UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                           --------------------------
                                   FORM 10-KSB/A

[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

[_]      TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934

For the transition period ________________________ to _________________________

Commission File Number: 0-49666


                         Tiens Biotech Group (USA), INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its charter)

           Delaware                                      75-2926439
--------------------------------               ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


No. 6, Yuanquan Road,
Wuqing New-Tech Industrial Park
Tianjin, China                                               301700
-----------------------------------------      ---------------------------------
(Address of principal executive offices)                   (Zip Code)


Issuer's telephone number: 011-86-22-82137264

Securities  registered  pursuant to Section  12(b) of the Exchange  Act:  Common
Stock, $0.001 par value

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

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         State issuer's  revenues for its most recent fiscal year:  $38,392,208.

         The  aggregate  market value of 3,503,568  voting Common Shares held by
non-affiliates  of the  issuer  was  approximately  $28,904,584.50  based on the
average bid and asked prices of the issuer's Common Shares,  $.001 par value, as
reported on the NASDAQ SmallCap Market on March 31, 2004.

         As of March 31,  2004,  the issuer had  outstanding  71,998.586  Common
Shares, $.001 par value.

         Documents Incorporated by reference:

         (1) The  Information  Statement for the amendment to the certificate of
incorporation  and election of new directors dated December 12, 2003 in Part III
of this Form 10-KSB.

         (2) Form 8K/A and Form 8K dated  October  24 and  September  24,  2003,
announcing the change of control and the acquisition of Tianshi China;

         Form 8K dated  July 1,  2003,  announcing  the  discontinuation  of the
combination attempt with Capital Financial Group, Inc.;

         Form 8K dated  February  14, 2003,  announcing  the  agreement  for the
combination attempt with Capital Financial Group, Inc.;

         (3) Other documents incorporated by reference on this report are listed
in the Exhibit Reference Table

                  Transition Small Business Disclosure Format: [ ] YES [X] NO

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

PART I
   ITEM 1.  DESCRIPTION OF BUSINESS.........................................   3
   ITEM 2.  DESCRIPTION OF PROPERTIES.......................................  18
   ITEM 3.  LEGAL PROCEEDING................................................  19
   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............  19
PART II
   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........  20
   ITEM 6.  MANAGEMENT DISCUSSION AND ANALYSIS..............................  20
   ITEM 7.  FINANCIAL STATEMENTS............................................  24
   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURES.......................................  24
   ITEM 8A. CONTROL AND PROCEDURE...........................................  25
PART III
   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
            COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT...............  25
   ITEM 10. EXECUTIVE COMPENSATION..........................................  26
   ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..  26
   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION...................  27
   ITEM 13. EXHIBITS AND REPORTS ON FORM 8K.................................  36
   ITEM 14. PRINCIPAL AND ACCOUNTING FESS AND SERVICES......................  36































                                       2
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Corporate History

Tiens  Biotech  Group  (USA),  Inc.  (the  "Company"  or "Tiens")  used the name
Strategika,  Inc.  before the name was changed into Tiens  Biotech  Group (USA),
Inc. effective on February 17, 2004.  Strategika,  Inc. was incorporated on July
13,  1990 as Super  Shops,  Inc.  under  the laws of the State of  Michigan.  In
October 2000, Super Shops, Inc.  reincorporated in Delaware and changed its name
to MIA  Acquisition  Corp. On February 11, 2002, in connection  with a change in
control transaction,  MIA Acquisition Corp changed its name to Strategika,  Inc.
Until  September  9,  2003,  Strategika,   Inc.  had  only  nominal  assets  and
liabilities  and was a development  stage company  attempting to provide network
security services to Fortune 1000 listed companies.


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

         TIANSHI  was  incorporated  on March 24, 2003 in the  territory  of the
British Virgin Islands. On June 18, 2003, Tianshi  International  Holdings Group
Ltd. acquired 80% of Tianjin Tianshi Biological  Development Co., Ltd. ("Tianshi
China").  Tianshi China is a foreign investment joint venture  established under
the laws of the People's Republic of China ("PRC" or "China") on March 27, 1998.
Tianshi China is classified as a Foreign Invested Enterprises (FIE) in China and
is subject to the FIE laws of China. Its legal structure is similar to a regular
corporation  with  limited  liability  organized  under state laws in the United
States of America.  The Articles of  Association of Tianshi China provides for a
50 years term with registered  capital of $10,000,000.  The original partners in
this joint venture were Tianshi Hong Kong  International  Development  Co., Ltd.
incorporated  in Hong Kong  which  owned 80% of the joint  venture  and  Tianjin
Tianshi Biological  Engineering Co., Ltd, a company  incorporated in China which
owned the remaining 20% of the joint  venture.  Tianshi Hong Kong  International
Development  Co., Ltd. is owned 100% by LI Jinyuan,  Strategika,  Inc.'s current
president and majority shareholder.  Tianjin Tianshi Biological Engineering Co.,
Ltd is 49% owned by Ms. LI Baolan, the daughter of LI Jinyuan and 51% by Tianjin
Tianshi Group Co., Ltd. Which Mr. LI Jinyuan owns 90%, Ms. LI Baolan owns 10% On
June 18,  2003,  Tianjin  Tianshi  Biological  Engineering  Co.,  Ltd  ("Tianshi
Engineering")  transferred  its  20%  interest  in  the  joint  venture  for  no
consideration to Tianjin Tianshi  Pharmaceuticals Co., Ltd, a Chinese company in
which the majority  shareholder  is Tianjin  Tianshi Group Co., Ltd. On June 18,
2003, Tianshi International  Holdings Group Ltd. acquired 80% of Tianjin Tianshi
Biological Development Co., Ltd from Tianshi Hong Kong International Development
Co.,  Ltd. for no  consideration.  This  transfer was made for no  consideration
since LI Jinyuan is president and sole shareholder of both companies.

Description of Business

         TIANSHI  conducts its main business  operation  through its  subsidiary
Tianshi China.  Tianshi China is engaged in the  manufacturing and production of
healthcare  products and is based in Tianjin,  PRC.  Tianshi  China is primarily
engaged in the research, development,  manufacturing and marketing of healthcare
products including herbal products, vitamin and mineral supplements and personal
care.  Since its  establishment,  Tianshi  China has  developed 6 major  product
series and produced 27 types of healthcare products. Tianshi China has put great
emphasis on product quality  assurance.  On November 3, 2002,  Tianshi China was
awarded   Quality  System   Certificate   for   compliance   with  the  standard
"ISO9001:2000" in the area of Design and Development,  Production and Service of
Food and Healthcare Food in China.

Some of the significant events in our business history include:

2003 Tianjin  Tianshi  Biological  Development  Co., Ltd. was awarded as Top-100
Enterprise in Health Food Industry of China by Health Food Association of China.

August,  2003  Tianshi  Nutrient  High  Calcium  Powder was awarded as Scutcheon
Products  of  Tianjin by  Leaders  Team of  Actualizing  Scutcheon  Products  of
Tianjin.



                                       3
<PAGE>

May, 2003 Tianshi Brand  nutritious and healthcare food series were  recommended
as Salable Brand of China by Brand Protect  Research and  Development  Center of
China.

March 2003  Tianjin  Tianshi  Biological  Development  Co.,  Ltd. was awarded as
Top-50  Enterprise  in Food  Industry  of  Tianjin  in  2002  by  Food  Industry
Association of Tianjin.

March 2002 Tianshi Brand  Spirulina  Capsules were  recommended  as high quality
science products by Association Technologie Nouvelle De France.


March 2002 Tianshi Brand Vigor-rousing Capsules were recommended as high quality
science products by Association Technologie Nouvelle De France.

March 2002 Tianshi Brand Cordyceps  Mycelium  Capsules were  recommended as high
quality science products by Association Technologie Nouvelle De France.

September 2002 Tianshi Chitosan Capsules were recommend as high-quality products
by The US Council of International Quality Authentication.

September 2002 Tianshi Chitosan Capsules were proved to be Recommended  Products
For International Trade by U.S. Asia Economic Trade Cooperation Committee.

September  2002 Tianshi  Chitosan  Capsules were  accepted by the  International
Exchange  Exhibition  by the U.S.  Los Angeles  Chinese  Merchandise  Exhibition
Center.

May  2001  Tiens  Slimming  Tea  was  approved  as  Recommended  Product  For TV
Commercials  of 21  Century  Health  Family  Preferred  Product  by Health  Food
Association of China.

September  2000  Tianshi  Vigor-Rousing  Capsule  was  awarded  as Gold Prize in
Secondary New and Special Medicine and Healthcare Products Exhibition.

Tianshi China has its own research and product  development  center.  It employs
highly  qualified   professionals  in  research  and  product   development  and
innovation.

         Tianshi  China  has been  conducting  the  marketing  and  sales of its
products  through its affiliate  company Tianshi  Engineering in China.  Tianshi
Engineering is a limited liability  corporation duly incorporated under the laws
of PRC, and  affiliated  with Tianshi China through  common  ownership of Mr. LI
Jinyuan. Tianshi Engineering markets and sells Tianshi China's products in China
domestically  through its 22 branches,  representative  offices and chain stores
and 12 domestic  affiliate  companies.  Tianshi  Engineering  owns the affiliate
companies. Please see the Related Party Transactions section for details.

         Prior to formally  obtaining  export  license rights for its healthcare
products  to overseas  purchasers  in  September  2002,  Tianshi  China sold its
products to approximately 60 countries  worldwide  through Tianshi  Engineering.
Tianshi  Engineering  has export rights  according to the PRC laws. From October
2002 to June 18, 2003, Tianshi China sold its products directly to approximately
90 countries  worldwide.  Tianshi China's export license needs to be renewed due
to the  change of  ownerships.  An  application  for a new  export  license  was
received in January 2004.  From June 19, 2003 to December 31, 2003 Tianshi China
sold its products internationally through Tianshi Engineering.

         Both  Tianshi  China and  Tianshi  Engineering  receive  administrative
support from Tianjin  Tianshi  Group Co.,  Ltd.  ("Tianshi  Group"),  which is a
company organized under the PRC laws,  located in Tianjin,  PRC and 90% owned by
Mr. LI Jinyuan, 10% by LI Baolan.  According to internal  arrangements,  Tianshi
China pays Tianshi  Group 1% of its annual sales income  (excluding  value added
taxes "VAT") for the administrative services except officers provided by Tianshi
Group and the use of Tianshi Group's administrative building.



                                        4
<PAGE>

Business and Industry Overview
------------------------------

         With increase in world population and global economic development,  the
need for health food  products is not only limited to  malnutrition  (mostly for
developing   countries),   but   also   covers   balance   nutrition   and   the
inter-relationship   between  nutrition  intakes  and  sicknesses   (mostly  for
developed countries).  Health problems have become a major concern worldwide. As
such, we believe  there is a developing  market for health  products  worldwide.
Tianshi  China has  developed  its  products  to capture  this  increasing,  yet
geographically  differentiated,  market demand for health food  products.  Since
2000,  in China,  due to the fast  economic  development,  health  problems have
become a main concern for the society.  People are more aware of the  importance
of vitamins and minerals balances.  Vitamins are the necessary organic compounds
for  maintaining  a human  body's  normal  functions.  There are many  types and
varieties  of them,  contained  in many  types of  natural  foods.  Food  intake
imbalance  could cause a long term lacking of one or several  types of vitamins,
which could in turn result in  indigestion or other bodily  disorders.  Minerals
operate with vitamins and other nutrient  elements of the human body to maintain
the PH balances,  stimulate  nerves and muscle systems.  The human body needs to
maintain  proper  chemical  balance,  and this  balance  depends on the  mineral
balance in our body.  As such,  Tianshi  China  believes  that its  vitamins and
minerals line of products will have extensive potential in markets in both China
and many developing countries worldwide.


After China's  accession  into WTO, the markets of all kinds of products will be
globalized  integrating  the sales in markets in China and  overseas.  There are
more opportunities for our enterprises to enter into the international  markets.
Some major  components  of  Tianshi  China's  products,  i.e.  lecithin,  ginkgo
extract,  and melatonin,  are gradually being recognized by international market
as beneficial food supplement to human body. The current  estimate for the North
American vitamins,  minerals,  and supplements market is $17.7 billion according
to Global Information Inc.'s vertical market research report.  Market demand for
vitamins,   herbal/botanical   products,  sports  nutrition,  meal  supplements,
minerals,  and  specialty  products is expected to increase over the next 5 to 8
years.


CURRENT PRODUCTS
----------------

         Since its incorporation in 1998,  Tianshi China has been  strengthening
its  technological  capacities to enable sustained  product  innovation.  It has
developed  and  produced  27 types of health  food  products,  all of which have
obtained the "Health Food Certificates"  issued by the PRC Ministry of Health to
be sold in China.

The 27 health food/food products:

     Twenty three products have "Wei Shi Jian Zi" Health Food Certificates. They
are:

Tianshi Nutrient High Calcium Powder                          No. 240  (1997)
Tianshi Hyperglycemia High Calcium Powder                     No. 425 (1997)
Tianshi Children Nutrient High Calcium Powder                 No. 241 (1997)
Tianshi Clearing Throat Granular Drink                        No. 432 (1998)
Tianshi Vigor-Rousing Capsule                                 No. 0455 (1999)
Tiens Slimming Tea                                            No. 0393 (1999)
Tiens Iron Supplement                                         No. 741 (1997)
Tiens Spirulina Tablets                                       No. 779 (1997)
Tiens Spirulina Capsules                                      No. 780 (1997)
Tianshi Beneficial Capsule                                    No. 156 (1998)
Tianshi Zinc Cream Supplement                                 No. 194 (1998)
Tianshi Cordyceps Fermented Mycelium Capsules                 No. 228 (1998)
Tianshi Chitosan Capsule                                      No. 330 (1998)
Tianshi Beautiful Dream Drink                                 No. 448 (1998)
Tianshi Vitality Softgel Capsule                              No. 470 (1998)
Tianshi Three-high Comfortable Capsule                        No. 0186(1999)
Tianshi Antilipemic Tea                                       No. 229 (1998)
Tianshi Calcium Chewable Tablets                              No. 0420 (1999)
Tianshi Beauty Capsule                                        No. 0638 (2000)
Tianshi Catabatic Press Tea                                   No. 0184 (2001)
 Tianshi Lecithin High Calcium Capsules                       No. 426 (1997)
Ginkgo Leaf Film Coating Tablats                              No. 0550 (2002)
Tianshi Calcium Chewable Tablets                              No. 0693 (2002)

Four products have "Wei Shi Zi" License:
Tianshi Double Cellulose Tablet
Tianshi High Calcium Milk Powder
Tianshi High Calcium Gourmet Powder
Tiens Seabuckthorn Oil Gel


                                       5
<PAGE>

         Two  Health  Licenses  cover all these 27  products:  the `Jin Wei Jian
Zheng Zi' 2003, No.0006 and the `Wu Wei Shi Zi' 2003, No.2200306

         The  governmental  approval  process  in the PRC for a newly  developed
health  product is as follows:  a product  sample is sent to a clinical  testing
agents  designated  by the PRC  Ministry  of Health,  which  conducts  extensive
clinical  testing and  examinations  to verify if the product has the  specified
functions  as stated.  A Report  will be issued by the  clinical  testing  agent
confirming or negating such functions. It generally takes six months to one year
for  the  Report  to be  issued.  This  Report  then  has to be  submitted  to a
provincial  Health  Management  Commission  for  approval.  A letter of approval
issued by the  provincial  Commission  will then have to be submitted to the PRC
Ministry  of Health  for the  issuance  of a  "Health  Food  Certificate".  This
Certificate  authorizes  the sales and  marketing of the product in the PRC. The
whole process generally takes one and a half to two years.

Trademarks, Licenses and Concessions
------------------------------------

         o        We have  registered  our products  under the logo "Tiens" with
                  the State Administration of Industry and Commerce.

         o        Tianshi China is considered to be a foreign  investment  joint
                  venture by the PRC government and receives  special income tax
                  incentive  treatment  from both the local  (Wuqing  County and
                  central government in China.

         o        Under the  High-Calcium  series,  Tianshi  China has conducted
                  extensive  research and developed Tianshi  Hyperglycemia  High
                  Calcium  Nutrient  Powder and Tianshi  Children  High  Calcium
                  Nutrient  Powder,  which have been awarded  patents from State
                  Intellectual Properties Office in China with respective patent
                  numbers of ZL97115067.2 and ZL97115068.0

         The 6 major  product  series of the Company are:  High-Calcium  Series,
Immune  System  Adjustment  Series,  Nutrient  Supplements  Series,  Cholesterol
Adjustment Series, High-Fiber Series, Heart and Brain Improvement Series.

HIGH-CALCIUM SERIES

         The sale of this product series,  on average,  generates  45.78% of the
total revenue of Tianshi China. The main raw materials for the  manufacturing of
this product series are fresh ox backbone  currently supplied by a local Chinese
company in Hebei at the price of RMB1.75 per kilogram; and pumpkin power.

         The main products under this series are:  Tianshi Nutrient High Calcium
Powder and Tianshi Hyperglycemia High Calcium Powder.

         Nutrient High Calcium Powder consists of all natural ingredients,  with
high content of fresh ox backbone.  Every 100 grams  contain more than 400 mg of
clean and  unpolluted  calcium.  The extracted  calcium  reacts with amino acid,
forming  amino acid  calcium  chelate,  which can  directly  enter  pericellular
membrane of small  intestines  resulting  in quick  absorption  by human body to
increase bone density.  It contains abundant protein,  amino acid,  vitamins and
trace  elements,  which  regulates the human  functions at cellular  level,  and
significantly  increases the body's immune capacity.  Its current domestic price
is RMB70 per 10 sachets.

         Hyperglycemia  High Calcium Powder was  especially  developed for those
people who suffer from hyperglycemia. Its calcium content is 3600 milligrams/100
grams.  Pumpkin powder was added to stimulate the pancreas to excrete insulin in
helping restrain  increasing protein level in blood resulted from diabetes.  Its
current domestic price is RMB90 per 10 sachets.


NUTRIENT SUPPLEMENT SERIES

         The sale of this product series,  on average,  generates  32.49% of the
total revenue of Tianshi China. The main raw materials for the  manufacturing of
this product series are egg-protein powder currently supplied by a local Chinese
company  in  Dalian,  at the  price of RMB60  per  kilogram;  glucose  currently
supplied  by a local  Chinese  company  in  Tianjin  at the price of RMB6.8  per
kilogram;  and lactic  Zinc  currently  supplied by a local  Chinese  company in
Shijiazhuang at the price of RMB21 per kilogram.


                                       6
<PAGE>

         Tianshi Zinc Cream  Supplement  is the main product  under this product
series.  Every tablet  contains the daily Zinc need of the human body, in around
0.8-1.2  milligrams of Zinc/tablet.  In considering  that intake food containing
Zinc with protein helps the quick absorption of Zinc by the human body, the Zinc
Cream Supplement is made of egg-protein powder, lactic Zinc and glucose. Tianshi
China chooses lactic Zinc as the Zinc supplement  because it can be dissolved in
water,  quick  absorption  by the human body,  and will not be affected by other
acidic elements in the human body.  Egg-protein and glucose also helps fast body
absorption of Zinc. Its current domestic price is RMB36 per 60 tablets.

CHOLESTEROL ADJUSTMENT SERIES

         The sale of this product series,  on average,  generates  16.40% of the
total revenue of Tianshi China. The main raw materials for the  manufacturing of
this product series are green tea leaves  currently  supplied by a local Chinese
enterprise in Fujian at the price of RMB28 per kilogram; and choice grape vines.

         The main products under this series are: Tianshi  Vigor-Rousing Capsule
and Tianshi Antilipemic Tea.

         The main content of  Vigor-Rousing  Capsule is grape  alcohol  which is
extracted  from  selected  grape  vines by  using  the  following  technologies:
biological  inducing  technology  that ensures that the planted grape vines have
higher content of grape alcohol;  and airproof packaging technology which allows
the separated grape alcohol extracts to be packaged airproof so as to ensure its
quality stability,  storage and usage. The grape alcohol stimulates smooth blood
circulation;  decreases blood  precipitates onto blood vessel  membranes;  helps
maintain the proper  functioning of  hematoblast  by reducing its thickness.  In
addition,  it protects  cholesterol in the blood oxidize so as to prevent artery
hardening.   Internal  research  shows  that  grape  alcohol  contained  in  one
Vigor-Rousing Capsule is more than the amount contained in a bottle of wine. Its
current domestic price is RMB168 per 60 capsules.

         The Antilipemic  Tea is made of extracts from natural herbal  essences.
It is a green tea product,  combined with selected  various  Chinese  medicines,
which serves the purposes of reducing  cholesterol  and helping  digestion.  Its
current domestic price is RMB75 per 20 sachets.

HIGH-FIBER SERIES

         The sale of this product  series,  on average,  generates  4.48% of the
total revenue of Tianshi China.  The main raw material for the  manufacturing of
this product series are corn fiber powder currently  supplied by a local Chinese
enterprise in Tianjin at the price of RMB11 per kilogram.

         Tianshi Double  Cellulose Tablet is the main product under this series.
Food fiber  stimulates  bowel  movements  and prevents  constipation.  It mainly
consists  of  non-dissolvable  food fiber  (corn  fiber) and  dissolvable  fiber
(glucose),  plus raw  powder.  The  non-dissolvable  fiber goes into  intestines
stimulating  bowel movements while dissolvable fiber absorbs and clears away the
harmful  germs and  toxicants  in small  intestines.  It reduces the  intestinal
absorption of sugar and fat cholesterol.  As such, it helps prevent constipation
as well as artery  hardening and coronary  heart disease.  Its current  domestic
price is RMB68 per 60 tablets


IMMUNE SYSTEM ADJUSTMENT SERIES

         The sale of this product  series,  on average,  generates  0.30% of the
total revenue of Tianshi China. The main raw materials for the  manufacturing of
this product series are Cordyceps powder  currently  supplied by a local Chinese
company in Jiangxi at the price of RMB140 per kilogram;  and Chitosan  currently
supplied  by a local  Chinese  company  in  Shanghai  at the  price of RMB98 per
kilogram.

         The main products  under this series are:  Tianshi  Cordyceps  Mycelium
Capsule and Tianshi Chitosan Capsule.

         The Cordyceps  Mycelium Capsule is made of purified  cordyceps mycelium
powder using biological  technologies.  According to the PRC Chinese Traditional
Medicines  Compilation  and various  other  publications,  cordyceps  serves the
purpose of resisting  tiredness by toning the kidney and  nourishing  the lungs.
The capsule  eliminates  fatigue  quickly by breaking  down the  fatigue-causing
substances in the muscles,  fights  against  oxygen  deficiency,  improves human
body's movement  capacity and guards against  angiosclerosis,  heart trouble and
neurasthenia. Its current domestic price is RMB148 per 100 capsules.

         The Chitosan Capsule contains more than 85% of Chitosan  extracted from
crab-shells.  It uses  crab-shell  food fiber to absorb excess fats or sugars in
the human body, also it carries a special type of electropositive  animal fiber,
which  compounds  with  chlorine  from the  excess  intake  of salts  and  helps
discharge the excess salts from the body.  These functions  effectively  control
high blood  pressure  caused from excess  intake of salts.  The capsule  absorbs
heavy metal  elements in the human body, so as to eliminate  toxic elements from
the  body  and  stimulates   proper  digestion   functions.   It  also  improves
gastrointestinal  function in  effectively  absorbing  nutritional  elements and
strengthens  the functions of liver.  Its current  domestic price is 128 per 100
capsules.

                                       7
<PAGE>

HEART AND BRAIN SERIES

         The sale of this product  series,  on average,  generates  0.55% of the
total revenue of Tianshi China. The main raw materials for the  manufacturing of
this product  series are carrot  powder  currently  supplied by a local  Chinese
company in Tianjin at the price of RMB59 per  kilogram;  plantule oil  currently
supplied  by a local  Chinese  company in  Guangzhou  at the price of RMB170 per
kilogram;  and lecithin currently supplied by a local Chinese company in Beijing
at the price of RMB32 per kilogram.

         The main products under this series are: Tianshi Beneficial Capsule and
Tianshi Vitality Softgel Capsule.

         Tianshi  Beneficial  Capsule  consists of carrot powder,  vitamin C and
various Chinese herbal essences.  It combines the Chinese  traditional  medicine
with modern medical research to serve the purpose of hypoxia prevention.  It can
be  used  in  treatment  of all  kinds  of  cardiovascular,  hyperglycemia,  and
cerebrovascular diseases. Its current domestic price is RMB160 per 150 capsules.

         Vitality  Softgel  Capsule is a new generation  healthcare food product
made of  wheat  plantule  oil,  lecithin  and  compounded  carrot  extracts.  In
particular,  high technologies are used in extracting the wheat plantule oil. It
prevents tiredness and slows down caducity.  Its current domestic price is RMB98
per 30 capsules.

Suppliers

         At   present,   Tianshi   China  has   established   long-term   stable
relationships  with  most of its  suppliers.  In  addition,  the  raw  materials
required for the  manufacturing  of its products are relatively easy to find and
alternative  suppliers are convenient to locate.  Therefore,  there is no formal
agreement  signed between  Tianshi China and any of its  suppliers.  Our primary
suppliers of materials  which are used to  manufacture  our products are located
within an approximately 200 mile radius.  Similar supplier companies are located
in the same area as the above suppliers. Consequently, we do not believe that we
would have any difficulty in locating alternative suppliers.

Our current major suppliers are:
     Our primary suppliers of materials
     Material ox backbone
     Supplier location: Hebei It is located within an approximately 200 km.

     Material cordyceps mycelium powder Supplier location Tianjin It
     is located within an approximately 50 km.

     Material milk powder
     Supplier location Beijing
     It is located within an approximately 150 km.



FUTURE PRODUCTS:
----------------

         Tianshi China has additional  products under  development  including an
eye-care capsule which contains various vitamins and minerals helping youth with
near-sightedness;  and vitamin and mineral  supplement  tablets which supplement
the daily  vitamins and minerals  intake to maintain  equilibriums  in the human
body.  Within the next few years, we expect these products will be launched into
markets.

R&D expense  displayed  below is accounted for through  related party of Tianshi
China. We plan to take over all R&D functions starting 2004.
2001-US $1,270,000
2002- US $993,000
2003- US $2,167,000
It will  need  to  spend  at  least  US  $2,542,000  to  complete  research  and
development.

We  anticipate  hiring  more  than 30  employees  over  the  next 12  months  to
accomplish our research and development projects.

                                       8
<PAGE>

Business Development Strategy - Marketing and Distribution
----------------------------------------------------------

         By the operation of Tianshi China,  one of TIANSHI's  primary  business
strategies  has been to develop  strong  direct  sales or Internet  distribution
networks both domestically and internationally through Tianshi Engineering's and
Tianshi China's affiliated companies.  Tianshi China is primarily engaged in the
manufacturing of healthcare products. Tianshi China sells all of its products to
its affiliate  company,  Tianshi  Engineering for the domestic and international
markets.   Tianshi   Engineering   in  turn  sells  the  products  to  end-users
domestically  through chain  stores,  and  internationally  through an extensive
direct sales force of its overseas  affiliates and independent  distributors who
use the  products  themselves  and/or  resell  them  to  other  distributors  or
consumers.  This distribution network has reached almost every province in China
and about 170 countries  worldwide.  TIANSHI believes that direct sales industry
is a fast growing worldwide industry with dramatic growth potentials in the next
decade. Based on a study conducted by Mary Kay Inc. (a direct sales company), by
the year of 2007, the worldwide  direct sales market will reach US$200  billion,
and direct sales  distributors  will reach 60 million people.  For those heavily
populated countries, such as, China, Russia and South American countries, direct
sales industry is developing at an increasing speed. Within the past four years,
direct sales  distributors for different products have increased from 14 million
people to 31 million people  worldwide,  and in average  300,000 people join the
industry  every month.  The advantages of direct sales are: (1) the direct sales
concept  has been  generally  accepted  and  supported  in many  countries;  (2)
internet  provides  dramatic growth  potentials for direct sales  networks;  (3)
direct sales provides  distributors with more flexibility in time and place when
they work; and (4) distributors are controlling the sales themselves. Currently,
TIANSHI  and its  affiliates  are  planning  to set up an  online  system  among
thirty-one  (31) provinces in China.  This system will integrate the traditional
direct sales by generating a multi-channeled  distribution network for the sales
of products of TIANSHI.

         Commencing from the beginning of 2003, the business development plan of
TIANSHI is  focused on further  market  expansion  on the  international  arena.
TIANSHI  will  target  developing  countries  in  Southeast  Asia,  Africa,  and
Northeast Europe,  giving  consideration of its overall market  capabilities and
targeted  consumer  groups.  TIANSHI  plans to enter these  overseas  markets by
setting up overseas  offices or branches to better help its local  direct  sales
distributors. To achieve this international expansion, TIANSHI will focus on its
product  research  and  development,  online  direct sales  system,  and quality
assurance of its products.  At present,  TIANSI has already sold its products in
China,  the United  States,  South  Korea,  Japan,  India,  Thailand,  Malaysia,
Indonesia, Canada, Peru, Brazil, Russia, Kazakhstan, Belarus, Mongolia, Finland,
Lithuania,  Britain, Germany, France, Romania, Ukraine, Portugal, Turkey, Italy,
Nigeria, Ghana, South Africa and Australia.

         In terms of  products,  TIANSHI will focus  marketing on the  following
four products:  Tianshi Spirulina Capsule, Tianshi Nutrient High Calcium Powder,
Tianshi Vitality Softgel Capsule and Tianshi Cordyceps Mycelium Capsule.

Competition:
------------

         TIANSHI  adopts the approach of  multi-leveled  direct  sales  networks
internationally.   Though  carrying  different  kinds  of  products,   its  main
competitors  are some of the  world-renowned  direct sales  companies,  such as,
Amway, Avon, Mary Kay, Nu Skin, Herbalife, RunRider and SunHope.

         TIANSHI's competitive strengths that will enable it to benefit from the
increasing demand for healthcare products include:

         o        Quality and size of manufacturing facilities;
         o        Developed multi-channeled direct sale distribution network;
         o        Customer  orientated  business  operation  and  market  driven
                  response system;
         o        Products quality assurance system;
         o        Worldwide education and staff training system;
         o        Worldwide information technology system; and
         o        Extensive product research and development efforts.



                                       9
<PAGE>

Government Regulation:
----------------------

         TIANSHI's  products  are  mostly  classified  as health  food.  In most
countries, sales of such products are usually considered under the categories of
general  commodities,  which do not  require  specific  permits or under  strict
regulations  applied to drugs or  medicine.  Since  TIANSHI  and its  subsidiary
Tianshi China are only engaging in  manufacturing  and production for healthcare
food,  which business do not involve sales  activities (all the sales activities
are conducted by affiliate companies),  the local approval issues are dealt with
by the Company's local affiliates.

         In some countries,  direct sales (or  multi-level  marketing) is highly
regulated or prohibited. Since TIANSHI and its subsidiary Tianshi China are only
engaging in manufacturing  and production for healthcare food, which business do
not involve any direct sales  operation with all the direct sales  operation are
conducted by affiliate  companies.  All of TIANSHI and Tianshi China's affiliate
companies  overseas are legally  registered  in  countries  that do not prohibit
direct sales model. In China, on February 9, 2004, a high ranking  official from
the  Ministry of  Commerce of P.R.  China  revealed at a  Sino-America  Business
seminar that China plans to set up regulation for direct sales model within Year
2004. The new  regulation  will rule out illegal  direct sales  companies  while
encouraging legal direct sales companies.  TIAHSHI expects a favorable impact on
its business development by the new regulation.

GOVERNMENTAL REGULATION OF OUR OPERATIONS IN CHINA

TIANSHI's  subsidiary  operates from facilities that are located in the People's
Republic of China. Accordingly,  our subsidiary's operations must conform to the
governmental regulations and rules of China.

Environmental Compliance

We are  subject  to the  People's  Republic  of China's  national  Environmental
Protection  Law,  which was enacted on December 26, 1989, as well as a number of
other national and local laws and regulations  regulating air, water,  and noise
pollution and setting pollutant discharge standards.  Violation of such laws and
regulations could result in warnings,  fines,  orders to cease  operations,  and
even criminal  penalties,  depending on the circumstances of such violation.  We
believe that all  manufacturing  operating is in compliance  with all applicable
environmental  laws,  including  those laws  relating to air,  water,  and noise
pollution.



                                       10
<PAGE>

Government  Review and  Approvals  and  Applicable  Laws in China  Affecting Our
Subsidiary:  The Chinese government's involvement and influence in the operation
of joint  venture  companies  is  limited to a well  defined  legal/bureaucratic
infrastructure in three areas operated through three separate State entities:

1. Review by Foreign Investment Commission
Foreign  Invested  Enterprise or joint  ventures must be reviewed by the Foreign
Investment  Commission,  or its  delegate,  for  approval as a Foreign  Invested
Enterprise.  Changes in ownership  identity or  registered  capital of a Foreign
Invested  Enterprise  must be reviewed  and  approved by the Foreign  Investment
Commission.

2. Industrial and Commercial Registration Administration Bureau
A Foreign Invested Enterprise must have a business license to operate,  which is
issued by the Industrial and Commercial  Registration  Administration Bureau. In
addition,  any  change  in a Foreign  Invested  Enterprise's  ownership  must be
reported to this bureau for a reissue of a business license.

3. Laws Associated with State-Owned Enterprises
The Chinese partners in joint venture Foreign Invested  Enterprise  companies or
Sino-Foreign Equity Joint Ventures may be State-Owned  Enterprises.  State-Owned
Enterprises have defined rights and areas of authority regarding a joint venture
as set  forth in the  joint  venture's  articles  of  association  and the joint
venture contract.  As such, the Foreign Investment Commission and the Industrial
and  Commercial  Registration  Commission  have  a  limited,   defined  area  of
operation,  responsibility,  and authority.  As discussed  below,  none of these
State  entities  has the  ability  to change  the  laws,  the  articles,  or the
contracts governing the rights,  obligations,  operation,  or existence of joint
venture companies. Further, the minority partners in our joint venture companies
are not State-Owned Enterprises.  As a non-State-Owned  Enterprise, the minority
partners  have no  direct  relationship  with  the  People's  Republic  of China
government.

Sino-Foreign Invested Enterprise Laws: FIE Laws

Tianshi CHINA is a Sino-Foreign  Equity Joint Venture  established under the law
of the People's  Republic of China in accordance  with the People's  Republic of
China  Sino-Foreign  Equity Joint Ventures Law, or EJV Law. Article 2 of the EJV
Law, which provides as follows:

         The Chinese  Government,  pursuant  to the  provisions  of  agreements,
contracts,  and articles of association  that it has approved,  shall protect in
accordance  with the law,  the  investments,  distributable  profits,  and other
lawful rights and interests of foreign investors.

Further, the EJV Law provides:
         The State  shall not  subject  joint  ventures  to  nationalization  or
expropriation.  In  special  circumstances,   however,  in  order  to  meet  the
requirements  of the  public  interest,  the State  may carry out  expropriation
against a joint venture in accordance with legal  procedures,  but corresponding
compensation must be made.

The first  provision set forth above  reflects the principle that the State must
protect  the  interest  of the foreign  investor  based upon an  approved  Joint
Venture  Contract and Articles of Association.  This would extend to the control
provisions in the  contracts  and articles,  as control is one of the rights and
interests of the foreign investor in a majority-owned  EJV. The second statement
reflects the power that all national  governments,  including that of the United
States, reserve to them.

In  addition,  Article 33 of the  Implementing  Regulations  to the Equity Joint
Venture Law provides that "the highest authority of a Joint Venture shall be its
board of  directors,  which shall decide all major issues  concerning  the Joint
Venture."  Thus,  control  over the  Joint  Ventures  is  vested in the board of
directors,  not in the State.  While it is true that the State retains  ultimate
control of State-Owned  Enterprises,  Equity Joint Ventures are not  State-Owned
Enterprises,  but are an entirely  separate category of enterprise under the law
of the People's Republic of China.  While the State can influence the operations
of a joint venture where a Chinese party is a State-Owned Enterprise, legally it
can do so only through the party's representatives on the Joint Venture board of
directors.

Foreign Companies Doing Business in China
There are three standard  investment  vehicles for foreigners  doing business in
China:
o        Equity Joint Venture
o        Cooperative or contract Joint Venture
o        Wholly Foreign-Owned Enterprise

Each of these investment vehicles is known as a Foreign Invested Enterprise. The
applicable  legal framework for the  establishment  and  continuation of Foreign
Invested Enterprise laws is as follows:



                                       11
<PAGE>

     General    - People's Republic of China Foreign Economic Contract Law

     Accounting - People's Republic of China Accounting Law
                - Laws Concerning Enterprises with Foreign Investments
                - The General Accounting Standard for Enterprises
                - The Specific Accounting Standards

     Equity Joint
     Venture    - People's Republic of China Sino-Foreign Equity Joint
                    Venture Law
                - People's Republic of China Sino-Foreign Equity Joint
                    Venture Law Implementing Regulations

     Cooperative
     Venture    - People's Republic of China Sino-Foreign Cooperative Joint
                    Venture Law
                - Detailed Rules for the Implementation of the People's Republic
                    of China Sino-Foreign Cooperative Joint Venture
                    Law Regulations

     Wholly Foreign-
     Owned
     Enterprise - People's Republic of China Wholly Foreign-Owned Enterprise Law
                - Implementing Rules of the Wholly Foreign-Owned Enterprise Law
                - Interpretations on Various Provisions Concerning the
                     Implementing Rules of the Wholly Foreign-Owned
                     Enterprise Law




The Chinese Legal System
The  practical  effect of the People's  Republic of China's  legal system on our
business  operations  in China can be viewed from two separate  but  intertwined
considerations.

First,  as a matter of substantive  law, the Foreign  Invested  Enterprise  laws
provide significant protection from government interference.  In addition, these
laws  guarantee  the full  enjoyment of the  benefits of corporate  Articles and
contracts to Foreign Invested Enterprise  participants.  These laws, however, do
impose standards  concerning  corporate formation and governance,  which are not
qualitatively different from the General Corporation Laws of the several states.
Therefore,  as a practical matter, a Foreign Invested Enterprise needs to retain
or have  ready  access  to a local  Chinese  law  firm  for  routine  compliance
purposes.

Similarly,  the People's  Republic of China  accounting laws mandate  accounting
practices,  which are not co-existent with U.S.  Generally  Accepted  Accounting
Principles.  The China accounting laws require that an annual  "statutory audit"
be performed in accordance with People's Republic of China accounting  standards
and that the books of account of Foreign Invested  Enterprises are maintained in
accordance with Chinese  accounting laws. Article 14 of the People's Republic of
China  Wholly  Foreign-Owned  Enterprise  Law  requires  a Wholly  Foreign-Owned
Enterprise to submit certain periodic fiscal reports and statements to designate
financial and tax authorities,  at the risk of business license revocation. As a
practical  matter,  a Foreign  Invested  Enterprise  must retain a local Chinese
accounting  firm that has  experience  with both the Chinese  standards and U.S.
Generally Accepted Accounting Principles. This type of accounting firm can serve
the dual function of performing the annual Chinese statutory audit and preparing
the Foreign Invested Enterprise's  financial statements in a form acceptable for
an  independent  U.S.  certified  public  accountant to issue an audit report in
accordance with Generally Accepted Accounting Auditing Standards.

Second,  while the enforcement of substantive  rights may appear less clear than
United States procedures,  the Foreign Invested  Enterprises and Wholly Foreign-
Owned Enterprises are Chinese  registered  companies which enjoy the same status
as  other  Chinese   registered   companies  in   business-to-business   dispute
resolution.  Because the terms of the respective Articles of Association provide
that all business disputes pertaining to Foreign Invested  Enterprises are to be
resolved by the  Arbitration  Institute of the Stockholm  Chamber of Commerce in
Stockholm, Sweden applying Chinese substantive law, the Chinese minority partner
in our joint venture companies will not assume a privileged  position  regarding
such  disputes.  Any award  rendered  by this  arbitration  tribunal  is, by the
express  terms  of  the  respective  Articles  of  Association,  enforceable  in
accordance  with  the  "United   Nations   Convention  on  the  Recognition  and
Enforcement  of Foreign  Arbitral  Awards  (1958)."  Therefore,  as a  practical
matter,  although no assurances can be given, the Chinese legal  infrastructure,
while  different in operation  from its United  States  counterpart,  should not
present  any  significant  impediment  to  the  operation  of  Foreign  Invested
Enterprises.


Earnings and Distributions of the FIE's
Both the Foreign  Investment  Equity Joint Venture laws and the Wholly  Foreign-
Owned  Enterprise laws provide for and guarantee the  distribution of profits to
foreign investors in Chinese Foreign Invested Enterprises.


                                       12
<PAGE>

Article 7 of the People's  Republic of China  Sino-Foreign  Equity Joint Venture
Law requires  that profits of an equity joint venture be  distributed  among the
parties in proportion to their respective  contributions to registered  capital.
These  distributions  are made  from net  profits  after  deducting  from  gross
profits,  a reserve fund, a bonus and welfare fund for workers and staff,  and a
venture  expansion  fund,  all  as  stipulated  in  the  venture's  Articles  of
Association. The Yi Wan joint venture Articles of Association provide in Chapter
7, Article 43, that  allocations  for these statutory funds be determined by the
Board of Directors each year  "...according to the actual business situation and
profitability of the Joint Venture from after-tax profit."

Article 10 of the People's Republic of China  Sino-Foreign  Equity Joint Venture
Law allows the net profit which a foreign investor  receives as its share of the
Foreign  Investment  Equity  Joint  Venture  profit  to be  "remitted  abroad in
accordance with foreign exchange control regulations...." Logistically, when the
statutory  funds are allocated in accordance  with Article 43, and any loans are
repaid by the joint venture in accordance with the terms thereof,  the after-tax
profits  of the  joint  venture  are  distributed  based  upon the ratio of each
party's registered  capital.  The profits are decided by the board of directors,
whether for  distribution or for the expansion of the joint venture's  business;
provided,  however,  that where  profits  are used for  expansion,  the board of
directors  are  required  to  distribute  the  profits  that are  available  for
distribution  in an  amount  sufficient  to  enable  each  party  to pay the tax
liabilities,  if any,  that  they  each may  incur  with  respect  to the  joint
venture's profits.

If the joint venture has incurred losses in previous  years,  the profits of the
current  year must be first used to make up  losses.  The joint  venture  cannot
distribute profits until the previous losses are made up. Remaining profits from
previous years may be added to the current year for profits distribution, or for
distribution  after making up the current year  deficit.  The profits of a party
may be used for  further  investment  inside  China or may be  remitted  outside
China.

Where the joint venture has foreign currency available for profit  distribution,
each party can  receive  an amount of  foreign  currency  in  proportion  to its
respective  contribution  to registered  capital.  The joint venture must assist
each party,  upon request,  in exchanging  profits available for distribution in
RMB into United States Dollars using the Foreign Exchange Adjustment Centers and
any other  reasonable  methods that may be available to the joint venture or any
party. The costs of cash exchanges are the responsibility of the party receiving
the foreign currency profit distribution.  All profits distributed to TIANSHI in
foreign  currency  are  freely  remittable  outside  of China to a bank  account
designated by TIANSHI.


Similarly,  Article 19 of the People's  Republic of China Wholly  Foreign  Owned
Enterprise  Law provides that a foreign  investor may remit abroad  profits that
are earned by a Foreign  Invested  Enterprise,  as well as other funds remaining
after the enterprise is liquidated.

Because Tianshi China is 80% owned by Tianshi International  Holdings Group Ltd.
which is wholly owned by Tiens Biotech Group (USA).  Inc. Tianshi  International
Holdings Group Ltd. Is a controlled foreign corporation, for U.S. federal income
tax  purposes,  we may be required to include in our gross  income for U.S.  tax
purposes:

o        The Company's "Subpart F" income, which includes certain passive income
         and income from certain  transactions with related persons,  whether or
         not this income is distributed to it; and

o        Increases in the Company's earnings invested in certain U.S. property.

Based on the current and expected income, assets, and operations of our company,
we  believe  that  it  will  not  have   significant  U.S.  federal  income  tax
consequences under the controlled foreign corporation rules.

Required Statutory Reserve Funds
In accordance with various regulations in China, a Foreign Invested  Enterprise,
such as our hotel and  agriculture  divisions,  can  distribute  their after tax
profit  only after  making  transfers  to certain  statutory  surplus  reserves,
collectively  referred  to as  "Surplus  Funds."  The order of  distribution  to
investors is:

o        Enterprise or corporate income tax payments;
o        Application to eliminate prior year losses;
o        Transfers to the three statutory funds per regulations;
o        Distribution to investors.




                                       13
<PAGE>

The three statutory reserve funds are:
o        Statutory  surplus  reserves  are to be utilized to offset prior years'
         losses,  or to increase its share capital.  When the statutory  surplus
         reserve  fund of a  limited  liability  company  converts  its  surplus
         reserves to capital in accordance with a shareholders' resolution,  the
         company will either  distribute  new shares in proportion to the number
         of shares held by the each  shareholder,  or increase  the par value of
         each share.  Except for the  reduction  of losses  incurred,  any other
         usage should not result in this reserve  balance  falling  below 25% of
         the registered capital.

o        Enterprise  expansion fund is to provide for capital  expenditures  and
         working  capital.  When the fund is  utilized,  an amount  equal to the
         lower of cost of the assets and the balance of the fund is  transferred
         from the expansion fund to the general surplus reserve. This reserve is
         non-distributable  other than in  liquidation.  When the relevant asset
         are  disposed  of or  written  off,  the  original  transfers  from the
         expansion fund are reversed.

o        Public  welfare  fund  is to be  utilized  for  capital  items  for the
         collective  benefits of a company's  employees such as the construction
         of dormitories, cafeteria and other staff welfare facilities. This fund
         is  non-distributable  other  than in  liquidation.  When  the  fund is
         utilized,  an amount  equal to the lower of cost of the  assets and the
         balance of the fund is  transferred  from the statutory  public welfare
         fund to the general surplus reserve,  This reserve is non-distributable
         other than in liquidation.  When the relevant assets are disposed of or
         written off, the original  transfers from the statutory  public welfare
         fund are reversed.

The separate  allocation  to each of the  Statutory  Surplus  Reserve  Funds are
either pre-set in the articles of association or joint venture contracts, or can
be  determined  by the board of directors of each  entity.  In Foreign  Invested
Enterprises the directors determine the separate allocations on an annual basis.
The total  allocations  to the Surplus  Funds  required as a  percentage  of net
profits  after  income  tax  is not  set by  regulations  for  Foreign  Invested
Enterprise  joint ventures and is to be determined by the directors on an annual
basis.  The  allocations  for each fund are recorded  differently on the Foreign
Invested Enterprise financial statements. The reserve fund, enterprise expansion
fund and statutory  public  welfare fund are shown on the balance sheets as part
of owners' equity.

For all Foreign Invested  Enterprises,  once the  contributions to the statutory
surplus  reserve  fund  equals  to  50%  of the  Foreign  Invested  Enterprise's
registered capital,  no further  contributions to that fund needs to be made. No
such limitation exists for other funds. Foreign Invested Enterprises do not have
to set up or contribute to an enterprise expansion fund.

In wholly-owned Foreign Invested Enterprises,  income after the payment of China
income  taxes ,  shall  be  allocated  to the  statutory  surplus  reserves  and
statutory  public  welfare  fund  for  staff  and  workers.  The  proportion  of
allocation  for reserve funds is no less than 10 percent of the profit after tax
until the accumulative  amount of allocation for statutory surplus reserve funds
reaches 50 percent of the registered capital, and then no more allocation may be
made.  The  proportion  of  allocation  for  statutory  public  welfare fund and
enterprise  expansion  fund  is  decided  by the  enterprise  itself.  A  wholly
foreign-owned  enterprise does not have to set up or contribute to an enterprise
expansion fund.


Currency Conversion and Exchange
The   currency  in  China  is   designated   as  the   Renminbi.   Although  the
Renminbi/United  States dollar exchange rate has been  relatively  stable in the
past five years there can be no assurance that the exchange rate will not become
volatile or that the Renminbi will not be officially devalued against the United
States dollar by direction of the Chinese government.

Exchange  rate  fluctuations  may  adversely  affect our  financial  performance
because of our foreign  currency  denominated  assets and  liabilities,  and may
reduce the value,  translated  or converted,  as  applicable  into United States
dollars, of our net fixed assets, our earnings and our declared dividends. We do
not engage in any hedging activities in order to minimize the effect of exchange
rate risks.


RISKS RELATED TO BUSINESS AND INDUSTRY:

         Forward-Looking  Statements  Risks:  The discussion of the business and
industry of the Company contains various forward looking statements.  within the
meaning of applicable  federal  securities laws and are based upon the Company's
current expectations and assumptions concerning future events, which are subject
to a number of risks and uncertainties that could cause actual results to differ
materially from those anticipated.



                                       14
<PAGE>

         Marketing Risks:  Newly developed  products and technologies may not be
compatible  with the market  needs.  Due to the fact that market for  healthcare
food products differentiate geographically, TIANSHI must develop and manufacture
its products to accurately  target specific  markets to ensure product sales. If
we fail to invest in extensive  market research on consumer health needs through
collecting  of  large  volume  of  market  information  and  conducting  of many
discussions,  we may face limited market acceptance of our products, which could
have material adverse effect on our sales and earning.

         Technology  Risks:  Our products and  technologies  must keep pace with
advances in the industry and may be replaced by other newly  developed  products
and technologies.  The industry of healthcare products is characterized by rapid
product  development,   with  a  significant  competitive  advantage  gained  by
companies that introduce products that are first to market,  constant innovation
in products and techniques,  frequent new product  introductions and competitive
prices.  Our future growth partially  depends on our ability to develop products
that are more effective in meeting consumer needs or that incorporate the latest
technologies. In addition, we must be able to manufacture and effectively market
those products.  The sales of our existing products may decline if a new product
is introduced by one of our competitors.  As such, if we fail to make sufficient
investments  in research,  pay close  attention to consumer needs or we focus on
technologies that do not lead to more effective products, our current and future
products could be surpassed by more effective or advanced products of others.

         Product  Assessment Risks: The newly developed  products may not accord
with  the PRC  laws or laws of  other  relevant  countries,  which  renders  the
products not marketable in the relevant countries. For example, we cannot market
some of our products in the United  States until such products  obtain  approval
from the Food & Drug  Authority  (the "FDA"),  and there is no assurance that we
will obtain such approval.  We have limited  experience in conducting  extensive
testing and expert  assessments  to obtain  regulatory  approvals  in the United
States.

         Sales of healthcare  products  outside the United States are subject to
regulatory  requirements that vary by countries.  The time required to obtain an
approval may be shorter or longer than the time  required for FDA  consideration
and involve complexities of dealing with a variety of international governmental
regulations. We have limited experience in dealing with the specific regulations
that may be required to sell our products in certain international markets.

         In  addition,  delays  or  rejections  may be  encountered  based  upon
additional government regulation from future legislation,  administrative action
or  changes  in  governmental  policy  and  interpretation  during the period of
product development and product  assessment.  Although we have, so far, obtained
the  marketing  rights  for  selling  of our  products  in the PRC and 90  other
countries,  however,  we may not  continue  to receive and  maintain  regulatory
approvals for the sales of our products.

         Manufacturing Risks: There are risks associated with ingredients mixing
or production  processes and techniques.  Our  manufacturing  process requires a
significant   degree  of  technical   expertise.   If  we  fail  to  produce  to
specifications  or inadvertently  use defective  materials in the  manufacturing
process, the reliability and performance of our products will be compromised, as
such, our business could be adversely affected.

         Governmental  Regulatory  and Policy Risks:  We need to follow  various
government regulations  particularly in the fields of health food regulation and
direct  marketing  which may have material impact on our operations and increase
our costs and could even  prevent us from or delay us in selling  our  products.
The research, development,  testing, manufacturing and marketing of our products
are subject to various governmental  regulations in China. Government regulation
includes  inspection  of and controls over  testing,  manufacturing,  safety and
environmental  controls,  efficacy,  labeling,  advertising,  promotion,  record
keeping  and  the  sale  and  distribution  of  healthcare   products.   Tianshi
Engineering is also subject to government  regulation with respect to the prices
it will  charge,  the rebates it may offer to  customers  and the methods of its
marketing. Government regulation substantially increases the cost of developing,
manufacturing and selling our products. In addition,  our product sales in other
countries  are  subject to product  regulatory  regimes to various  degrees  and
direct marketing or distribution  regulations.  Although currently these aspects
are handled by our distributors in the relevant  jurisdictions,  there can be no
assurance  that the current  operations  of our company and our  affiliates  and
distributors will not be adversely  affected by compliance issues and changes in
applicable laws and regulations in relevant jurisdictions.



                                       15
<PAGE>

         Risks relating to the PRC:  Substantially all of our assets are located
in China and  substantially  all of our revenues are derived from our operations
in China.  Accordingly,  our operations are subject, to a significant degree, to
the PRC law. At present,  Tianshi Engineering has adopted Single-Level Marketing
("SLM") domestically, as Multi-Level Marketing ("MLM") is strictly prohibited by
the PRC laws. As stated under "Business Strategy", our primary business strategy
is to  develop  strong  direct  sales or  Internet  distribution  networks  both
domestically  and  internationally  through  Tianshi  Engineering's  and Tianshi
China's affiliated companies. This sales system that we are trying to develop is
worldwide distribution networks that are similar to MLM, which is and will still
be prohibited in China in the  foreseeable  future.  If we are unable to develop
other  marketing  channels,  our planned  growth may be adversely  affected.  In
addition,  there are no  comprehensive  laws regulating  Single-Level  Marketing
("SLM")  business  entities in China,  apart from  several  scattered  governing
rules. Based on the agreements between the US and the PRC in entering WTO, China
expressed that within three years of China entering WTO, China will discuss with
other members of WTO in instituting  laws regarding SLM.  Chinese  government is
now in  the  process  of  adopting  such  related  laws.  This  unclearness  and
uncertainty of the development of such regulations in this subject may adversely
affect sales of our products in China.

         In terms of industry regulations and policies: The economy of China has
been  transitioning  from a planned economy to a more  market-oriented  economy.
Although  in recent  years  the  Chinese  government  has  implemented  measures
emphasizing the utilization of market forces for economic reform,  the reduction
of state ownership of productive assets and the establishment of sound corporate
governance in business  enterprises,  a substantial portion of productive assets
in China is still owned by the Chinese  government.  For example,  all lands are
State  owned  and  to  lease  to  business   entities  or  individuals   through
governmental  granting of State-owned  Land Use Rights.  The granting process is
typically based on government  policies at the time of granting,  which could be
lengthy and complex.  This process may adversely affect our future manufacturing
expansions.  The Chinese  government  also  exercises  significant  control over
China's economic growth through the allocation of resources, controlling payment
of  foreign  currency  and  providing   preferential   treatment  to  particular
industries or companies.  Uncertainties  may arise with changing of governmental
policies and measures. At present, the development of biological technologies of
TIANSHI is all  subject to  approvals  from the  relevant  government  bodies in
China. Such governmental  approval  processes are typically lengthy and complex,
and never certain to be obtained.

         Risks relating to other countries:  Products  distributed outside China
are  subject to  government  regulations  of  different  jurisdictions.  In some
developed  countries,  the government  regulations  could be equally or stricter
than in China,  while in developing  countries,  government  regulation could be
uncertain in this area. Our products could take a  significantly  long time than
we expect to gain  regulatory  approval  and may never gain  approval.  This may
limit Tianshi  Engineering  or our ability to promote,  sell and  distribute our
products.  In  addition,  in  terms  of  marketing  approach,  MLM  may  also be
prohibited in some countries other than China. As such,  growth in our sales may
be  adversely   affected  if  such  approval   cannot  be  obtained  in  certain
jurisdictions.

         Financial  Risks:  Tianshi China began its operation in July 1998,  and
has incurred  losses until the financial year ending  December 31, 2002. For the
first half year of 2003, with effective  control on costs and dramatic  increase
in sales, especially in the international markets,  Tianshi China has achieved a
dramatic growth in sales income (more than 50%). This short history of achieving
great  profitability  may not be adequate to fully assess our ability to achieve
market  acceptance of our products or our ability to respond to competition  and
continue this level of performances.  Long-term sustainable  profitability level
has not been  determined.  There can be no  assurance  that we will achieve such
profitability  in  a  long  run.  Accordingly,   we  are  subject  to  the  same
uncertainties  and risks  associated  with any early  stage  company  developing
products and beginning operations. If we are unsuccessfully addressing the risks
and  uncertainties  frequently  encountered  in a new and evolving  market,  our
business will be seriously harmed.

         Risks  relating to related party  transactions:  TIANSHI has affiliated
companies or business  entities which are owned by Mr. LI Jinyuan and his direct
family  members  (mostly his  daughter Ms. LI Baolan).  Although all  affiliated
companies and business  entities were  established as such that they are legally
and  financially  independent  except  through  the common  ownership,  they are
centrally  administrated  by Tianshi Group. The decisions of Tianshi Group could
materially  affect the operation of our business,  which could be adverse to our
investors. (Please see "Related Party Transactions" for details).

Tianshi  China  sells  all of its  products,  which  sold in  China  to  Tianshi
Engineering  (Please see "Related  Party  Transactions"  for  details).  As both
Tianshi China and Tianshi  Engineering  are in majority owned by Mr. LI Jinyuan,
even given considerations to the internal price transferring  policies set among
the related  parties,  these internal  policies might not be strictly  followed,
accordingly  our financial  performances  could be  materially  affected by such
internal  policies  and  their  enforcements,  which  could  be  adverse  to our
investors.



                                       16
<PAGE>

In view of the inter-related  business dealings and ownership  structure,  there
are risks of conflict of interest and  self-dealing  as well as cross default in
contracts and manipulation of performance results. The Company is in the process
of  establishing  a system to ensure  the  independence  of its  operations  and
financial controls.  However, there can be no assurance that the desired results
can be achieved and even so effectively.

         International  Operation  Risks:  We  may  face  various  international
operation  risks that may cause an increase  in costs.  We face risks due to our
reliance on sales in  international  markets  through Tianshi  Engineering.  Our
future success will depend in part on the continued  expansion of  international
sales of our products. Such international operations expose us to certain risks,
including but not limited to, need for export  licenses;  unexpected  regulatory
requirements;  tariffs and other  potential  trade  barriers  and  restrictions;
political,  legal and economic  instability in foreign  markets;  longer account
receivable  cycles;   difficulties  in  managing   operations  across  disparate
geographic  areas;  foreign  currency  fluctuations;  limited  protection of our
intellectual   property   rights  in  some   countries;   dependence   on  local
distributors;  and  potential  disruptions  in  sales  or  manufacturing  due to
military or terrorist acts. If one or more of these risks materialize, our sales
to  international  customers  may decrease and costs may  increase,  which could
negatively impact our financial condition.

         Risks  related to common  stock:  The  liquidity of our common stock is
affected by its limited trading market. Shares of our common stock are traded on
the OTC Bulletin Board under the symbol "TBGU.OB". There is currently no broadly
followed established trading market for our common stock. An established trading
market may never develop or be  maintained.  Active  trading  markets  generally
result in lower price  volatility and more  efficient  execution of buy and sell
orders. The absence of an active trading market reduces the liquidity of shares.
The  trading  volume of our  common  stock  historically  has been  limited  and
sporadic. As a result of this trading activity,  the quoted price for our common
stock on the OTC Bulletin Board is not  necessarily a reliable  indicator of its
fair market value. Further, if we cease to be quoted, holders would find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of our  common  stock and the  market  value of our common  stock  likely  would
decline.

         Our  common  stock may be  subject  to  regulations  prescribed  by the
Securities and Exchange Commission relating to "Penny Stock". The Securities and
Exchange  Commission has adopted regulations that generally define a penny stock
to be  any  equity  security  that  has a  market  price  (as  defined  in  such
regulations) of less than $5.00 per share, subject to certain exceptions. If our
common  stock meets the  definition  of a penny  stock,  it will be subjected to
these  regulations,  which impose  additional  sales  practice  requirements  on
broker-dealers  who sell such  securities  to  persons  other  than  established
customers and accredited investor,  generally institutions with assets in excess
of $5,000,000 and individuals with a net worth in excess of $1,000,000 or annual
income  exceeding  $200,000  (individually)  or  $300,000  (jointly  with  their
spouse).

         The reorganized  Tiens is subject to critical  accounting  policies and
actual  results  may vary  from our  estimates.  We  follow  generally  accepted
accounting   principles  for  the  United  States  in  preparing  our  financial
statements.  As part of this work,  we must make many  estimates  and  judgments
about  future  events.  These  affect the value of the  assets and  liabilities,
contingent assets and liabilities,  and revenue and expenses that we reported in
our  financial  statements.   We  believe  these  estimates  and  judgments  are
reasonable, and we make them in accordance with our accounting policies based on
information available at the time. However, actual results could differ from our
estimates,  and this  could  require us to record  adjustments  to  expenses  or
revenues  that  could be  material  to our  financial  position  and  results of
operations in future periods.

         After  giving  effect  to  the  exchange,   certain  of  our  principal
stockholders  will have  significant  voting power and may take actions that may
not be in the best  interest  of other  stockholders.  Certain of our  officers,
directors and  principal  stockholders  control a significant  percentage of our
outstanding common stock. If these  stockholders act together,  they may be able
to  exert  significant   control  over  our  management  and  affairs  requiring
stockholder approval,  including approval of significant corporate transactions.
This  concentration of ownership may have the effect of delaying or preventing a
change in control  and might  adversely  affect  the market  price of our common
stock.  This  concentration of ownership may not be in the best interests of all
our stockholders.


                                       17
<PAGE>

         Our common stock will likely be subject to substantial price and volume
fluctuations.  The  stock  market  has  experienced  extreme  price  and  volume
fluctuations in recent years that have significantly  affected the quoted prices
of  securities  of many  companies,  including  companies in our  industry.  The
changes often appear to occur without regard to specific operating  performance.
In addition,  there has been a limited  public market for our common  stock.  We
cannot predict the extent to which  investor  interest in us will be maintained.
Such interest is necessary for an active,  liquid  trading market for our common
stock.  Active trading markets  generally  result in lower price  volatility and
more  efficient  execution of buy and sell orders for  investors.  The price and
trading  volumes of our common  stock may  fluctuate  widely due to the  limited
public market for our stock.

         A significant number of our shares are eligible for sale and their sale
could depress the market price of our stock.  Sales of a  significant  number of
shares of our common stock in the public market following the merger and related
transactions  could harm the  market  price of our common  stock.  Moreover,  as
additional  shares of our common stock become available for resale in the public
market pursuant to the  registration  of the sale of the shares,  and otherwise,
the supply of our common stock will  increase,  which could  decrease its price.
Some or all of the shares of common  stock may be  offered  from time to time in
the open  market  pursuant to Rule 144,  and these  sales may have a  depressive
effect on the market for the shares of common  stock.  In general,  a person who
has held  restricted  shares for a period of one year may,  upon filing with the
SEC a  notification  on Form 144, sell into the market common stock in an amount
equal to the  greater  of 1% of the  outstanding  shares or the  average  weekly
number of shares sold in the last four weeks prior to such sale.  Such sales may
be repeated once each three months, and any of the restricted shares may be sold
by a non-affiliate after they have been held two years.

         We do not anticipate  paying dividends in the foreseeable  future,  and
the lack of dividends  may have a negative  effect on the stock  price.  We have
never declared or paid any cash dividends or  distributions on our common stock.
We currently  intend to retain our future earnings to support  operations and to
finance expansion and, therefore, do not anticipate paying any cash dividends on
our common stock in the foreseeable future.

         Our  certificate  of  incorporation  and Delaware  Law contain  certain
anti-takeover  provisions  that may inhibit a  takeover,  and we may adopt other
measures to discourage a takeover.  Delaware Law and the provisions we intend to
add to our  certificate  of  incorporation  relating  to a  classified  board of
directors may have the effect not only of discouraging attempts by others to buy
us, but also of making it more difficult or impossible for existing stockholders
to make management  changes.  A classified board,  which is made up of directors
elected for staggered terms,  while promoting  stability in board membership and
management,  also  moderates  the pace of any  change in control of our board of
directors  by  extending  the time  required  to elect a  majority,  effectively
requiring  action in at least two annual  meetings.  Our board may  consider and
adopt  additional  measures  that  would  prevent  us form  being  subject  to a
takeover.

         Risks  related to growth and financial  control:  The Company after the
reorganization  is managed by a new  management  team which is not familiar with
the  capital  market and the ways a U.S.  public  company  should be managed and
operated.  The management is currently making efforts to familiarize itself with
the relevant laws, rules and regulations and market practice. However, there can
be no assurance that the new management  team can master the relevant  knowledge
and skills and set up the  required  system in time to prevent  breaches  and to
meet the expectations of its shareholders.  In terms of financial  control,  the
Company is making major adjustments to comply with the reporting obligations and
new  securities  law  requirement.  However,  there can be no assurance that the
financial  control  system  will  be  improved   effectively  to  ensure  smooth
operations.

Item 2.  Description of Real Property Owned:

Although TIANSHI is a company organized under the laws of British Virgin Islands
("BVI"),  it does not maintain an office in BVI. Our only presence in the United
States,  after the acquisition,  is through our affiliate company Tianshi Health
Products, Inc. with registered office at Suite A-8, 917 134th Street SW, Everett
in the State of  Washington.  We conduct our main  business  activities  through
Tianshi China in Tianjin, the PRC.

Tianshi China's manufacturing workshops are located at No. 6., Yuanquan Xi Road,
Wuqing Development District (the "District"), Tianjin in the PRC, and include:

         (1) We have three management buildings and one research building.
         (2) We have five production plants, and their total area is 5879.4 m2.
         (3) We have five warehouses.
         (4) We have one  testing  and  inspection  equipment,  that is  lighten
             weight machine.
         (5) We have two production lines.
         (6) We have approximately 127 sets of equipment.



                                       18
<PAGE>

         According  to  the  PRC  laws,  the  government  owns  lands  and  only
authorizes  land use rights to  individuals  or  enterprises.  The land on which
these  workshops are built,  is identified as Lot W-30-35-2 of the District with
the total area of 28,425.5 square meters.  According to the State-owned Land Use
Right  Grant  Contract   signed  between  the  Tianjin  Wuqing  Land  Management
Commission  and  Qinghai  Aluminum  Factory  Wuqing  Trading  Company  ("Qinghai
Aluminum",  an independent  party) on June 15, 1995,  Qinghai  Aluminum has been
granted  the land use  right of 30,000  square  meters  of land  (including  Lot
W-30-35-2)  located  inside the District  under Land Use Right  Certificate  No.
95026,  for a total land use price of RMB 4,230,000  (RMB 141 per square meter).
The term for the use  right  of the land is 50 years  (starting  retrospectively
from June 1, 1993 and  expiring  on May 31,  2043).  Under an  agreement  signed
between  Qinghai  Aluminum and Tianshi Group on May 22, 1997,  Qinghai  Aluminum
agreed to transfer the said land use right, together with the factories, offices
and other facilities  constructed  thereon to Tianshi Group for a total price of
RMB7,750,000.  A new Land Use Right  Certificate  No.  97070 has been granted in
replacement  of the  previous  certificate  of No.  95026.  On January 10, 2001,
Tianshi Group passed a Board of Director's resolution, divided the said land use
right into two parts:  (i) land use right of 28,425.5  square meters of the land
was  legally  transferred  to  Tianshi  China  without  consideration,  and such
transfer was legally  registered with the relevant  government  agency in China;
(ii) 1,574.5 square meters land use right was retained by Tianshi Group. In this
way,  Tianshi China has legally  obtained land use right in the Lot W-30-35-2 of
the District with the total area of 28,425.5 square meters.

         In 1999, prior to the obtaining of land use right of the said land from
Tianshi Group, Tianshi China had obtained  governmental  approvals and proceeded
to build five buildings on the premises as its manufacturing factories.  Some of
them are still in building  progress now. To date, the total  investment made by
Tianshi China in constructing these factories has reached  approximately  RMB31,
260,760.

         In   addition,   we  lease  a  portion  of  our  office   building  and
manufacturing  facilities  from Tianshi Group,  which is a related party through
common ownership.  At December 31, 2002, the Company had a verbal agreement with
Tianshi  Group to pay for certain  expenses  of the  Tianshi  Group in lieu of a
lease  payment.  The amount of these  expenses paid in 2002 and 2001 amounted to
$242,960 and $268,100  respectively  and have been expensed in the  accompanying
statement  of  operations  under  various  general  and  administrative  expense
accounts.  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 amount of the expense paid in 2003
amounted to $375,645.

ITEM 3. LEGAL PROCEEDINGS

         We are not a party to any legal proceedings.

ITEM 4.  SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

In the third quarter of 2003, the Company has filed an information  statement on
Schedule 14C to make the following  actions:  1. To amend (the  "Amendment") the
Certificate of  Incorporation to change the name of the Company to TIENS BIOTECH
GROUP (USA),  INC. and 2. To inform the  shareholders of the Board of Directors'
decision on the  election of the  following  persons to the Board of  Directors:
JIAO Wenjun, YAN Yupeng, BAI Ping, Percy Kong Kei Chin (QIAN Gangji), Gilbert D.
Raker, Howard R. Balloch, and Socorro M. Quintero.



                                       19
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Market  Information.  There is not an established  active public market
for our common  stock.  Although our stock is eligible for  quotation on the OTC
Bulletin  Board (Symbol  "TBGU.OB"),  the trading has been sporadic and is still
under development.

         Holders.  As of December  31,  2003,  there were a total of  71,998,586
shares of our common stock outstanding, held by approximately 1,000 stockholders
of record.

         Dividends. We have not declared any dividends on our common stock since
inception  and do not  intend  to pay  dividends  on  our  common  stock  in the
foreseeable future.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Statements:

The following  discussion  of the financial  condition and results of operations
should be read in conjunction  with the  consolidated  financial  statements and
related  notes  thereto.  The  following  discussion  contains   forward-looking
statements.  Tianshi International  Holdings Group Limited is referred to herein
as "we" or "our." The words or phrases  "would be," "will allow,"  "intends to,"
"will likely  result,"  "are expected to," "will  continue,"  "is  anticipated,"
"estimate,"   "project,"  or  similar   expressions  are  intended  to  identify
"forward-looking  statements"  Such  statements  include  those  concerning  our
expected  financial  performance,  our corporate strategy and operational plans.
Actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements as a result of a number of risks and  uncertainties,
including:  (a) those  risks  and  uncertainties  related  to  general  economic
conditions in China,  including regulatory factors that may affect such economic
conditions; (b) whether we are able to manage our planned growth efficiently and
operate profitable operations,  including whether our management will be able to
identify,  hire, train,  retain,  motivate and manage required personnel or that
management  will  be  able to  successfully  manage  and  exploit  existing  and
potential market  opportunities;  (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations; and (d) whether
we are able to successfully  fulfill our 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-KSB  with the  Securities  and
Exchange  Commission  and should not be relied upon as of any  subsequent  date.
Unless  otherwise  required  by  applicable  law,  we do not  undertake,  and we
specifically disclaim any obligation,  to update any forward-looking  statements
to reflect  occurrences,  developments,  unanticipated  events or  circumstances
after the date of such statement.



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

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


                                       20
<PAGE>

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

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

TIANSHI  was  incorporated  on March 24,  2003 in the  territory  of the British
Virgin  Islands.  On June  18,2003,  TIANSHI  acquired  80% of  Tianjin  Tianshi
Biological  Development Co. Limited ("Tianshi  China") which conducts  TIANSHI's
main business  operations.  Tianshi China is a foreign  investment joint venture
incorporated  in the  People's  Republic of China  ("PRC") on March 27,  1998. A
joint venture agreement was subsequently signed on July 13, 1998 between Tianshi
(HK) International  Limited ("HKCo."),  a company  incorporated in Hong Kong and
100% owned by Mr. LI Jinyuan;  and Tianjin Tianshi  Biological  Engineering Co.,
Limited  ("Tianshi  Engineering"),  a  Chinese  companies  49%  owned by Mr.  LI
Jinyuan's  daughter  Ms. LI Baolan and 51% owned by Tianjin  Tianshi  Group Co.,
Ltd. ("Tianshi Group"). Tianshi Group is a company organized under the PRC laws,
located in Tianjin,  PRC and 90% owned by Mr. LI Jinyuan and 10% owned by Ms. LI
Baolan.  Tianshi China is classified as a Foreign  Invested  Enterprise (FIE) in
the PRC and is  subject  to the FIE  laws of the PRC.  Its  legal  structure  is
similar to a corporation and a limited  liability  company organized under state
laws in the United States. The Articles of Association  provide for a term of 50
years and registered  capital of $10,000,000.  Tianshi China was 80% owned by HK
Co., and 20% owned by Tianshi  Engineering.  On June 18, 2003,  TIANSHI acquired
80%  ownership in Tianshi  China from HK Co. The  remaining  20% was acquired by
Tianjin Tianshi  Pharmaceuticals Co., Ltd., a Chinese company with Tianshi Group
as its majority shareholder (51%).

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

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

Tianshi  China has been  conducting  the  marketing  and  sales of its  products
through its affiliate company, Tianshi Engineering in China. Tianshi Engineering
is a limited  liability  company  duly  incorporated  under the laws of PRC, and
affiliated  with  Tianshi  China  through  common  ownership  of Mr. LI Jinyuan.
Tianshi  Engineering  markets and sells Tianshi  China's  products  domestically
through its 22 branches, representative offices and chain stores and 12 domestic
affiliate  companies.  The Company also markets its products to approximately 90
countries  worldwide  including the United States,  South Korea,  Japan,  India,
Thailand,  Malaysia,   Indonesia,  Canada,  Peru,  Brazil,  Russia,  Kazakhstan,
Belarus,  Mongolia,  Finland,  Lithuania,  Britain,  Germany,  France,  Romania,
Ukraine, Portugal, Turkey, Italy, Nigeria, Ghana, South Africa and Australia.


                                       21
<PAGE>

RESULTS OF OPERATIONS

General Results of Operations for the year ending December 31, 2003

As of December 31, 2003, we had $20,453,290 of retained earnings. As of December
31, 2003, we had cash of $12,725,043 and reported total shareholders'  equity of
$33,086,192.  For the year ending December 31, 2003, we had revenues $38,392,208
and general, administrative and sales expenses of $3,171,338.

1) SALES increased by $24,295,482,  or approximately  172.35%,  from $14,096,726
for the year ended December 31, 2002 to $38,392,208  for the year ended December
31, 2003.  The 172.35%  increase was results of directly  marketing our products
international  at the end of 2002.  By the end of 2003,  we sold our products to
approximately 90 countries.  In addition,  we increased our domestic  networking
sales forces during 2003,  including domestic sales increased by $13,335,294 and
oversea sales increased by $10,960,188.

2) COST OF GOODS SOLD.  Consolidated cost of goods sold increased by $4,427,316,
from $8,297,845 for the year ended December 31, 2002 to $12,725,161 for the year
ended December 31, 2003.  Cost of goods sold as a percentage of sales  decreased
to 33.15% for the year ended  December 31, 2003,  from 58.86% for the year ended
December 31, 2002.  The decrease in cost of goods sold as a percentage  of sales
was a result  of  stronger  management  control  over  (1) cost of raw  material
purchases;  (2)  utilization of raw material and production  cost  efficiency of
production cost; (3) products  quality  control;  (4) improvement of manufacture
techniques; and (5) volume-produce.

(3) GROSS  PROFIT.  Consolidated  gross profit  increased by  $19,868,166,  from
$5,798,881  for the year ended  December 31, 2002 to $  25,667,047  for the year
ended  December 31, 2003.  Gross  profit as a percentage  of sales  increased to
66.85%  for the year  ended  December  31,  2003 from  41.14% for the year ended
December 31, 2002.  This  increase in gross profit as a percentage  of sales was
the results of increasing  sales both in domestic and  worldwide and  management
control on production cost.

(4) SELLING AND ADMINISTRATIVE  EXPENSES.  Selling and  administrative  expenses
decreased by $21,852  from  $3,193,190  for the year ended  December 31, 2002 to
$3,171,338 for the year ended December 31, 2003. The selling and  administrative
expenses as a percentage of sales  decreased to 8.2% for the year ended December
31, 2003 from  22.65% for the year ended  December  31,  2002.  The  decrease in
selling  and  administrative  expenses  was due to the  decrease  in the cost of
selling  expenses and related  selling  administrative  expenses.  At the end of
2002, in order to monitor our production's  manufacturing and selling functions,
our  management  decided to divide  all the sales  divisions  to our  affiliated
company. In results,  all the expenses related to sales reduced tremendously for
the year ended of 2003 comparing to the same period ended 2002.

(5)  NET  INCOME.   Consolidated  net  income   increased  by  $15,057,957,   or
approximately  754.4%,  from  $1,995,865 for the year ended December 31, 2002 to
$17,053,822 for the year ended December 31, 2003. The increase was mainly due to
increase  in  sales  and  decrease  in  production   cost  and  in  selling  and
administrative expenses.


CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

TIANSHI markets most of its products through various domestic and  international
business  entities that are related to Tianshi China through  common  ownership.
Related  party  sales  amounted  to  100%  of  total  sales.  Due to the  common
ownership, there are no formal sales or administrative agreement between Tianshi
China and those related  parties.  The business  operations  among these related
entities are regulated  through  internal  ordinances.  For the domestic market,
Tianshi China sells part of its products to Tianshi  Engineering,  which in turn
sells  them  through  its 22  representative  offices,  and 12 other  affiliated
companies in China. All of these  affiliated  companies are owned in whole or in
part by LI Jinyuan.

Other receivables
-----------------

The Company  through its  Chinese  joint  venture,  Tianjin  Tianshi  Biological
Development  Co.,  Ltd.,  is  owed  additional   amounts   classified  as  other
receivables  from  Tianjin  Juchao  Commercial  and Trading Co.,  Ltd.  totaling
$26,831,339 as of December 31, 2003.  These  receivables  are generated from the
Company  making various cash advances and short term loans and the allocation of
various  expenses to related  parties.  These  transactions  are re-occurring in
nature. The Company does not charge interest on these receivables.


                                       22
<PAGE>

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

Loans receivable
----------------

The Company was owed amounts classified as loans receivable from related parties
of  $10,899,102  as of December 31, 2002.  Prior to the year ended  December 31,
2000,  Tianshi China made cash advances and loans to Tianjin Tianshi  Biological
Engineering Co., Ltd. which was a 20% shareholder of Tianshi China prior to June
2003, and Tianshi Group. In June 2003,  Tianjin Tianshi  Biological  Engineering
Co., Ltd.  transferred its 20% ownership to another related party.  However, the
amount owed to Tianshi China still remained outstanding.

There were three loans  outstanding  as of December  31, 2000 which  amounted to
$4,840,000,  $2,009,773 and $ 4,926,936.  Interest is being charged at 5.31% per
annum  beginning  January 1, 2000.  As of  December  31,  2002 there was accrued
interest of $1,945,105 owed on these loans. In August,  2003 the Company entered
into a payment  schedule to pay off the loans by  December  31, 2003 which these
amounts have been paid off in 2003.

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

Accounts  payable due to related  parties  amounted to $758,570  and $762,694 at
December 31, 2003 and 2002, respectively.  These amounts were generated from the
related parties paying expenses on behalf of the Company.

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

The Company also has amounts classified as other payables due to related parties
which  amounted to $1,312,288  and  $2,294,168 as of December 31, 2003 and 2002,
respectively.  These  amounts  arose from cash  advances  from related  parties,
management fees due to related parties and various non-operational  transactions
incurred with related parties.

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

At December 31, 2002,  the Company has a verbal  agreement  with Tianshi  Group,
which is a related  party  through  ownership,  to lease a portion of its office
building and manufacturing facilities. The Company has agreed to pay for certain
expenses of the Tianshi  Group in lieu of a lease  payment.  The amount of these
expenses  paid in 2002  amounted  to  $242,960  and have  been  expensed  in the
accompanying  statement of operations  under various general and  administrative
expense  accounts.  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.  Rent expense under this
agreement amounted to $375,645 in 2003.


LIQUIDITY AND CAPITAL RESOURCES

For the year ended December 31, 2003, net cash provided by operating  activities
was $5,561,449,  net cash provided by investing  activities was $8,291,362,  and
net cash used in financing activities was $1,430,941.

For the year ended December 31, 2002, net cash used in operating  activities was
$210,959,  net cash used in  investing  activities  was  $425,381,  and net cash
provided by financing activities was $609,505.



                                       23
<PAGE>

Net cash provided by operating  activities increased by $5,772,408 to $5,561,449
for the year ended December 31, 2003,  representing a increase of  approximately
2736.2% compared to $210,959 net cash used in operating  activities for the same
period of 2002.  The increase in cash flow from operating  activities  primarily
reflects  increasing  in revenues for the year ended  December  31,  2003.  This
increase  was  also due to our  better  management  on  collection  of  accounts
receivable during this year.

Net cash provided by investing  activities increased by $8,716,743 to $8,291,362
for the year ended December 31, 2003, representing a 2049.16% increase, compared
to $425,381 net cash used by investing  activities  for the same period of 2002.
The  increase in net cash  provided by  investing  activities  was due to higher
collections of other receivable to related party.

Net cash used in financing  activities increased by $2,040,246 to $1,430,741 for
the year ended December 31, 2003,  representing a 334.74% increase,  compared to
$609,505 net cash provided in financing  activities for the same period of 2002.
The  increase  in cash  used in  financing  was  primarily  due to  decrease  in
borrowings from banks and increase in payments on long term debt to banks.

Going forward,  our primary  requirements for cash consist of: (1) the continued
implementation  of existing  products and general overhead and personnel related
expenses to support these activities; (2) continued promotional networking sales
activities  pertaining to our attempt to increase related revenues;  and (3) the
development costs of our new products.  We anticipate that our current operating
activities will enable us to meet the anticipated cash requirements for the 2004
fiscal year.

MANAGEMENT ASSUMPTIONS

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


EFFECTS OF INFLATION

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


EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

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


ITEM 7.  FINANCIAL STATEMENTS

         The financial  statements  required by this item may be found following
the signature page of this annual report.


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING DISCLOSURE

         None.



                                       24
<PAGE>

ITEM 8A.  CONTROLS AND PROCEDURES

         As required by Rule 13a-15 under the Exchange  Act,  within the 90 days
prior to the filing date of this  report,  we carried out an  evaluation  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  This  evaluation was carried out under the supervision and with the
participation  of our  management.  The Company is in the  process of  reviewing
their internal  control systems in order to be compliant with Section 404 of the
Sarbanes  Oxley Act.  The  Company  anticipates  that the review and any changes
required to implemented  to be in compliance  with Section 404 will be completed
by the year ended  December 31, 2004.  However at this time the Company makes no
representation  that the  Company's  systems of  internal  control  comply  with
Section 404 of the Sarbanes Oxley Act.

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



                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Pursuant  to the  Agreement,  on August 22,  2003,  the  directors  and
executive  officers of Tiens resigned on the Effective  Date.  The  resignations
were not a result of disagreement  with the Registrant on any matter relating to
the Registrant's operations, policies or practices.

The newly elected directors and executive officers of the Registrant are:

Name                                Position
----                                --------

LI Jinyuan                          Director/President
                                    Chief Executive Officer
JIAO Wenjun                         Director/Secretary
                                    Chief Financial Officer
YAN Yupeng                          Director

QIAN Gangji                         Director

DENG Jiatai                         Director


Executive Officers:
-------------------

         TIANSHI,   including  Tianshi  China,   currently  has  584  employees,
including 175 staff  performing  administrative  and management  functions.  The
following  table  sets forth the names,  titles and ages of key  management  for
reorganized Tiens.

-------------- ----------------- ------ ----------------------------------------
               Title             Age    Biography
Name
-------------- ----------------- ------ ----------------------------------------
JIAO Wenjun    Director/           39   From 2001 to present, he is in charge of
               Secretary/               the overall financial affairs of TIANSHI
               Chief Financial          and Tianshi China,  including budgeting,
               Officer                  asset management and finance management.
                                        He  is   pursuing   a  PH.D   Degree  in
                                        Accounting  from Tianjin  University  of
                                        Finance and  Economics  and a MBA Degree
                                        from Oklahoma City University.  Prior to
                                        join Tianshi  China,  he has 17 years of
                                        industry   and   commercial   accounting
                                        experiences.   He   has   obtained   CPA
                                        certification and is a senior accounting
                                        specialist.
-------------- ----------------- ------ ----------------------------------------



                                       25
<PAGE>

-------------- ----------------- ------ ----------------------------------------
YAN Yupeng     Director            40   From  1998  to   present,   Mr.  Yan  is
                                        employed  by  Tianshi   China  from  its
                                        establishment and experienced the growth
                                        of Tianshi China. He is now in charge of
                                        the ERP project of  TIANSHI's  Worldwide
                                        Information  System.  He is  pursuing an
                                        EMBA  Degree  from  NanKai   University,
                                        China.
-------------- ----------------- ------ ----------------------------------------
DENG Jiatai    Director            40   Joined  Tianshi  China in 2003 and is in
                                        charge  of   biological   research   and
                                        production   series    development   and
                                        management.  He  has a MBA  Degree  from
                                        Texas  A&M  and  a  PH.D   Degree   from
                                        Tennessee  Health Science Center.  Prior
                                        to joining TIANSHI, he worked for Weitai
                                        Biological Engineering Co., Ltd. and was
                                        responsible  for the  management  of the
                                        business  operation of such company.  In
                                        1996,  Mr. Den did  research  studies in
                                        biological   medicine  and  pharmacology
                                        while  he  was  at  the  Health  Science
                                        Center of New York State University. Mr.
                                        Den   has    extensive    research   and
                                        production line  management  experiences
                                        in the biological engineering field.
-------------- ----------------- ------ ----------------------------------------
LI Jinyuan     Director/President  45   From  1998  to  present,  Mr.  Li is the
               Chief Executive          Founder,   Chairman  and   President  of
               Officer                  TIANSHI   and  Tianshi   China.   He  is
                                        pursuing  an  EMBA  Degree  from  NanKai
                                        University, China.
-------------- ----------------- ------ ----------------------------------------
QIAN Gangji    Director            48   Canadian National,  he joined TIANSHI in
                                        May 2003  and is in  charge  of  overall
                                        sales   and   marketing   of   TIANSHI's
                                        products.  Prior to joining TIANSHI,  he
                                        worked   for  Amway  and  has   obtained
                                        extensive  experiences  in direct  sales
                                        networks.
-------------- ----------------- ------ ----------------------------------------

Key Employees

         The biographies of the two key employees of the  reorganized  Tiens are
as follows:

         ZHANG Xiangdong,  Vice President, age 34, he joined TIANSHI in 2003 and
is in charge of Media  Communications  for TIANSHI.  He has  obtained  Bachelor,
Master and PH.D Degrees from  Northeast  Normal  University  in China.  Prior to
joining TIANSHI,  Mr. Zhang has worked for China Central Television  responsible
for TV programs planning.

         BAI Ping,  Manager,  age 33,  from 2000 to  present,  she serves as the
position of Executive Office Manager. She is pursuing an EMBA Degree from NanKai
University in China,  and a  Undergraduate  Degree in Literature  from Northwest
Normal  University in China.  Prior to joining  Tianshi  China,  Ms. Bai was the
Chief  Representative  of Tianjin Office for Sinar Mas Group,  Asia Pulp & Paper
Co., Ltd. She is an experienced  international  relations  specialist and modern
enterprise management specialist.


ITEM 10. Executive Compensation.

LI Jinyuan        Director/President/Chief Executive Officer   RMB 100,000/month
QIAN Gangji       Director                                     RMB 20,000/month
JIAO Wenjun       Director/Secretary/Chief Financial Officer   RMB 16,000/month
YAN Yupeng        Director                                     RMB 16,000/month
BAI Ping          Manager                                      RMB 8,000/month


Item 11. Security Ownership of Certain Beneficial Owners and Management.

         The following table sets forth the beneficial  ownership of persons who
owned more than five  percent  of Tiens'  common  capital  stock  following  the
closing  of the  reorganization  and the share  holdings  of the new  members of
management, based on 71,998,586 shares outstanding as of December 31, 2003.

Name               Positions Held                Shares Owned         Percentage
----               --------------                ------------         ----------
LI Jinyuan         Director/President            66,500,000           92%
                   Chief Executive Officer



                                       26
<PAGE>

Item 12. Certain Relationships and Related Transactions.

The following brief ownership  flowchart provides the ownership structure of the
key affiliated companies:

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

Tianshi International  Holdings Group Limited - British Virgin Island registered
company owned 100% by the Company

LI Jinyuan - individual - President and majority shareholder

Li Baolan - individual - daughter of LI Jinyuan

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

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

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

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

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


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


         Related party sales amounted to  $38,392,208  and  $14,096,726  for the
         years ending December 31, 2003 and 2002,  which represent 100% of total
         sales for the year ending  December  31,  2003 and 2002,  respectively.
         Related party  accounts  receivable  related to these sales amounted to
         $8,533 and $2,562,657 at December 31, 2003 and 2002, respectively,  net
         of an allowance for doubtful accounts of $0 and $12,877, respectively.


         Due to the common ownership, there is no formal sales or administrative
agreement  between  Tianshi  China  and  those  related  parties.  The  business
operations  among  these  related   entities  are  regulated   through  internal
ordinances.  Commencing June 30, 2003, the internal transferring price is 25% of
products' domestic market price.




                                       27
<PAGE>
<TABLE>
<CAPTION>

         For the domestic  market,  Tianshi  China sells part of its products to
Tianshi  Engineering,  which in turn sells them  through  its 22  representative
offices,  and 12 other  affiliated  companies in China. The following table sets
forth the  specific  details of the  above-mentioned  representative  offices of
Tianshi Engineering and its affiliated companies in chronological order:

------------------------------------------------------------------------------------------------------
 No.   Province/                                                                          Incorp.
         City      Name of Business Entity        Registered Office       Ownership        Date
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
<S>                  <C>                          <C>                     <C>             <C>
                     Tianshi Engineering,          No. 1 Tai Bei Lu,
                     Hubei Representative           Hankou District,          LI
1      Hubei             Office (2)                     Wuhan              Jinyuan       1996-8-8
------------------------------------------------------------------------------------------------------
                     Tianshi Engineering,          No. 43 Shang Qin
                    Shan Xi Representative          Lu, Xing Cheng            LI
2      Shanxi              Office                   District, Xian          Jinyuan      1996-9-4
------------------------------------------------------------------------------------------------------
                     Liaoning Tianshi             Rm. 2, No. 27 Xiao
                   Biological Engineering        Bei Guan Jie, Dadong         LI
3     Liaoning           Co., Ltd.               District,  Shenyang        Jinyuan      1996-9-26
------------------------------------------------------------------------------------------------------
                   Tianshi Engineering,             No. 35 Shang Ma
                  Shanxi Representative          Jie, Yingze District,        LI
4      Shanxi            Office                        Taiyuan              Jinyuan      1996-10-4
------------------------------------------------------------------------------------------------------
                   Tianshi Engineering,             Rm 302, Jin Hu
                  Guangxi Representative           Plaza, No. 4 Hui           LI
5      Guangxi           Office                    Chun Lu, Nanning         Jinyuan      1996-11-28
------------------------------------------------------------------------------------------------------
                                                  Rm. 3018, Building
                                                   A, Nuo Ya Plaza,
                     Tianshi Engineering,         No. 224 Zhong Shan
                    Jiangsu Representative          Nan Lu, Jianye            LI
6     Jiangsu             Office                   District,Nanjing         Jinyuan      1996-12-16
------------------------------------------------------------------------------------------------------
                       Dalian Tianshi              No. 140-2, Wu Si
                    Biological Engineering          Lu, Sha He Kou            LI
7     Dalian              Co., Ltd.                District, Dalian         Jinyuan      1997-9-23
------------------------------------------------------------------------------------------------------
                   Tianshi Engineering, Ji         No. 3-4 Tiecheng
                      Lin Representative          Garden, Jiefang Da          LI
8      Jilin                Office                    Lu, Jilin             Jinyuan      1998-7-27
------------------------------------------------------------------------------------------------------
                                                   Rm 72, Fl. 5, An
                                                   Hua Plaza, No. 99
                      Chongqing Tianshi            Zhong Shan Er Lu,
                    Biological Technology          Yuzhong District,       LI Baolan
9    Chongqing           Co., Ltd.                    Chongqing               (1)        1998-8-1
------------------------------------------------------------------------------------------------------
                                                   Rm 902, Biological
                                                  Technology Plaza, PC
                                                  City, No. 100 Huang
                     Tianshi Engineering,            Hua Gang Ke Mao
                   Guangzhou Representative       Jie, Xian Lie Zhong         LI
10    Guangzhou             Office                   Lu, Guangzhou          Jinyuan      1998-8-18
------------------------------------------------------------------------------------------------------
                         Shanghai Tianshi            No. 475 Chi Feng
                      Biological  Engineering      Lu, Hongkou District,      LI
11    Shanghai               Co., Ltd.                    Shanghai          Jinyuan      1998-9-3
------------------------------------------------------------------------------------------------------
                                                  Yin Hua Village, No.
                       Tianshi Engineering,        119 Liu  Yi Zhong          LI
12     Fuzhou             Fuzhou Store                 Lu, Fuzhou           Jinyuan      1998-11-2
------------------------------------------------------------------------------------------------------
                         Tianjin Tianshi
                      Biological Engineering
                        Co., Ltd.("Tianshi          No.15 Xinxin Garden,
                      Engineering"), Hei Long         120 Shizi Jie,
                       Jiang Representative        Nangang District, Ha       LI
13  Heilongjiang             Office                      Er Bing            Jinyuan      1998-11-24
------------------------------------------------------------------------------------------------------
                       Tianshi Engineering,          No. 1 Yong Chang
                      Ganshu Representative            Lu, Chengguan          LI
14    Ganshu                 Office                  District, Lanzhou      Jinyuan      1999-7-21
------------------------------------------------------------------------------------------------------


                                       28
<PAGE>

------------------------------------------------------------------------------------------------------
                                                    No. 1, Sheng Rui
                                                      Apartments, 183
                       Tianshi Engineering,         Shaoxin Road, Hexi        LI
15     Tianjin          Health Food Store                District           Jinyuan      1999-9-17
------------------------------------------------------------------------------------------------------
                                                      No. 1 West Hai
                       Tianshi Engineering,        Guang Plaza, 216 Hai       LI
16    Huhehaote          Huhehaote Store           Zhong Lu, Huhehaote      Jinyuan      2000-3-23
------------------------------------------------------------------------------------------------------
                                                      Rm. 103, No. 18
                       Tianshi Engineering,         Wanlong Garden, Dong
                            Chang Chun               Si Ma Lu, Nanguan        LI
17     Changchun        Representative Office       District, Changchun     Jinyuan      2001-8-10
------------------------------------------------------------------------------------------------------
                        Haikou Tianshi
                     Biological Technology           No. 100 Hai Fu Lu,
18      Haikou              Co., Ltd.                       Haikou         LI Baolan     2002-4-9
------------------------------------------------------------------------------------------------------
                        Yinchuan Tianshi             3-1-202 Dong Sheng
                      Biological Technology             Xiao Qu, Cheng
19    Yinchuan        and Trading Co., Ltd.           District, Yinchuan   LI Baolan     2002-4-18
------------------------------------------------------------------------------------------------------
                                                      Fl.13, Commercial
                         Qinghai Tianshi              Bank Building, 236
                      Biological Technology            Dong Guan Da Jie,
20     Qinghai              Co., Ltd.                      Xining          LI Baolan     2002-4-23
------------------------------------------------------------------------------------------------------
                         Jiangxi Tianshi
                      Biological Technology            No. 30 Ding Gong
21     Jiangxi               Co., Ltd.                   Lu, Nanchang      LI Baolan     2002-5-24
------------------------------------------------------------------------------------------------------
                                                     Rm. A, Fl. 20, Ping
                     Hunan Tianshi Biological        An Plaza, No. 60 Fu
                      Technology and Trading         Rong Zhong Lu, Kaifu
22      Hunan                Co., Ltd.                District, Changsha   LI Baolan     2002-8-14
------------------------------------------------------------------------------------------------------
                      Tianshi Engineering,
                    Xingjiang Representative         Building 8, No. 107      LI
23    Xingjiang               Office                Hong Qi Lu, Wulumuqi    Jinyuan      2002-9-18
------------------------------------------------------------------------------------------------------
                      Tianshi Engineering,           No. 20 Huai Nan
                    Zhenzhou Representative        Jie, Erqi District,        LI
24    Zhengzhou               Office                     Zhengzhou          Jinyuan      2002-9-18
------------------------------------------------------------------------------------------------------
                                                   No. 1-1-1-4, Jia Siu
                       Guizhou Tianshi               Xiang, Xi Hu Lu,
                     Biological Technology           Nanmin District,
25     Guizhou            Co., Ltd.                       Guiyang           LI Baolan    2002-10-24
------------------------------------------------------------------------------------------------------
                                                     Rm 6D, Lian Bang
                      Tianshi Engineering,         Plaza, 8/23 He Xiang
                     Xiamen Representative            Xi Lu, Kaiyuan          LI
26     Xiamen               Office                  District, Xiamen        Jinyuan      2002-11-15
------------------------------------------------------------------------------------------------------
                                                    No. 18 Wen Hua Lu,
                      Tianshi Engineering,          Lintong District,         LI
27      Xian             Lintong Store                    Xian              Jinyuan      2002-11-20
------------------------------------------------------------------------------------------------------
                      Tianshi Engineering,            No. 31 Fou Shan
                    Shandong Representative        Jie, Lixia District,       LI
28    Shandong              Office                        Jinan             Jinyuan      2002-11-27
------------------------------------------------------------------------------------------------------
                                                    Building 2, No. 16
                                                    Hua Ye Apartments,
                       Tianshi Engineering,          Jian Hua Bei Da
                       Hebei Representative            Jie, Changan           LI
29     Hebei                  Office              District, Shijiazhuang    Jinyuan      2002-12-24
------------------------------------------------------------------------------------------------------
                                                    No. 143 Zhao Deng
                       Beijing Tianshi                Yu Lu, Xicheng          LI
30    Beijing        Engineering Co., Ltd.          District, Beijing       Jinyuan      2003-3-26
------------------------------------------------------------------------------------------------------
                                                    No. 125, Mei Hua
                     Tianshi Engineering,         Ju, First North Part
                    Sichuan Representative          2nd Ring, Jinniu          LI
31    Sichuan               Office                 District, Chengdu        Jinyuan      2003-4-7
------------------------------------------------------------------------------------------------------


                                       29
<PAGE>

------------------------------------------------------------------------------------------------------
                                                   No. 411-1 Bai Long
                      Kunming Tianshi                Lu Middle Part,
                   Biological Technology             Guandu District,
32    Kunming            Co., Ltd.                       Kunming           LI Baolan     2003-5-21
------------------------------------------------------------------------------------------------------
                    Tianshi Engineering,           Rm 201-1-133 Hu Po
                    Hefei Representative            Shan Dong Zhuang,         LI
33     Hefei               Office                          Hefei            Jinyuan      2003-6-20
------------------------------------------------------------------------------------------------------
                                                 Sheng De Apartments,
                                                   No. 379 De Sheng
                    Tianshi Engineering,         Lu, Gongshu District,        LI
34    Zhejiang        Zhejiang Store                    Hangzhou            Jinyuan
------------------------------------------------------------------------------------------------------
</TABLE>

Notes:

(1)  Out of the 34  business  entities  listed  above,  Mr. LI Jinyuan  has 100%
     ownership  to 26 of them;  The other 8 business  entities are 100% owned by
     Ms. LI Baolan, the daughter of Mr. LI Jinyuan;
(2)  The 22 representative offices of Tianshi Engineering are not separate legal
     entities, while the 12 affiliate companies are legal entities under the PRC
     laws.

Price and cost allocations for domestic transactions are as follows:

         Tianshi China sells to Tianshi  Engineering  at the price of 25% of the
domestic  market  price  for the  products.  Tianshi  Engineering  then  through
individual  distributors of its 22 representative offices or 12 affiliates sells
the  products to  purchasers.  Through this  process,  the  commission  to those
individual  distributors  is 52.5%  of the  domestic  market  price;  while  the
representative  offices or affiliates incur 4-9% of the domestic market price as
their operation expenses and Tianshi  Engineering retains 15.5-20.5% as expenses
and profits. This is summarized as follows:


Tianshi China (Costs, expenses and profit)              25%
Tianshi Engineering (expenses and profit)               15.5-20.5%
Representative Offices or Affiliates                    4-9%
Individual Distributors' Commission                     52.5%
------------------------------------------------------------------
Domestic Market Price                                   100%

         For the  international  market,  Tianshi  China  sells its  products to
approximately  90 affiliated  offshore  companies that are responsible for their
respective regional markets. The following tables set forth the specific details
of the affiliated overseas companies by regions, in chronological order:
<TABLE>
<CAPTION>

Eastern Europe:

----------------------------------------------------------------------------------------------------
 No.    Country      Overseas Affiliate           Ownership          Registered        Incorp.
                                                                       Address          Date
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
<S>     <C>          <C>                          <C>                <C>              <C>
  1     Russia      Tianshi Group Yatai        LI Jinyuan;            Haishenwei
                   Science and Technology     Jiang Ming Jun
                    Development Ltd. Co.
----------------------------------------------------------------------------------------------------
  2   Haishenwei      Tianshi Ltd. Co.           LI Jinyuan
----------------------------------------------------------------------------------------------------
  3     Russia       Shengshi Ltd. Co.           LI Jinyuan             Moscow        2001.07.12
----------------------------------------------------------------------------------------------------
  4     Russia        Huamao Ltd. Co.             LI Baolan             Moscow
----------------------------------------------------------------------------------------------------
  5     Russia       Tian Dihe Ltd. Co.           LI Baolan             Moscow        2001.07.16
----------------------------------------------------------------------------------------------------
  6     Russia    Huafeng Travel Ltd. Co.         LI Baolan             Moscow        2001.05.04
----------------------------------------------------------------------------------------------------
  7     Russia        Baofeng Ltd. Co.           LI Jinyuan             Moscow        2003.04.13
----------------------------------------------------------------------------------------------------
  8     Russia      Tianshi Health Foods    Tianjin Tianshi Group       Moscow        1999.03.06
                     (Russia) Co., Ltd.         Co., Limited
----------------------------------------------------------------------------------------------------
  9     Yeca       Tianshi WulareTrading         LI Jinyuan            Yecaburg       2000.01.31
                         Co., Ltd.
----------------------------------------------------------------------------------------------------


                                       30
<PAGE>

----------------------------------------------------------------------------------------------------
 10   New Siberia  Tianshi (New Siberia)         LI Jinyuan           New Siberia     2000.02.24
                         Co., Ltd.
----------------------------------------------------------------------------------------------------
 11       St.        Tianshi Co., Ltd.           LI Jinyuan         St. Petersburg    2000.03.20
      Petersburg
----------------------------------------------------------------------------------------------------
 12     Latvia     Tianshi (Latvia) Group        LI Jinyuan             Latvia        2000.05.02
                         Co., Ltd.
----------------------------------------------------------------------------------------------------
 13     Calining     Tianshi Co., Ltd.           LI Jinyuan              Russia       2000.06.07
----------------------------------------------------------------------------------------------------
 14  White Russia   Tianshi White Russia         LI Jinyuan           White Russia    2000.06.23
                         Co., Ltd.
----------------------------------------------------------------------------------------------------
 15     Hungary     Tianshi Hungary Co.,      LI Jinyuan 95%;          Budapest,      2000.08.23
                            Ltd.             DI Zhen Jiang 5%           Hungary
----------------------------------------------------------------------------------------------------
 16     Czech     Tianshi Czech Co., Ltd.        GAO Guo Jun             Crech        2000.12.01
----------------------------------------------------------------------------------------------------
 17     Romania   Tianshi Grup Co., S.R.L        LI Jinyuan            Bucharest,     2000.12.08
                                                                        Romania
----------------------------------------------------------------------------------------------------
 18    Esthonia    Tianshi Esthonia Co.,         LI Jinyuan                           2000.12.22
                            Ltd.
----------------------------------------------------------------------------------------------------
 19     Ukraine      Company "Hua Yuan"          LI Jinyuan             Ukraine       2001.01
----------------------------------------------------------------------------------------------------
 20     Moldova    "Tianshi-Grup" S.R.L.                           Republica Moldova  2001.01.16
----------------------------------------------------------------------------------------------------
 21     Biermu     BiermuBaolan Co., Ltd.         LI Baolan             Russia        2001.02.01
----------------------------------------------------------------------------------------------------
 22    Lithuania    Tianshi (Lithuania)           LI Jinyuan           Lithuania      2001.04.19
                         Co. Ltd.
----------------------------------------------------------------------------------------------------
 23     Russia     Tianshi LiShi Ltd. Co.         LI Baolan             Moscow        2001.04.28
----------------------------------------------------------------------------------------------------
 24     Russia        Huayuan Trading            LI Jinyuan             Russia        2001.06.09
                     (Russia) Co., Ltd.
----------------------------------------------------------------------------------------------------
 25     Russia        Nanfang Ltd. Co.           LI Jinyuan              Russia       2002.01.14
----------------------------------------------------------------------------------------------------
 26    Slovakia    Tiens Slovakia S.R.O.      LI Jinyuan 95%;           Slovakia      2002.07.11
                                              ZHOU Zhi Dian 5%
----------------------------------------------------------------------------------------------------
 27     Odyssey       Tianshi Company            LI Jinyuan             Odyssey       2002.12
----------------------------------------------------------------------------------------------------
 28     Ukraine    Huaerkev Hua Mao        WANG Shu Ying; ZHANG Jia      Ukraine      2002.12.16
                      Co., Ltd.                    Zhen
----------------------------------------------------------------------------------------------------
 29      Kazan    Tianshi Kazan Co., Ltd.        LI Jinyuan              Kazan        2003.02.27
----------------------------------------------------------------------------------------------------
 30    Bulgaria        Balkan Tianshi         LI Jinyuan 99%;            Sofia,       2003.05
                                             GUI Xin Jiang 1%          Bulgaria
----------------------------------------------------------------------------------------------------
 31     Kyrgyz     Kyrgyz LiShi Ltd. Co.         LI Jinyuan         Kyrgyz Republic   2003.05.15
----------------------------------------------------------------------------------------------------
 32    Waluoniea     Bao Yuan Co., Ltd.          LI Jinyuan            Waluoniea      2003.06.04
----------------------------------------------------------------------------------------------------
 33    Volgograd   Tianshi Volgograd Co.,        LI Jinyuan            Volgograd      2002.12.09
                            Ltd.
----------------------------------------------------------------------------------------------------

Western Europe:

----------------------------------------------------------------------------------------------------
 No     Country      Overseas Affiliate           Ownership           Registered     Incorp. Date
                                                                        Address
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
  1     England        Tianshi UK PLC            LI Jinyuan         London, England   2001.07.16
----------------------------------------------------------------------------------------------------
  2      Spain      Tianshi Spain, S.L.      Tianshi China (100%    CL Ausias Marc    1999.12.29
                                            owned by LI Jinyuan)     26, Barcelona
                                                                         08010
----------------------------------------------------------------------------------------------------
  3     Poland       Tianshi Poland Sp           LI Jinyuan         UL Przyokopowa    2000.11.01
                                                                     31, Warszawa,
                                                                        Poland
----------------------------------------------------------------------------------------------------


                                       31
<PAGE>

----------------------------------------------------------------------------------------------------
  4    Germany        Tianshi Co., Ltd.        LI Jinyuan 85%;          Berlin,       2000.12.01
                                               LI Baolan 10%;           Germany
                                               Li Tie Gang 5%
----------------------------------------------------------------------------------------------------
  5      Italy         Tianshi Italia          LIU Jin Quan 98%;      Latigo Appio
                            S.R.L.             ZHU Xiang Rong 1%      Claudio, 365    2001.07.16
                                               LIN Jian Hua 1%        Roma, Italy
----------------------------------------------------------------------------------------------------
  6    Portugal      Tianshi Millenium-           LI Jinyuan             Centro       2001.11.26
                        Comercio De                                     Commercial
                         Produtos                                      Martin Moniz
                        Biologicos,                                    5 Piso H03
                      Unipessoal, LDA                               1100-339, Lisboa
                                                                         Portugal
----------------------------------------------------------------------------------------------------
  7     Denmark       Tianshi Danmark            LI Jinyuan           Copenhagen,       2001.12
                   Sundhedsprodukter Aps                                Denmark
----------------------------------------------------------------------------------------------------
  8     Finland       Tianshi Finland            LI Jinyuan             Finland       2002.01.13
                  Healthproduct Co., Ltd.
----------------------------------------------------------------------------------------------------
  9     France       Tiens France SARL           LI Jinyuan              2 Rue        2002.02.26
                                                                     D'Hauteville
                                                                     75010 Paris,
                                                                        France
----------------------------------------------------------------------------------------------------
 10     Greece       Tiens Hellas A.E.         LI Jinyuan 90%;          Athens        2002.06.19
                                               LI  Baolan 10%
----------------------------------------------------------------------------------------------------
 11     Austria   Tianshi Health Products        LI Jinyuan         Vienna, Austria   2002.08.01
                       GmbH Co., Ltd.
----------------------------------------------------------------------------------------------------

Middle East:

----------------------------------------------------------------------------------------------------
 No       Country        Overseas Affiliate         Ownership          Registered     Incorp. Date
                                                                         Address
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
  1      Kazakhstan     Tianshi People Group       LI Jinyuan
                              Limited.
----------------------------------------------------------------------------------------------------
  2      Kazakhstan      Tianshi Kazakhstan        LI Jinyuan          Kazakhstan      2000.09.02
                            Co., Limited
----------------------------------------------------------------------------------------------------
  3        Israel         Tianshi Israel        Tianjin Tianshi
                             Limited            Group  Co., Ltd.        Jerusalem,     2000.10
                                                  (100% owned             Israel
                                                 by LI Jinyuan)
----------------------------------------------------------------------------------------------------
  4        Turkey       China Tianshi Group     LI Jinyuan 99%;         Istanbul,      2000.11.16
                         Import/Export Co.,     MENG Qing Ling 1%        Turkey
                                Ltd.
----------------------------------------------------------------------------------------------------
  5       Mongolia     Tianshi Mongolia Co.,       LI Jinyuan           Mongolia       2001.10.02
                                Ltd.
----------------------------------------------------------------------------------------------------
  6        U.A.E.        Tiens Unirates LLC        LI Jinyuan             Dubai        2003.03.26
----------------------------------------------------------------------------------------------------
  7                         LLC"Tianshi"           LI Jinyuan       Yerevan, Armenia   2003.05.20
     Armenia
----------------------------------------------------------------------------------------------------
  8     Beihabaolan       Bao Lan Company          LI Jinyuan            Aztanai       2003.05.20
----------------------------------------------------------------------------------------------------
  9      Uzbekistan       Bao Lan Company          LI Jinyuan          Uzbekistan      2003.07.04

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

                                       32
<PAGE>

America:

----------------------------------------------------------------------------------------------------
 No       Country        Overseas Affiliate         Ownership          Registered     Incorp. Date
                                                                         Address
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
  1     Brazil    Tianshi Brazil Co., Ltd.       LI Jinyuan 30%       Av.Brigadeiro    2002.08.01
                                                LI Shu Ying 35%;       Luis Antonio
                                                  LI Ai Jun 4%;            4605,
                                                XIAO Yong Hong 31%     CEP01402-002
                                                                     Jardim Paulista
                                                                  Sao Paulo-SP,Brasil
----------------------------------------------------------------------------------------------------
  2    Hong            Tianshi International       LI Jinyuan        29/F., 133 Wan
       Kong            Development Co., Ltd.                         Chai Road, Wan    1996.12
                                                                     Chai, HongKong
----------------------------------------------------------------------------------------------------
  3   Canada         Tianshi (Canada) Health      LI Jinyuan        1959 Upper Water
                         Products, Inc.                                St. P.O.Box     1997.12.31
                                                                      997,Suite 800
                                                                      Halifax, Nova
                                                                      Scotia Canada
----------------------------------------------------------------------------------------------------
  4       USA          Tianshi Health        Tianjin Tianshi Group     Suite A-8,
                       Products, Inc.              Co., Ltd.           Everett, WA     1998.02.12
                                                (100% owned by          98204, USA
                                                  Li JinYuan)
----------------------------------------------------------------------------------------------------
  5      Japan        Tiens Co., Ltd.            LI Jinyuan          Tokyo, Janpan     1998.11.18
----------------------------------------------------------------------------------------------------
  6      Peru       Tianshi Peru S.A.C.        LI Jinyuan 50%;      AV.A.Benavides
                                                LI Baolan 50%       1981-Miraflores    2000.11
                                                                       Lima-Peru
----------------------------------------------------------------------------------------------------
  7    Hong Kong    Tianshi Development          LI Jinyuan         29/F., 133 Wan
                         Co., Ltd.                                  Chai Road, Wan     2001.02.27
                                                                    Chai, HongKong
----------------------------------------------------------------------------------------------------
  8    Hong Kong    Jinyuan Development          LI Jinyuan         29/F., 133 Wan
                         Co., Ltd.                                  Chai Road, Wan     2002.04.16
                                                                    Chai, HongKong
----------------------------------------------------------------------------------------------------
  9    Hong Kong   Tianshi International         LI Jinyuan         29/F., 133 Wan     2002.05.13
                  Holdings Group Co., Ltd.                          Chai Road, Wan
                                                                    Chai, HongKong
----------------------------------------------------------------------------------------------------
 10    Hong Kong   Tianshi Communication         LI Jinyuan         29/F., 133 Wan     2003.03.24
                         Co., Ltd.                                  Chai Road, Wan
                                                                    Chai, HongKong
----------------------------------------------------------------------------------------------------

Southeastern Asia:

----------------------------------------------------------------------------------------------------
 No       Country        Overseas Affiliate         Ownership          Registered     Incorp. Date
                                                                         Address
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
  1       Thai           Thal Tianshi               LI Jinyuan        Rm. 210, 219,    1997.11.17
                       International Co.,                           21st Fl., South
                            Ltd.                                       Sathorn Rd,
                                                                     Bangkok, Thai
----------------------------------------------------------------------------------------------------
  2    Indonesia    Pt. Singa Langit Jaya         LI Jinyuan           Jakarta,        2000.08
                                                                       Indonesia
----------------------------------------------------------------------------------------------------
  3   Philippines   Tianshi Philippine          LI Jinyuan 0.01%
                            Inc                 YAN Yu Peng0.01%
                                              YU Xiao Chuan 0.01%
                                               DU Hong Yan 0.01%      Philippines      2001.02.28
                                             ZHAO Xiang Huan 0.01%;
                                                Tianshi Health
                                              Products, Inc. 99.95%
----------------------------------------------------------------------------------------------------
  4       Lao       Tianshi Lao Co., Ltd.   Tianjin Tianshi Group     067 Fa That     2001.05.04
                                            Co., Ltd. (100% owned   Khao, Vientiane
                                                by LI Jinyuan)         Lao P D R
----------------------------------------------------------------------------------------------------
                         Tiens Health           LI Jinyuan 30%      128 Jalan Pudu,
  5     Malaysia    Development (Malaysia)                            55100 Kaula     2002.02.26
                           SDN. BHD                                Lumpur, Malaysia
----------------------------------------------------------------------------------------------------



                                       33
<PAGE>

----------------------------------------------------------------------------------------------------
  6      India      Tianshi India Private      LI Jinyuan 51%;     New Delhi, India   2002.04.29
                             Ltd.            Ruchita Nanda Veenu
                                                  Mittal 49%
----------------------------------------------------------------------------------------------------
  7    Singapore     Tianshi (Singapore)          LI Jinyuan          128 Tanjong     2003.03.12
                           Pte.Ltd.                                   Pagar Road,
                                                                   Singapore 088535
----------------------------------------------------------------------------------------------------

Africa:

----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
 No       Country        Overseas Affiliate         Ownership          Registered     Incorp. Date
                                                                         Address
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
  1      Egypt     Amriya Pharmaceutical                             Manshia Alex,
                            Co.                                          Egypt
----------------------------------------------------------------------------------------------------
  2  South Africa    Tianshi (S.A)(Pty)           LI Jinyuan         Johannesburg,     1998.12.02
                           Ltd                                       South Africa
----------------------------------------------------------------------------------------------------
  3      Ghana         Tianshi Health              LI Jinyuan          Ghana Company   2000.06.29
                       Industries and                                Registration
                   Enterprises Ghana Ltd.                               Office
----------------------------------------------------------------------------------------------------
  4    Swaziland          Tianshi                  LI Jinyuan            Mbabane,      2000.07
                   (Swaziland)(Pty.) Ltd.                              Swaziland
----------------------------------------------------------------------------------------------------
  5    Botswana   Tianshi (Botswana) Pty.          LI Jinyuan           Gaborone,      2000.08.23
                            Ltd.                                       Botswana
----------------------------------------------------------------------------------------------------
  6     Nigeria   Tianshi Health Products    LI Jinyuan; LI Ai Jun   Lagos, Nigeria     2000.10.23
                     Company (NIG) LTD
----------------------------------------------------------------------------------------------------
  7     Zambia     Tianshi (Zambia)(Pty.)        LI Jinyuan         Lusaka, Zambia     2000.12.08
                            Ltd.
----------------------------------------------------------------------------------------------------
  8  Cote D'ivoire  Tianshi Health Ind.&         LI Jinyuan          Cote D'ivoire     2002.06.28
                  Ent.. Cote D'ivoire Ltd.
----------------------------------------------------------------------------------------------------
</TABLE>

Notes:

(1)  Majority of the  above-listed  company are owned by Mr. LI Jinyuan,  except
     where foreign ownerships are not permitted in the respective jurisdictions.

The price and cost allocation for international transactions are as follows:

         As operation costs vary from country to country,  international  market
prices vary accordingly. Tianshi China sells the products to Tianshi Engineering
at the  price of 25% of the  domestic  market  price for the  products.  Tianshi
Engineering  then  sells  the  products  to  overseas   affiliates  at  the  FOB
(destination  port) price,  which consists of 25% of the domestic  market price,
customs duty,  value-added tax and other  miscellaneous  transporting costs. The
individual  distributors of overseas  affiliates sell the products to purchasers
for  commission  of 52.5% of the  respective  international  market  price.  The
overseas  affiliates charges its expenses and ensures  approximately 10% profits
for itself.  In average,  the  international  prices  comprise of the  following
components:

<TABLE>
<CAPTION>

<S>                                                           <C>
Tianshi China (Costs, expenses and profit)                    25% of Domestic Market Price
Tianshi Engineering (Custom Duties, VAT, transporting)     Varies
Tianshi Engineering (profits)                                 10% of International Market Price
Representative Offices or Affiliates                         4-9% of International Market Price
Individual Distributors' Commission                          52.5% of International Market Price
------------------------------------------------------------------------------------------------
International Market Price                                    100%
</TABLE>


                                       34
<PAGE>

         Apart from related party  accounts  receivables  and accounts  payables
related to these sales, there are significant amount of other receivables due to
Tianshi  China from  related  parties  and  payables to related  parties.  These
receivables arise from various cash advances,  allocation of administrative  and
operating  costs,  various short term loans to related parties and other various
non-operational  transactions  incurred  with  related  parties.  Most of  these
related  party loans and cash  advances are interest  free,  as they are made on
short term and ad hoc basis.  These payables arise from  management  fees due to
related parties and various  non-operational  transactions incurred with related
parties.

Other receivables
-----------------


The Company  through its  Chinese  joint  venture,  Tianjin  Tianshi  Biological
Development  Co.,  Ltd.,  is  owed  additional   amounts   classified  as  other
receivables  from  Tianjin  Juchao  Commercial  and Trading Co.,  Ltd.  totaling
$26,831,339 as of December 31, 2003.  These  receivables  are generated from the
Company  making various cash advances and short term loans and the allocation of
various  expenses to related  parties.  These  transactions  are re-occurring in
nature. The Company does not charge interest on these receivables.

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

Loans receivable
----------------

The Company was owed amounts classified as loans receivable from related parties
of  $10,899,102  as of December 31, 2002.  Prior to the year ended  December 31,
2000,  Tianshi  made cash  advances  and  loans to  Tianjin  Tianshi  Biological
Engineering  Co., Ltd which was a 20%  shareholder of Tianshi prior to June 2003
and Tianshi Group. In June 2003, Tianjin Tianshi Biological Engineering Co., Ltd
transferred its 20% ownership to another related party. However, the amount owed
to Tianshi still remained outstanding.

There were three loans  outstanding  as of December  31, 2000 which  amounted to
$4,840,000,  $2,009,773 and $ 4,926,936.  Interest is being charged at 5.31% per
annum  beginning  January 1, 2000.  As of  December  31,  2002 there was accrued
interest of $1,945,105 owed on these loans. In August,  2003 the Company entered
into a payment  schedule to be paid off by December 31, 2003 which these amounts
have been paid off in 2003.

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

Accounts  payable due to related  parties  amounted to $758,570  and $762,694 at
December 31, 2003 and 2002, respectively.  These amounts were generated from the
related parties paying expenses on behalf of the Company.

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

The Company also has amounts classified as other payables due to related parties
which  amounted to $1,312,288  and  $2,294,168 as of December 31, 2003 and 2002,
respectively.  These  amounts  arose from cash  advances  from related  parties,
management fees due to related parties and various non-operational  transactions
incurred with related parties.


                                       35
<PAGE>

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

At December 31, 2002,  the Company has a verbal  agreement  with Tianshi  Group,
which is a related  party  through  ownership,  to lease a portion of its office
building and manufacturing facilities. The Company has agreed to pay for certain
expenses of the Tianshi  Group in lieu of a lease  payment.  The amount of these
expenses  paid in 2002  amounted  to  $242,960  and have  been  expensed  in the
accompanying  statement of operations  under various general and  administrative
expense  accounts.  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.  Rent expense under this
agreement amounted to $375,645 in 2003.


         There  are  no  family   relationships  among  TIANSHI's  directors  or
executive officers. However, several of TIANSHI's affiliates are owned by Ms. LI
Baolan,  the  daughter  of Mr. LI  Jinyuan,  TIANSHI's  Director/President/Chief
Executive Officer.

ITEM 13.  EXHIBITS AND REPORTS

Exhibits


(A)      The financial  statements required by Rule 310(a) of Regulation S-B for
         the Company are filed herein.

31.1     Certifications Pursuant to 18 USC, Section 1330, as adopted pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002

31.2     Certifications Pursuant to 18 USC, Section 1330, as adopted pursuant to
         Section 906 of the Sarbanes-Oxley Act of 2002


(B)      Reports on Form 8-K

Form 8K/A and Form 8K dated October 24 and September  24, 2003,  announcing  the
change of control and the acquisition of Tianshi China;

Item 14.   Principal Accountant Fees and Services

AUDIT FEES

         Total annual audit fees billed for  professional  services  rendered by
Moore  Stephens  Wurth  Frazer and  Torbet,  LLP during the 2003 and 2002 fiscal
years for the audit of our  annual  financial  statements  and the review of the
financial  statements  included  in our  quarterly  reports on Form  10-QSB,  or
services that are normally  provided by Moore  Stephens Wurth Frazer and Torbet,
LLP in connection with statutory and regulatory filings or engagements for those
fiscal years, totaled $150,000 and $150,000, respectively.


TAX FEES

         The  total  fees  billed  during  the 2003  and  2002 for  professional
services  rendered  by Moore  Stephens  Wurth  Frazer  and  Torbet,  LLP for tax
compliance  services  were $0 and  $10,000,  respectively.  Specifically,  these
services involved preparation of the consolidated tax returns.



--------------------------------------------------------------------------------
                                   SIGNATURES

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

                                          Tiens Biotech Group (USA), Inc.


Dated: April 13, 2004                      /s/ JIAO Wenjun
       --------------                     --------------------------------------
                                          JIAO Wenjun,
                                          Chief Financial Officer






                                       36
<PAGE>

                        Tiens Biotech Group (USA), Inc.
                           (formerly Strategika, Inc.)

                          INDEX TO FINANCIAL STATEMENTS



INDEPENDENT AUDITORS' REPORT                                                 F-1

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2003 AND 2002                 F-2

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
  FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002                             F-3

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED
  DECEMBER 31, 2003 AND 2002                                                 F-4

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
  DECEMBER 31, 2003 AND 2002                                                 F-5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                   F-6

































                                       37
<PAGE>

INDEPENDENT AUDITORS' REPORT


The Board of Directors
Tiens Biotech Group (USA), Inc. and Subsidiaries
(Formerly Known as Strategika, Inc.)

We have audited the  accompanying  consolidated  balance sheets of Tiens Biotech
Group (USA),  Inc.  (formerly known as Strategika,  Inc.) and Subsidiaries as of
December 31, 2003 and 2002,  and the related  consolidated  statements of income
and other comprehensive  income (loss),  shareholders' equity and cash flows for
years then ended. These consolidated financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Tiens Biotech Group
(USA), Inc. (formerly known as Strategika, Inc.) and Subsidiaries as of December
31, 2003 and 2002, and the results of their  operations and their cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States of America.




February 27, 2004, except for Note 6,
  as to which the date is March 30, 2004
Walnut, California







                                       F-1

<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2003 AND 2002

                                     ASSETS
                                     ------

                                                                 2003            2002
                                                             ------------    ------------
<S>                                                          <C>             <C>
CURRENT ASSETS:
    Cash                                                     $ 12,725,043    $    302,974
    Accounts receivable, trade - related party, net of
      allowance for doubtful accounts of $0 and $12,877
      as of December 31, 2003 and 2002, respectively                8,533       2,562,657
    Other receivables                                             139,820         328,491
    Other receivables - related party                          26,831,339
    Loans receivable - related party                                           10,899,102
    Inventories                                                 4,004,216       4,047,673
                                                             ------------    ------------

      Total current assets                                     43,708,951      18,140,897
                                                             ------------    ------------

PLANT AND EQUIPMENT, net                                       11,156,268      12,757,497
                                                             ------------    ------------

OTHER ASSETS:
    Intangible asset, net                                         363,330         411,094
    Employee advances                                             821,536         554,032
    Deposits                                                    1,051,557       1,934,436
                                                             ------------    ------------
      Total other assets                                        2,236,423       2,899,562
                                                             ------------    ------------

         Total assets                                        $ 57,101,642    $ 33,797,956
                                                             ============    ============

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

CURRENT LIABILITIES:
    Accounts payable                                         $  2,531,829    $  1,962,068
    Accounts payable - related party                              758,570         762,694
    Advances from customers - related parties                   5,141,661          60,439
    Wages and benefits payable                                     25,447         165,936
    Other taxes payable                                           206,723         210,788
    Other payables                                                 27,251       1,130,569
    Other payables - related parties                            1,312,288       2,294,168
    Short term notes payable                                    5,324,000       6,460,190
    Current portion of long term debt                             259,364         263,677
                                                             ------------    ------------
      Total current liabilities                                15,587,133      13,310,529

LONG TERM DEBT, net of current portion                            155,591         446,029
                                                             ------------    ------------

      Total liabilities                                        15,742,724      13,756,558
                                                             ------------    ------------

MINORITY INTEREST                                               8,272,726       4,009,228
                                                             ------------    ------------

SHAREHOLDERS' EQUITY:
    Common stock, $0.001 par value, 260,000,000
      shares authorized, 71,998,586 and 32,503,586
      shares issued and outstanding, respectively                   6,851               1
    Paid-in-capital                                             8,906,492       8,906,492
    Statutory reserves                                          3,730,137         399,173
    Retained earnings                                          20,453,290       6,730,432
    Stock receivable                                               (6,650)              0
    Accumulated other comprehensive income (loss)                  (3,928)         (3,928)
                                                             ------------    ------------
      Total shareholders' equity                               33,086,192      16,032,170
                                                             ------------    ------------
         Total liabilities and shareholders' equity          $ 57,101,642    $ 33,797,956
                                                             ============    ============
</TABLE>


                                      F-2
<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

    CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                       2003            2002
                                                   ------------    ------------
REVENUE - RELATED PARTIES                          $ 38,392,208    $ 14,096,726

COST OF SALES                                        12,725,161       8,297,845
                                                   ------------    ------------

GROSS PROFIT                                         25,667,047       5,798,881

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES          3,171,338       3,193,190
                                                   ------------    ------------

INCOME FROM OPERATIONS                               22,495,709       2,605,691

OTHER EXPENSE, net of other income                   (1,178,389)       (110,860)
                                                   ------------    ------------

INCOME BEFORE MINORITY INTEREST                      21,317,320       2,494,831

MINORITY INTEREST                                     4,263,498         498,966
                                                   ------------    ------------

NET INCOME                                           17,053,822       1,995,865

OTHER COMPREHENSIVE INCOME (LOSS):
  Foreign currency translation adjustment                  --              --
                                                   ------------    ------------

COMPREHENSIVE INCOME                               $ 17,053,822    $  1,995,865
                                                   ============    ============

EARNINGS PER SHARE, BASIC AND DILUTED              $       0.38    $       0.07
                                                   ============    ============

WEIGHTED AVERAGE NUMBER OF SHARES                    44,730,609      29,137,549
                                                   ============    ============













                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002



                                                      Number           Common          Paid-in         Statutory
                                                    of shares          stock           capital         reserves
                                                  -------------    -------------    -------------    -------------
<S>                                               <C>              <C>              <C>              <C>
BALANCE, January 1, 2002                                500,508    $           1    $   8,906,492    $        --
   Sale of common stock through
     private placement                                4,500,000             --               --               --
   Net income                                              --               --               --               --
   Adjustment to statutory reserve                         --               --               --            399,173
                                                  -------------    -------------    -------------    -------------
BALANCE, December 31, 2002                            5,000,508                1        8,906,492          399,173
   Tianshi stock issued to Tianshi shareholders
   6.5 for one shares forward split                  27,503,078            6,850             --               --
   Issuance of common stock to Tianshi
     shareholders due to reorganization              68,495,000             --               --               --
   Cancellation of common stock held by
     Rene Larrave                                   (29,000,000)            --               --               --
   Net income                                              --               --               --               --
   Adjustment to statutory reserve                         --               --               --          3,330,964
                                                  -------------    -------------    -------------    -------------
BALANCE, December 31, 2003                           71,998,586    $       6,851    $   8,906,492    $   3,730,137
                                                  =============    =============    =============    =============


                                                                                     Accumulated
                                                                                        other
                                                    Retained          Stock         comprehensive
                                                    earnings        receivable      income (loss)        Totals
                                                  -------------    -------------    -------------    -------------
BALANCE, January 1, 2002                          $   5,133,740    $        --      $      (3,928)   $  14,036,305
   Sale of common stock through
     private placement                                     --               --               --               --
   Net income                                         1,995,865             --               --          1,995,865
   Adjustment to statutory reserve                     (399,173)            --               --                  0
                                                  -------------    -------------    -------------    -------------
BALANCE, December 31, 2002                            6,730,432             --             (3,928)      16,032,170
   Tianshi stock issued to Tianshi shareholders
   6.5 for one shares forward split                        --             (6,650)            --                200
   Issuance of common stock to Tianshi
     shareholders due to reorganization                    --               --               --               --
   Cancellation of common stock held by
     Rene Larrave                                          --               --               --               --
   Net income                                        17,053,822             --               --         17,053,822
   Adjustment to statutory reserve                   (3,330,964)            --               --               --
                                                  -------------    -------------    -------------    -------------
BALANCE, December 31, 2003                        $  20,453,290    $      (6,650)   $      (3,928)   $  33,086,192
                                                  =============    =============    =============    =============
</TABLE>









                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                                                                   2003            2002
                                                               ------------    ------------
<S>                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                 $ 17,053,822    $  1,995,865
    Adjustments to reconcile net income to cash
     provided by (used in) operating activities:
       Minority interest                                          4,263,498         498,966
       Depreciation                                                 991,138       1,004,456
       Amortization                                                  47,764          55,629
       (Gain) loss on sale of assets                                (18,587)         53,606
     (Increase) decrease in assets:
       Accounts receivable - related party                        2,554,124      (1,601,470)
       Other receivables                                            188,671         550,916
       Other receivables - related party                        (26,831,339)      1,021,303
       Inventories                                                   43,457        (319,562)
       Employee advances                                           (267,504)      3,415,279
       Deposits                                                     882,879         222,877
     Increase (decrease) in liabilities:
       Accounts payable                                             569,761         185,402
       Accounts payable - related party                              (4,124)         68,589
       Advances from customers                                    5,081,222        (509,239)
       Wages and benefits payable                                  (140,489)     (1,548,002)
       Other taxes payable                                           (4,065)     (1,561,094)
       Other payables                                            (1,103,318)     (2,037,426)
       Other payables - related parties                           2,254,539      (1,707,054)
                                                               ------------    ------------
         Net cash provided by (used in) operating activities      5,561,449        (210,959)
                                                               ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Decrease in loans receivable - related party                 10,899,102       2,822,710
    Increase in loans receivable - related party                          0        (661,212)
    Proceeds from sales of plant and equipment                       66,549             750
    Purchase of equipment and automobiles                        (2,674,290)     (2,587,629)
                                                               ------------    ------------
        Net cash provided by (used in) investing activities       8,291,361        (425,381)
                                                               ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payments, net of borrowings on short term notes payable      (1,136,190)        (12,100)
    Payments on long term debt                                     (294,751)        (98,950)
    Proceeds from long term debt                                                    720,555
    Proceeds of stock receivable                                        200
                                                               ------------    ------------
        Net cash provided by (used in)  financing activities     (1,430,741)        609,505
                                                               ------------    ------------

INCREASE (DECREASE) IN CASH                                      12,422,069         (26,835)

CASH, beginning of year                                             302,974         329,809
                                                               ------------    ------------

CASH, end of year                                              $ 12,725,043    $    302,974
                                                               ============    ============
</TABLE>


                                      F-5

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies

Background
----------

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

On August 22, 2003, Strategika,  Inc., a corporation organized under the laws of
the State of Delaware ("STRATEGIKA"); Tianshi International Holdings Group Ltd.,
a  corporation   organized   under  the  laws  of  the  British  Virgin  Islands
("TIANSHI");  Li Jin Yuan,  Jiao Wen Jun and Yan Yu Peng, all Chinese  Nationals
who are  stockholders  of TIANSHI (the "TIANSHI  Stockholders")  entered into an
Agreement  and Plan of  Reorganization  (the  "Agreement").  The  Agreement  was
effective  on  September  9,  2003  (the  "Effective  Date").  Pursuant  to  the
Agreement,  STRATEGIKA received from the TIANSHI  Stockholders all of the issued
and  outstanding  common stock of TIANSHI in exchange for  68,495,000  shares of
restricted  (as defined in Rule 144 of the  Securities  Act of 1933, as amended)
common stock of STRATEGIKA. As additional  consideration,  the 29,000,000 shares
of the common stock of  STRATEGIKA  held by Rene  Larrave,  the sole officer and
director of STRATEGIKA prior to the reorganization,  were redeemed to STRATEGIKA
and dully cancelled by STRATEGIKA.

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

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

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

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

Li Jinyuan - individual - President and majority shareholder

Li Baolan - individual - Daughter of Li Jinyuan



                                      F-6

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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

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

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

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

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

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

On June 18, 2001,  Tianshi  International  Holdings  Group Ltd.  acquired 80% of
Tianjin Tianshi Biological Development Co., Ltd. ("BIOLOGICAL"). Tianjin Tianshi
Biological  Development Co., Ltd. is a foreign investment joint venture which is
incorporated  under the laws of the People's  Republic of China ("PRC") on March
27,  1998.  The original  partners in this joint  venture were Tianshi Hong Kong
International Development Co., Ltd. incorporated in Hong Kong which owned 80% of
the joint venture and Tianjin Tianshi Biological Engineering Co., Ltd, a Chinese
company incorporated in the People's Republic of China which owned the remaining
20% of the joint venture. Tianshi Hong Kong International  Development Co., Ltd.
is owned 100% by Li Jinyuan,  the  Company's  president  and major  shareholder.
Tianjin Tianshi  Biological  Engineering Co., Ltd is 49% owned by Ms. Li Baolan,
the daughter of Li Jinyuan and 51% by Tianjin  Tianshi  Group Co.,  Ltd. On June
18, 2003,  Tianjin Tianshi  Biological  Engineering Co., Ltd transferred its 20%
interest  in  the  joint  venture  for  no   consideration  to  Tianjin  Tianshi
Pharmaceuticals Co., Ltd, a Chinese company in which the majority shareholder is
Tianjin Tianshi Group Co., Ltd. On June 18, 2003, Tianshi International Holdings
Group Ltd. acquired 80% of Tianjin Tianshi Biological  Development Co., Ltd from
Tianshi Hong Kong International Development Co., Ltd. for no consideration. This
transfer was made for no  consideration  since Li Jinyuan is president  and sole
shareholder of both companies.

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

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



                                      F-7

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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

The consolidated  financial  statements generally reflect only the activities of
Tianjin  Tianshi  Biological  Development  Co.,  Ltd. at its cost since  Tianshi
International  Holdings Ltd.,  had no operational  activities for the year ended
December  31,  2003  and  2002,  respectively.   Since  STRATEGIKA's  continuing
operations  and balance  sheet are  insignificant,  a pro forma balance sheet at
December 31, 2003 and December 31, 2002 and  statements  of  operations  for the
periods then ended are not presented herein.

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

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

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

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

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

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




                                      F-8

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

Revenue recognition (continued)
-------------------------------

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

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

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

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

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

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

Translation  adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and  amounted  to  $(3,928)  for the years  ended  December  31,  2003 and 2002,
respectively.

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



                                      F-9

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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 years ended  December
31, 2003 and 2002 amounted to $991,138 and $1,004,456, respectively.

Estimated useful lives of the assets are as follows:

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



Construction  in progress  represents the costs incurred in connection  with the
construction of buildings or new additions to the Company's plant facilities. No
depreciation  is provided for  construction  in progress  until such time as the
relevant  assets  are  completed  and are  ready  for their  intended  use.  The
capitalization of interest  associated with the cost in construction in progress
is discussed in note 1, Capitalized interest.

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

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 December 31, 2003, the Company expects these assets to be
fully recoverable.



                                      F-10

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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

Plant and equipment consist of the following at December 31:

                                                           2003          2002
                                                       -----------   -----------
Buildings and improvements                             $ 1,453,913   $ 5,084,994
Office facilities                                          461,526     1,082,232
Computer equipment and software                            763,661       730,500
Equipment                                                6,126,161     5,383,097
Vehicles                                                 1,455,991     1,418,053
Construction in progress                                 4,455,309     2,584,159
                                                       -----------   -----------
              Totals                                    14,716,561    16,283,035
Less accumulated depreciation                            3,560,293     3,525,538
                                                       -----------   -----------
              Totals                                   $11,156,268   $12,757,497
                                                       ===========   ===========


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.

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

In June 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
143, "Accounting for Asset Retirement  Obligations" ("FAS 143"). FAS 143 changes
the  recorded  amount of  liabilities  associated  with  asset  retirements  and
requires the accretion of interest expense over the remaining life of the asset.
FAS  143  also  requires  additional   disclosure   regarding  asset  retirement
obligations.

This Statement is effective for fiscal years  beginning after June 15, 2002. The
adoption of this  statement is not expected to have a significant  impact on the
financial condition or results of operations of the Company.

In August 2001, the FASB issued Statement of Financial  Accounting Standards No.
144,  "Accounting  for the  Impairment or Disposal of  Long-Lived  Assets" ("FAS
144").  FAS 144 retains the existing  requirements  to recognize and measure the
impairment  of  long-lived  assets to be held and used or to be  disposed  of by
sale.


                                      F-11

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies (continued)

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

However,  FAS 144  changes  the scope and certain  measurement  requirements  of
existing accounting guidance.  FAS 144 also changes the requirements relating to
reporting  the  effects  of a  disposal  or  discontinuation  of a segment  of a
business.  This Statement is effective for fiscal years beginning after December
15, 2001.  The adoption of this  statement did not have a significant  impact on
the financial condition or results of operations of the Company.

In April 2002, the FASB issued Statement of Financial  Accounting  Standards No.
145 "Rescission of Statements No. 4, 14 and 64,  Amendment of FASB Statement No.
13 and Technical  Corrections." ("FAS 145"). This Statement rescinds SFAS No. 4,
"Reporting  Gains and Losses from  Extinguishment  of Debt," and an amendment of
that  Statement,   SFAS  No.  64,  "Extinguishments  of  Debt  Made  to  Satisfy
Sinking-Fund   Requirements."   This   Statement  also  rescinds  SFAS  No.  44,
"Accounting for Intangible Assets of Motor Carriers." This Statement amends SFAS
No. 13,  "Accounting  for Leases," to eliminate  any  inconsistency  between the
required accounting for sale-leaseback  transactions and the required accounting
for certain lease  modifications  that have economic effects that are similar to
sale-leaseback transactions.

FAS 145 also amends other existing authoritative  pronouncements to make various
technical  corrections,  clarify meanings, or describe their applicability under
changed conditions. This Statement is effective for fiscal years beginning after
May 15, 2002.  The Company has adopted this  Statement in 2003.  The adoption of
this statement did not have a significant  impact on the financial  condition or
results of operations of the Company.

In November 2002, the FASB issued Interpretation No. 45, Guarantor's  Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness  of Others (FIN 45).  FIN 45 requires  the  recognition  of certain
guarantees as  liabilities  at fair market value and is effective for guarantees
issued or  modified  after  December  31,  2002.  The  Company  has  adopted the
disclosure  requirement  of FIN 45 and does not  expect  the  impact of the fair
market value requirement to have a material impact on its financial condition or
results of operations of the Company.

In December 2002, the FASB issued  Statement of Financial  Accounting  Standards
No. 148 "Accounting for Stock-Based  Compensation - Transition and  Disclosure".
The statement  allows for the Company's  current  method of accounting for stock
options to continue.  Effective for interim periods beginning after December 15,
2002,  disclosure  will be required for  information  on the fair value of stock
options and the effect on earnings per share (in tabular  form) for both interim
and annual reports. The Company has adopted this statement in 2003. The adoption
of this statement did not have a significant  impact on the financial  condition
or results of operations of the Company.




                                      F-12

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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

In  January  2003,  the FASB  issued  Interpretation  No. 46,  Consolidation  of
Variable Interest Entities,  an Interpretation of ARB No. 51 (FIN No. 46), which
requires the  consolidation of certain variable interest  entities,  as defined.
FIN No. 46 is effective immediately for variable interest entities created after
January 31,  2003,  and on July 1, 2003 for  investments  in  variable  interest
entities  acquired  before February 1, 2003;  however,  disclosures are required
currently if a company expects to consolidate any variable interest entities. As
the Company has no such variable interest  entities,  the adoption of FIN No. 46
did not  have an  impact  on the  Company's  results  of  operations,  financial
position or cash flows.

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  instruments and Hedging  Activities"  ("SFAS No. 149"). SFAS No. 149
amends  and  clarifies   financial   accounting  and  reporting  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts  and for  hedging  activities  under  SFAS  No.  133  "Accounting  for
Derivative  Instruments and Hedging  Activities."  SFAS No. 149 is effective for
contracts  entered  into or  modified  after  June  30,  2003  and  for  hedging
relationships designated after June 30, 2003. The adoption of this statement did
not  have a  significant  impact  on  the  financial  condition  or  results  of
operations of the Company.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of Both Liabilities and Equity." SFAS No. 150
changes the accounting for certain  financial  instruments  that, under previous
guidance,  issuers could account for as equity. FASB No. 150 requires that those
instruments  entered  into or modified  after May 31,  2002,  and  otherwise  is
effective at the beginning of the first interim period  beginning after June 15,
2003. The adoption of this  statement is not expected to have a material  impact
on the financial condition or results of operations of the Company.

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

Cash  includes  cash on hand and demand  deposits  in accounts  maintained  with
state-owned  banks  within  the  People's  Republic  of  China.  Total  cash  in
state-owned  banks at December  31, 2003 and 2002  amounted to  $12,725,043  and
$302,974,  respectively  of which no  deposits  are  covered by  insurance.  The
Company has not  experienced  any losses in such accounts and believes it is not
exposed to any risks on its cash in bank accounts.

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

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


                                      F-13

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of significant accounting policies (continued)

Accounts receivable - related party (continued)
-----------------------------------------------

The allowance for doubtful accounts as at December 31, 2003 and 2002 amounted to
none and $12,877, respectively.

Other receivables
-----------------

Other receivables consist of various cash advances to the Company's  independent
sales  representatives,  unrelated companies and individuals which have business
relationships  with the  Company.  These  amounts  are  unsecured,  non-interest
bearing and generally are short term in nature.

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

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


                                            2003         2002
                                         ----------   ----------
Raw material                             $1,673,405   $1,765,548
Work-in-progress                            342,252      702,162
Finished goods                            1,988,559    1,579,963
                                         ----------   ----------
      Totals                             $4,004,216   $4,047,673
                                         ==========   ==========

The Company  reviews its inventory  annually for possible  obsolete  goods or to
determine  if any reserves  are  necessary  for  potential  obsolescence.  As of
December  31, 2003 and 2002,  the Company has  determined  that no reserves  are
necessary at year end.

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

All land in the People's Republic of China is owned by the government and cannot
be sold to any individual or company.  However, the government grants the user a
"land use right" (the Right) to use the land. The Company  acquired the land use
rights for fifty years from The  People's  Republic of China on December 1, 1999
in  the  amount  of  $487,665.  At  December  31,  2003  and  2002,  accumulated
amortization  amounted to $124,335  and $76,571,  respectively.  The cost of the
right is being amortized over ten years using the straight-line method.

Intangible  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 December 31, 2003, the Company expects these assets to be
fully recoverable.

The total  amortization  expense for the years ended  December 31, 2003 and 2002
amounted to $47,764 and $55,629, respectively.


                                      F-14

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Summary of significant accounting policies (continued)

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

The Company has adopted  Statement of Financial  Accounting  Standards  No. 109,
"Accounting  for Income Taxes" (SFAS 109).  SFAS 109 requires the recognition of
deferred  income  tax  liabilities  and  assets  for  the  expected  future  tax
consequences  of temporary  differences  between  income tax basis and financial
reporting basis of assets and liabilities.

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

The Company's subsidiary,  Tianshi, is a Sino-Foreign Joint Venture incorporated
in the  People's  Republic of China.  Pursuant to the income tax laws of the PRC
concerning  Foreign Investment  Enterprises and foreign  Enterprises and various
local  income  tax laws (the  "Income  Tax  Law"),  Sino-foreign  joint  venture
enterprises generally are subject to income tax at an effective rate of 33% (30%
state income  taxes plus 3% local  income  taxes) on income as reported in their
statutory   financial   statements   unless   the   enterprise   is  located  in
specially-designated  regions or cities for which more favorable effective rates
apply. Tianshi is located in Special Economic Zone and is subject to the special
reduced income tax rate of 15%. Pursuant to the approval of the relevant PRC tax
authorities,  Tianshi  is fully  exempt  from PRC  income  taxes  for two  years
starting  from the year  profits are first  made,  followed by a 10% reduced tax
rate for the next  three  years.  Prior to the year  ended  December  31,  2002,
Tianshi has suffered operating losses. Tianshi started generating profits in the
year ended  December  31, 2002.  Effective  January 1, 2004,  the two-year  100%
exemption for income taxes will expire for Tianshi and it will become subject to
income tax at a reduced rate of 10%.

Capitalized interest
--------------------

The Company has  capitalized  a portion of its interest  costs as a component of
building  construction  costs. Total interest expense for the years December 31,
2003 and 2002 net of  capitalized  interest  amounted to $464,916 and  $489,254,
respectively.  Total interest  expense  capitalized as part of the  construction
costs for the years ended  December  31,  2003 and 2002  amounted to $34,459 and
$13,012, respectively.

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

The Company's  financial  instruments consist primarily of cash, trade and notes
receivable,  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.


                                      F-15

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies (continued)

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 years  ended  December  31,  2003 and 2002.  The
weighted  average  number of shares used to  calculate  EPS reflect the 6.5 to 1
share split retroactively starting January 1, 2002.

Note 2 - Short term notes payable

Short term notes payable  represent  amounts due to various banks and are due on
demand or normally  within one year.  These loans  generally can be renewed with
the banks. Short term notes payable at December 31, consisted of the following:

                                                            2003         2002
                                                         ----------   ----------
Loan from Industrial Commerical Bank, due July 17, 2004
     and August 5, 2002, respectively. Monthly interest
     payment only at 6.372% per annum, secured by
     properties and guaranteed by Tianshi Group          $2,057,000   $2,057,000

Loan from Country Credit Union, due on various dates
     Monthly interest only payments at 7.965%
     per annum, secured by properties                     3,267,000    3,846,590

Loan from Construction Bank of China, due June 30, 2003
     and July 4, 2002, respectively. Monthly interest
     payment only at 6.454% per annum, secured by
         properties and was paid off in July 2003              --        556,600
                                                         ----------   ----------
                     Totals                              $5,324,000   $6,460,190
                                                         ==========   ==========














                                      F-16

<PAGE>
<TABLE>
<CAPTION>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 3 - Long term debt

Long term debt at December 31, consisted of the following:

                                                                  2003          2002
                                                               -----------   -----------
<S>                                                            <C>           <C>
Loan from Construction Bank of China, due on various
         dates in 2005.  Quarterly interest and principal
         payments at 6.54% per annum, secured by
         properties                                            $      --     $    43,344

Loan from Agricultural Bank of China, due on various
         dates in 2005.  Monthly interest and principal
         payments at 6.588% per annum, secured by
         properties                                                414,955       666,362
                                                                ----------   -----------
                      Totals                                       414,955       709,706
Less current portion of long term debt                             259,364       263,677
                                                               -----------   -----------
                      Long term debt, net of current portion   $   155,591   $   446,029
                                                               ===========   ===========
</TABLE>

Total  interest  expense for the years ended December 31, 2003 and 2002 amounted
to $464,916 and $489,254, respectively.

Note 4 - Supplemental disclosure of cash flow information

No income  taxes  were  paid for the years  ended  December  31,  2003 and 2002,
respectively.  Interest  paid  amounted to $464,916  and  $489,254 for the years
ended December 31, 2003 and 2002, respectively.

Non-cash  financing  and investing  activities,  the Company  purchased  various
vehicles  during the years ended  December 31, 2002 which were financed  through
various financial  institutions.  The total amount financed for 2002 amounted to
$720,555.

During the year ended  December 31, 2003,  the Company sold various fixed assets
to a related party through a  cancellation  of other  payables with the net book
value of $3,238,210. The sale resulted in a gain of $1,791.

Note 5 - Accounts receivable and credit risk

The Company's  business  operations  are conducted  domestically  in the PRC and
internationally.  During the normal  course of  business,  the  Company  extends
unsecured credit to its customers. Management reviews its accounts receivable on
a regular basis to determine if the allowance for doubtful  accounts is adequate
at each year-end.




                                      F-17


<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 6 - Related party transactions

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

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

Li Jinyuan - individual - President and majority shareholder

Li Baolan - individual - daughter of Li Jinyuan

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

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

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

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

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

Sales
-----

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

Related party sales amounted to $38,392,208 and $14,096,726 for the years ending
December  31, 2003 and 2002,  which  represent  100% of total sales for the year
ending  December  31,  2003  and  2002,  respectively.  Related  party  accounts
receivable  related to these sales amounted to $8,533 and $2,562,657 at December
31, 2003 and 2002, respectively, net of an allowance for doubtful accounts of $0
and $12,877, respectively.

Other receivables
-----------------

The Company  through its  Chinese  joint  venture,  Tianjin  Tianshi  Biological
Development  Co.,  Ltd.,  is  owed  additional   amounts   classified  as  other
receivables  from  Tianjin  Juchao  Commercial  and Trading Co.,  Ltd.  totaling
$26,831,339 as of December 31, 2003.  These  receivables  are generated from the
Company  making various cash advances and short term loans and the allocation of
various  expenses to related  parties.  These  transactions  are re-occurring in
nature.  The Company  does not charge  interest on these  receivables.  Note 6 -
Related party transactions (continued)



                                      F-18

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Other receivables (continued)
-----------------------------

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

Loans receivable
----------------

The Company was owed amounts classified as loans receivable from related parties
of  $10,899,102  as of December 31, 2002.  Prior to the year ended  December 31,
2000,  Tianshi  made cash  advances  and  loans to  Tianjin  Tianshi  Biological
Engineering  Co which was a 20%  shareholder  of Tianshi  prior to June 2003 and
Tianshi Economic  Development  Group. In June 2003,  Tianjin Tianshi  Biological
Engineering Co transferred its 20% ownership to another related party.  However,
the amount owed to Tianshi still remained outstanding.

There were three loans  outstanding  as of December  31, 2000 which  amounted to
$4,840,000,  $2,009,773 and $ 4,926,936.  Interest is being charged at 5.31% per
annum  beginning  January 1, 2000.  As of  December  31,  2002 there was accrued
interest of $1,945,105 owed on these loans. In August,  2003 the Company entered
into a payment  schedule to pay off the loans by  December  31, 2003 which these
amounts have been paid off in 2003.

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

Accounts  payable due to related  parties  amounted to $758,570  and $762,694 at
December 31, 2003 and 2002, respectively.  These amounts were generated from the
related parties paying expenses on behalf of the Company.

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

The Company also has amounts classified as other payables due to related parties
which  amounted to $1,312,288  and  $2,294,168 as of December 31, 2003 and 2002,
respectively.  These  amounts  arose from cash  advances  from related  parties,
management fees due to related parties and various non-operational  transactions
incurred with related parties.


                                      F-19

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 6 - Related party transactions (continued)

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

At December 31, 2002,  the Company has a verbal  agreement  with Tianshi  Group,
which is a related  party  through  ownership,  to lease a portion of its office
building and manufacturing facilities. The Company has agreed to pay for certain
expenses of the Tianshi  Group in lieu of a lease  payment.  The amount of these
expenses  paid in 2002  amounted  to  $242,960  and have  been  expensed  in the
accompanying  statement of operations  under various general and  administrative
expense  accounts.  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.  Rent expense under this
agreement amounted to $375,645 in 2003.

Note 7 - Employee advances

Employee  advances  represent cash advances to various employees of the Company.
In the  People's  Republic of China,  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  $821,536  and  $554,032 at
December 31, 2003 and 2002, respectively.

Note 8 - Deposits - non current

The  Company  as of  December  31,  2003 and 2002 had  outstanding  deposits  of
$1,051,557 and $1,934,436,  respectively.  These amounts represent deposits with
vendors for purchases of equipment and construction in progress.

Note 9 - Retirement plan

Regulations in the People's  Republic of China require the Company to contribute
to a defined contribution  retirement plan for all employees.  All Joint Venture
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. The Joint Venture 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 $68,717 and $11,307 for the
years ended December 31, 2003 and 2002, respectively.

The Company also has an unemployment insurance plan for its employees.  The plan
requires each employee to contribute 1% of their salary to the plan. The Company
matches the  contributions  in an amount equal to two times the  contribution of
each participant.


                                      F-20

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9 - Retirement plan (continued)

The Company made contributions to the unemployment  insurance plan of $5,420 and
$1,269  for the  years  ended  December  31,  2003  and 2002  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 $28,488  and $2,800 for the years  ended
December 31, 2003 and 2002, respectively.

Note 10 - Distribution  of income,  statutory  reserves and restricted  retained
earnings

The laws and regulations of the People's Republic of China require that before a
Sino-foreign  cooperative joint venture  enterprise  distributes  profits to its
partners,  it must first  satisfy  all tax  liabilities,  provide  for losses in
previous years and make allocations, in proportions determined at the discretion
of the board of directors,  after the statutory reserve.  The Statutory Reserves
include the surplus  reserve fund,  the common  welfare fund and the  enterprise
fund.

Statutory reserve fund
----------------------

The  Company is required to transfer  10% of its net income,  as  determined  in
accordance with the PRC accounting rules and regulations, to a statutory surplus
reserve fund until such reserve balance reaches 50% of the Company's  registered
capital.

The transfer to this reserve must be made before distribution of any dividend to
shareholders,  for the year ended  December  31, 2003;  the Company  transferred
$1,665,482, being 10% of the year's net income determined in accordance with PRC
accounting rules and regulations,  to this reserve.  The surplus reserve fund is
non-distributable other than during liquidation and can be used to fund previous
years' losses,  if any, and may be utilized for business  expansion or converted
into share capital by issuing new shares to existing  shareholders in proportion
to their  shareholding  or by increasing  the par value of the shares  currently
held by them,  provided that the remaining  reserve  balance after such issue is
not less than 25% of the registered capital.

Common welfare fund
-------------------

The Company is required to transfer 5% to 10% of its net income,  as  determined
in accordance with the PRC accounting  rules and  regulations,  to the statutory
common  welfare  fund.  This fund can only be utilized on capital  items for the
collective   benefits  of  the  Company's  employees  such  as  construction  of
dormitories,  cafeteria facilities and other staff welfare facilities. This fund
is non-distributable other than upon liquidation. The transfer to this fund must
be made before distribution of any dividend to shareholders.


                                      F-21

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 10 - Distribution  of income,  statutory  reserves and restricted  retained
earnings (continued)

Common welfare fund (continued)
-------------------------------

For the year ended  December  31, 2003,  the  Directors  authorized,  subject to
shareholders' approval, the transfer of $832,741 which amounted to 5% of current
year's net income to the statutory reserve fund.

Enterprise fund
---------------

The  enterprise  fund may be used to acquire  fixed  assets or to  increase  the
working capital in order to expend the production and operation of the business.
There is no minimum  contribution  required to be  contributed to the enterprise
fund. For the year ended  December 31, 2003, the Board of Directors  authorized,
subject to shareholders' approval, the transfer of $832,741 which amounted to 5%
of current year's net income to the enterprise fund.

The Chinese  government  restricts  distributions of registered  capital and the
additional  investment amounts required by the Chinese joint ventures.  Approval
by the Chinese government must be obtained before distributions of these amounts
can be returned to the shareholders.

Note 11 - Stock transactions

Stock issuance
--------------

On August 22, 2003, the Tianshi International Holdings Group Limited amended and
restated their Articles of Association to authorize one class of common stock of
5,000,000  shares of $0.01  par  value per  share.  The  TIANSHI  cancelled  the
original common stock certificate  issued to Li Jinyuan and issued the following
shares of common stock to Li Jinyuan, Yan Yupeng,  Vice-President of Tianshi and
Jiao Wenjun, chief financial officer of Tianshi.

                                         No. Shares        Cost
                                         ----------     ----------
Li Jinyuan                                  665,000      $   6,650
Yan Yupeng                                    9,975            100
Jiao Wenjun                                   9,975            100


As of December 31, 2003, the receivable from Li Jinyuan is still outstanding.


                                      F-22

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 11 - Stock transactions (continued)

Stock option plans
------------------

On August 22, 2003, the Company adopted the Tianshi International Holdings Group
Limited  2003 Shares  Award Plan and the Tianshi  International  Holdings  Group
Limited 2003 Shares Option Plan.

The 2003 Shares Award Plan (referred to as Incentive Shares Options) is intended
to provide vice presidents in the sales divisions  located in the nine districts
of the Company an opportunity to acquire a proprietary interest in the Company.

The term of the 2003 Shares  Award Plan is for five years  beginning  August 22,
2003.  The employees  must meet certain  eligibility  requirements.  The maximum
number of shares which can be issued under this plan is 75,000 shares from which
15,000 shares may be granted each year.  The options vest at 20% per year over a
five year period from the date of the granting of the option. The exercise price
shall not be less than 100% of the fair market  value of the shares at the grant
date of the option.  To the extent that the fair market  value of the  Incentive
Shares Options that can be exercised during a single year exceeds $100,000,  the
portion  in excess of the  $100,000  will be  re-characterized  as  Nonqualified
Shares  Options.  The exercise price for the shares  designated as  Nonqualified
Share  Options  will not be less than 85% of the fair market value of the shares
at the grant date of the option.

The 2003  Shares  Option  Plan  (referred  to as  Incentive  Shares  Options) is
intended  to  provide  approximately  500  management  level key  employees  and
consultants of the Company an  opportunity to acquire a proprietary  interest in
the  Company.  The  term of the  2003  Shares  Option  Plan is for  three  years
beginning  August  22,  2003.  The  employees  must  meet  certain   eligibility
requirements.  The maximum  number of shares which can be issued under this plan
is 60,000 shares from which 20,000 shares may be granted each year.  The options
vest at 20% per year over a five year  period  from the date of the  granting of
the option.  The  exercise  price shall not be less than 100% of the fair market
value of the shares at the grant date of the option. To the extent that the fair
market value of the  Incentive  Shares  Options  that can be exercised  during a
single year  exceeds  $100,000,  the portion in excess of the  $100,000  will be
re-characterized  as  Nonqualified  Shares  Options.  The exercise price for the
shares designated as Nonqualified Share Options will not be less than 85% of the
fair market value of the shares at the grant date of the option.

As of December 31, 2003 no shares have been granted under this plan.





                                      F-23

<PAGE>

                TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
                      (FORMERLY KNOWN AS STRATEGIKA, INC.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Note 11 - Stock transactions (continued)

Merger agreement
----------------

On August 22, 2003, Tianshi International Holdings Group Limited entered into an
agreement to be effective  September 9, 2003 where the Company would  complete a
reverse  acquisition with  Strategika,  Inc.  ("Strategika"),  a publicly traded
non-operational Delaware corporation. Strategika acquired all of the outstanding
shares of Tianshi International  Holdings Group Limited's capital stock from the
individual  shareholders  in exchange for  68,495,000  shares of common stock in
Strategika  which  represents  95%  of  the  issued  and  outstanding  stock  of
Strategika at the time of issuance.

The  accounting  for these  transactions  is identical to that  resulting from a
reverse-acquisition,  except  that no  goodwill  or other  intangible  assets is
recorded.   Accordingly,  the  financial  statements  of  Tianshi  International
Holdings Group Limited are the historical  financial  statements of the Company,
formerly the operations of Tianjin Tianshi Biological Development Co., LTD.

After the reorganization,  on September 22, 2003, Li Jinyuan transferred 665,000
shares of common  stock of the  reorganized  Strategika  held by him to Ms. Ping
Bai.  The other two  shareholders,  Mr. Jiao Wenjun and Mr. Yan Yupeng have each
transferred 332,500 shares of common stock of the reorganized Strategika held by
them to Mr. Percy Kong Kei Chin.

























                                      F-24