissions and taxes, when the related Chinese distributor recognizes sales of
our products to unaffiliated third parties. We recognize revenue from
international (non-Chinese) sales to both affiliated and unaffiliated third
parties, net of commissions and taxes, when goods are shipped and cleared by the
international customs department.

We are generally not contractually obligated to accept returns. However, on a
case by case negotiated basis, we permit 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 March 31, 2006, Tianshi Engineering, an affiliated company, continued to
own all of the related party distributors which sell our products in China.

BAD DEBTS

Our business operations are conducted primarily in China. During the normal
course of business, we extend unsecured credit to our customers, all of whom are
affiliated parties. Management reviews our accounts receivable on a regular
basis to determine if the bad debt allowance is adequate at each fiscal year
end. We record a provision for accounts receivable trade which ranges from 0.3%
to 0.5% of our outstanding accounts receivable balance in accordance with
generally accepted accounting principles in China.

INVENTORIES

We record reserves against our inventory to provide for estimated obsolete or
unsalable inventory based on assumptions about future demand for its products
and market conditions. If future demand and market conditions are less favorable
than management's assumptions, additional reserves could be required. Likewise,
favorable future demand and market conditions could positively impact future
operating results if previously reserved for inventory is sold.

                                       25
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 2005

<TABLE>
<CAPTION>
                                                       Three months ended
                                                             March 31,
                                                  -------------------------------
                                                       2006             2005         Change
                                                  --------------   --------------   --------
<S>                                               <C>              <C>                  <C>
Revenue-related party                             $   16,722,560   $   14,295,999       17.0%
Cost of sales                                     $    4,806,296   $    3,457,418       39.0%
Gross profit                                      $   11,916,264   $   10,838,581        9.9%
Gross profit margin                                         71.3%            75.8%
Selling, general and administrative expense       $    2,566,422   $    2,633,875       (2.6)%
Selling, general and administrative
 expense as a percentage of sales                           15.3%            18.4%      (3.1)%
Other income (expense), net                       $      (37,721)  $     (463,061)     (91.9)%
Provision for income taxes                        $      733,531   $      616,259       19.0%
Net income                                        $    6,769,709   $    5,605,280       20.8%
Net profit margin                                           40.5%            39.2%       1.3%
</TABLE>

REVENUE. For the three months ended March 31, 2006, revenue was $16.7 million
compared to $14.2 million for the same period in 2005, an increase of 17.0%. The
breakdown of revenue between Chinese and international sales is as follow.

                       Three Months Ended March 31,
                       ----------------------------
                           2006            2005       Increase
                       ------------    ------------   --------
   China               $  8,566,617    $  8,040,796        6.5%
   International       $  8,155,943    $  6,255,203       30.4%

The increase in sales in China reflects continued growth in the demand for our
products in China. The increase in international sales was mainly due to a
significant sales increase in Indonesia of approximately $3.0 million,
reflecting the significant sales and marketing efforts we have made in Indonesia
in the past year. However, this increase was offset by a $1.2 million decrease
in Russian sales, which we believe is a normal fluctuation for a relatively
mature market.

COST OF SALES. Cost of sales for the three months ended March 31, 2006 increased
to $4.8 million, or 39.0%, compared to $3.5 million for the same period in 2005.
Cost of sales increased because we increased our sales in China and
internationally. In order to improve the quality of our products, we introduced
some new manufacturing procedures and stricter quality control testing than
previously, which added to our manufacturing costs. However, we believe that
once our production team becomes more familiar with the new production
procedures, the manufacturing costs of our products will decrease.

                                       26
<PAGE>

GROSS PROFIT. Gross profit increased to $11.9 million for the three months ended
March 31, 2006, or 9.9%, compared to $10.8 million for the same period in 2005.
The gross profit margins for the three months ended March 31, 2006 was 71.3%
compared to 75.9% for the same periods in 2005, respectively. In order to
qualify for a direct selling license in China, Tianshi Engineering, our related
party customer in China, is required to produce some of the products that it
sells in China. As a result, in 2006, we began to sell semi-finished products to
Tianshi Engineering, which jointly shares with us licenses to produce,
manufacture and sell the products. These semi-finished products have a lower
sales price and a lower margin than the finished products we had previously sold
to Tianshi Engineering. The decrease in our margins was primarily due to the
lower margin on our semi-finished products compared to our finished goods, as
well as the added manufacturing costs on our goods due to new manufacturing
procedures, as discussed in cost of sales above.

Management is exploring the extent to which the amount of finished manufacturing
by Tianshi Engineering must increase in the future to comply with its
qualification for, and maintenance of, a direct selling license in China, and
the potential impact this will have on Tiens USA. Management intends to provide
additional disclosure on this matter after it has completed its review and
analysis of this issue.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased slightly to $2.56 million for the three months
ended March 31, 2006, or 2.6%, compared to $2.6 million for the same period in
2005. The selling and administrative expenses as a percentage of sales decreased
to 15.4% for the three months ended March 31, 2006, from 18.4% for the same
period in 2005.

OTHER INCOME (EXPENSE), NET

Other income (expense), net was $37,722 of expense for the three months ended
March 31, 2006, compared to $0.5 million of expense for the same period in 2005.
During the first quarter of 2005, we incurred a one-time expense of $339,299 for
additional taxes and penalties paid by us to the Chinese government related to a
VAT examination by the local government. Other sales income derived mainly from
selling packing material and low cost supplies, increased by $0.2 million for
the three months ended March 31, 2006, compared to the same period in 2005.

PROVISION FOR INCOME TAXES

Provision for income taxes increased to $0.7 million for the three months ended
March 31, 2006, compared to $0.6 million for the same period in 2005. From
January 1, 2005 through December 31, 2007, Biological is subject to income tax
at a reduced rate of 7.5%. From January 1, 2008 forward, Biological will be
subject to a 15% income tax rate.

NET INCOME

As a result of the foregoing factors, net income for the three months ended
March 31, 2006 was $6.8 million, an increase of 20.8% compared to $5.6 million
for the same period in 2005.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We market all of our products through various domestic and international
business entities that are related to our company through common ownership.
Related party sales amounted to 100% of our total consolidated sales.

                                       27
<PAGE>

We have a sales contract with Tianshi Engineering which requires Tianshi
Engineering to purchase all of our products to be sold in China. We sell our
finished products to Tianshi Engineering at a price equal to 25% of the Chinese
market price for the products. This 25% figure was negotiated between the
parties in 2003, before we acquired Tianshi International, and we believe that
it is a reasonable sales price for us to receive. All of Tianshi Engineering's
Chinese affiliated companies are owned in whole or in part by Mr. Jinyuan Li's
immediate family members.

Internationally, we sell our products directly to our 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.

The following tables are provided to facilitate our understanding of the
relationships between the related parties and us and their transactions with us
during 2006 and 2005.

                                                   March 31,      December 31,
                                                     2006             2005
                                                --------------   --------------
Accounts receivable, trade - related party,
 net of allowance for doubtful accounts of
 $208,251 and $206,916 as of March 31, 2006
 and December 31, 2005, respectively            $    9,906,880   $    2,165,958

Other receivables - related party               $   32,195,077   $    3,281,081

Advances from customers - related party         $    2,145,619   $    2,077,130

Other payable - related party                   $    1,867,311   $    1,816,534

Accounts receivable - related party
----------------------------------

Accounts receivable - related party increased by $7,740,922 for the quarter
ended March 31, 2006. $7.5 million of this increase was incurred from sales to
our affiliate, Tianshi Engineering, in China. We believe that the Chinese market
has great potential. In order to increase its market share of the Chinese
market, Tianshi Engineering has been spending on sales and marketing in China,
such as advertising on Chinese television. To support these efforts by Tianshi
Engineering, we extended the date to collect payment for our sales to Tianshi
Engineering. However, we anticipate that we will collect these accounts
receivable from Tianshi Engineering by the end of the second quarter.

Other receivables - related party
---------------------------------

We are owed $32,195,077 and $3,258,081 as of March 31, 2006 and December 31,
2005, respectively, classified as other receivables from related parties, a net
increase of $28,913,996. The increase is due to the short-term loan to Tianshi
Engineering amounting to $24,960,000 and a $4,400,000 loan to Tianyuan Capital
Development Corp. Ltd. ("Tianyuan Capital"). Mr. Jinyuan Li owns 100% of
Tianyuan Capital.

On January 1, 2006, Biological loaned RMB 200,000,000 ($24,960,000) to Tianshi
Engineering, which was due on March 31, 2006. The loan was non-interest bearing,
and the purpose of the loan was to enable Tianshi Engineering to increase its
sales and marketing efforts in the Chinese Market. We sell our products
exclusively through Tianshi Engineering in China. On April 1, 2006, Biological
extended the RMB 200,000,000 ($24,960,000) loan to Tianshi Engineering for
another three months. The loan remains non-interest bearing and is due on June
30, 2006. Depending on market conditions at the time the loan is due, Biological
may choose to extend the due date on the loan.

On January 23, 2006, we made a $4,400,000 seven-day finance agreement with
Tianyuan Capital. The short-term financing rolls over automatically every seven
days until we call the loan. The agreement bears an interest at the rate of
LIBOR minus five basis points. The purpose of the short-term financing was to
improve cash management, and increase the earnings from short-term idle capital.
We anticipate that this finance agreement will remain in effect until the end of
the year.

Other receivables are generated by us making various cash advances and
short-term loans and the allocation of various expenses to related parties.
These are recurring transactions. We do not charge interest on these
receivables.

                                       28
<PAGE>

Advances from customers - related party
---------------------------------------

Advances from related party customers remained stable at $2,145,619 as of March
31, 2006 compared to $2,077,130 as of December 31, 2005. This reflects the
continued prepayment by certain of our customers to insure that they can
continue to obtain enough of our products to meet their demand.

Other payable - related party
-----------------------------

Other payables due to related parties as of March 31, 2006 and December 31,
2005, were $1,867,311 and $1,816,534, 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.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities was $26.6 million for the three months
ended March 31, 2006, compared to net cash provided by operating activities of
$3.8 million for the same period in 2005. The difference primarily reflects a
$7.7 million increase in accounts receivable-related party and a $28.8 million
increase in other receivable-related party. These transactions are further
described in "Certain Relationships and Related Party Transactions" above.

Net cash used in investing activities as of March 31, 2006 increased by $14
million compared to the same period in 2005. This was mainly due to the purchase
of a short-term, interest bearing financial instrument by Biological from
Agricultural Bank of China.

                                       29
<PAGE>

Net cash used in financing activities was $0 for the three months ended March
31, 2006, compared to net cash provided by financing activities of $63,337 in
the same period for 2005. For the three months ended March 31, 2006, we did not
have any new long-term borrowings, and did not make any payment on the current
long-term borrowings during this period.

As of March 31, 2006 and December 31, 2005, we had cash of $35.5 million and
$77.5 million, respectively, a decrease of $42.1 million. This decrease is
primarily due to the loans of approximately $29.4 million to Tiens Engineering
and Tiens Tianyuan and the purchase of $13.7 million of short-term financial
instruments from the Agricultural Bank of China. Approximately 42% of the cash
was held in the bank account of Biological, 52% in the bank account of Tiens
Yihai, and 6% in the bank account of Tianshi International.

Inventories were $5,790,819 and $7,516,352 as of March 31, 2006 and December 31,
2005, respectively. The amount of raw materials, work-in-progress and finished
goods decreased by $1,725,533. The primary reasons for this decrease is that the
amount of inventory, including raw materials and finished goods, stored at the
end of 2005 was relatively large and the market demand for products in the first
quarter is the lowest during the year. This is due in part to the week-long
Chinese New Year holiday. As a result, the production volume decreased, as did
the purchase of raw materials.

Inventories as of March 31, 2005 was $5,565,506, which is comparable to the
March 31, 2006 figure (like-vs-like comparison). However, inventory was built up
sharply throughout 2005 due to increased consume demand and Tianshi Engineering
opening up additional branches throughout the year.

Accounts payable was $2,326,621 and $2,698,813 as of March 31, 2006 and December
31, 2005, respectively. The decrease in accounts payable was primarily caused by
a decrease in purchases of materials.

Going forward, our primary requirements for cash consist of:

o    the continued production of existing products and general overhead and
     personnel related expenses to support these activities;

o    continued promotion of networking sales activities;

o    the development costs of new products;

o    construction and development of the business plan for Tiens Yihai, and

o    expansion of production scale to meet the demands of our growing markets.

We anticipate that our current operating activities will enable us to meet the
anticipated cash requirements for the 2006 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.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

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

Our operating subsidiary, Biological, is located in China, and buys all of its
raw materials in China and sells 50% of our 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%. Because we report our revenues in US
dollars, changes in the valuation of RMB may impact our net income. Given the
uncertainty of exchange rate fluctuations, we cannot estimate the effect of
these fluctuations on our future business, product pricing, results of
operations or financial condition. Currently we have not entered 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 management, including our
chief executive officer and the 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 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
("SEC") reports is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms relating to our company, 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.

                                       31
<PAGE>

Additionally, there were no significant changes in our\ internal controls or in
other factors that could significantly affect these controls subsequent to the
Evaluation Date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not presently involved in litigation that we expect individually or in
the aggregate to have a material adverse effect on our financial condition,
results of operation or liquidity.

ITEM 1A. RISK FACTORS

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

Exhibit No.    Description
-----------    -----------------------------------------------------------------
   31.1        Certification of the Chief Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

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

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

                                       32
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          TIENS BIOTECH GROUP (USA), INC.


Date: May 15, 2006
                                          /s/ Jinyuan Li
                                          --------------------------------------
                                          Jinyuan Li
                                          Chief Executive Officer and President
                                          (Principal Executive Officer)


Date: May 15, 2006
                                          /s/ Wenjun Jiao
                                          --------------------------------------
                                          Wenjun Jiao
                                          Chief Financial Officer
                                          (Principal Accounting Officer)

                                       33