THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Tiens Biotech Group (USA), Inc. (TBV)

11/16/2005 Proxy Information

The Company markets all of its products through various domestic and international business entities that are related to the Company's main operating subsidiary, Biological, which is based in Tianjin, People's Republic of China, through common ownership. Related party sales amounted to 100% of the Company's total consolidated sales. Internationally, Biological sells its product directly to its overseas affiliates. Due to the common ownership, there are no formal sales or administrative agreements among Biological and those overseas related parties. The business operations among these related entities are regulated through internal ordinances. For the domestic market, Biological sells all of its products to Tianjin Tianshi Biological Engineering Co., Ltd. ("Engineering"), which sells them through its 23 representative offices, and 9 other affiliated companies in China. Biological has a sales contract with Engineering. According to this contract, Engineering agreed to purchase all of Biological's products to be sold in China. Biological entered the Wellness Products Agreement described hereto to enable Engineering to resell Biological's products in China. All of Engineering's domestic affiliated companies are owned in whole or in part by Mr. Jinyuan Li's immediate family members.

The following table is provided to facilitate your understanding of the relationships between related parties and the Company and their transactions with the Company during the fiscal year of 2004 and 2003. (See page 15 of proxy for table).

Wellness Products Agreements

In October 2005, Biological entered three agreements with Engineering to enable Engineering to distribute Biological's products in China.

The Nutrition Supplements Market Committee of the China Health Care Association ("CHCA") assessed the value of the certificates subject to the agreements. The CHCA is an independent, non-profit organization composed of manufacturing enterprises, research and development institutions in the medical and health industry and entrepreneurs and professionals from related fields. The Nutrition Supplements Market Committee of the CHCA initiates the construction of industry benchmark and industry criterion, promotes the smooth development in research and development, manufacture and sales for wellness products, and makes contributions in setting up social credibility for enterprises and products.

On October 26, 2005, Biological entered an agreement with Engineering (the "Wellness Products Agreement I") relating to the joint ownership of the Certificates of Domestic Wellness Product issued by the State Food and Drug Administration of the PRC (the "SFDA") covering eighteen of Biological's wellness products (the "Wellness Certificates I") and the relevant production technology. Pursuant to the Wellness Products Agreement I, Biological will jointly share the ownership of the Wellness Certificates I and relevant production technology with Engineering. Under the agreement, Biological and Engineering both have the right to use the Wellness Certificates I and all technology to produce, manufacture and sell wellness products pursuant to local law.

The Nutrition Supplements Market Committee of the CHCA assessed the value of the Wellness Certificates I and the relevant production technology at USD$1.22 million (USD$1.00 = 8.08 RMB) based upon the CITCA's Market Evaluation Report. Engineering paid Biological 20% of this purchase price upon signing the Wellness Products Agreement I and will pay the remaining 80% of the purchase price within seven business days of the date the SFDA transfers joint ownership interest in the Wellness Certificates I and relevant production technology to Engineering.

On October 26, 2005, Biological entered an agreement with Engineering (the "Wellness Products Agreement II") relating to the transfer of ownership of the Certificates of Domestic Wellness Product covering six of Biological's wellness products (the "Wellness Certificates II") and the relevant production technology to Engineering. Engineering has the sole right to use the Wellness Certificates II and all technology to produce, manufacture and sell the wellness products pursuant to local law.

The Nutrition Supplements Market Committee of the CHCA assessed the value of the Wellness Certificates II and the relevant production technology at USD$292,503 based upon its Market Evaluation Report. Engineering paid Biological 20% of this purchase price upon signing the Wellness Products Agreement II and will pay the remaining 80% of the purchase price within seven business days of the date the SFDA transfers ownership of the Wellness Certificates II to Engineering.

On October 26, 2005, Biological entered an agreement with Engineering (the "Dietary Supplement Products Agreement") relating to the joint ownership of the Certificates of Domestic Dietary Supplement Product covering ten of Biological's dietary supplement products (the "Dietary Supplement Certificates") and the relevant production technology. Pursuant to the Dietary Supplement Products Agreement, Biological will jointly share the ownership of the Dietary Supplement Certificates and relevant production technology with Engineering. Engineering is agreeing to share ownership of the Dietary Supplement Certificates and relevant production technology with Biological. Under the agreement, Biological and Engineering both have the right to use the Dietary Supplement Certificates and all technology to produce, manufacture and sell the dietary supplement products pursuant to local law.

The Nutrition Supplements Market Committee of the CHCA assessed the value of the Dietary Supplement Certificates and the relevant production technology at USD$173,126 based upon its Market Evaluation Report. Engineering paid Biological 20% of this purchase price upon signing the Dietary Supplement Products Agreement and will pay the remaining 80% of the purchase price within seven business days of the date that Biological delivers to Engineering all of the documents related to the technology for the dietary supplements and the Dietary Supplement Certificates.

Other Receivables

The Company is owed additional amounts classified as other receivables from related parties totaling $8,144,740 and $26,831,339 as of December 31, 2004 and 2003, respectively. These receivables are generated from the Company's making various cash advances and short-term loans and the allocation of administrative and operating costs and various non-operational transactions incurred with related parties.

On March 26, 2004, Biological entered an agreement with Tianjin Juchao Commercial and Trading Co., Ltd. ("Juchao"), which is 40% owned by Mr. Jinyuan Li, to convert various receivable amounts into a note receivable in the amount of RMB200, 000,000 or approximately USD $24,200,000. The note was to be paid off in four quarterly installments of RMB50, 000,000 beginning March 31, 2004 and ending December 31, 2004. Interest was charged beginning January 1, 2004 at an annual interest rate of 6.048%. The receivable is secured by a personal guarantee of Jinyuan Li and the pledge of 20% of his stock ownership in the Company, or 13,167,000 shares. The note was repaid during 2004, together with $914,760 in interest.

Accounts Payable

Accounts payable due to related parties amounted to $209,199 and $758,570 at December 31, 2004 and 2003, respectively. These amounts were generated from the related parties' paying expenses on behalf of the Company.

Other Payables

The Company has amounts classified as other payables due to related parties which amounted to $945,274 and $1,312,288 as of December 31, 2004 and 2003, respectively. These amounts arose from cash advances from related parties, management fees due to related parties and various non-operational transactions.

Loans

Biological entered a Term Loan Agreement, dated September 7, 2005, with Tianjin Tianshi Group Co., Ltd. ("Tianshi Group"), which is a related party through common ownership. Under the agreement, Biological agreed to lend RMB 8.0 million, or approximately $988,000, to Tianshi Group. The loan is payable on December 31, 2005. Tianshi Group will pay interest on the loan at the rate of 5.22% per annum. Tianshi Group may repay the loan before December 31, 2005, with approval from Biological.

Biological entered a Term Loan Agreement, dated September 1, 2005, with Engineering. Under the agreement, Biological agreed to lend RMB 15.0 million, or approximately $1,852,500, to Engineering. The loan is payable on December 31, 2005. The loan does not bear any interest. Engineering may repay the loan prior to December 31, 2005, with approval from Biological.

On March 25, 2005 Tianshi International Holdings Group, Ltd. ("Tianshi International") entered a loan agreement with a company owned by Mr. Jinyuan Li, pursuant to which Tianshi International borrowed $300,000. The loan was non-interest bearing and was initially due on June 25, 2005. The parties extended the due date, and the loan was paid in full on September 26, 2005.

In 2004, Tianshi International entered a term loan agreement with Tianyuan Capital Development Corp. Ltd. ("Tianyuan"), pursuant to which Tianyuan agreed to lend $10.65 million in the aggregate to Tianshi International, at an interest rate of 5% per year. Tianshi International must repay the loan in ten consecutive semiannual installments of $1,065,000 commencing December 31, 2006. Tianshi International used the loan proceeds in Tiens Yihai. Mr. Jinyuan Li owns 100% of Tianyuan.

Joint Venture

In 2004, Tianshi International, agreed with Tianjin Tianshi Pharmaceuticals Co., Ltd. ("Tianshi Pharmaceutical") to establish Tiens Yihai Co., Ltd., a Chinese-Foreign Equity Joint Venture. Tiens Yihai, located in Shanghai, PRC, is in the business of research and development, production and marketing of nutrition supplement products, home care and personal care products. Mr. Jinyuan Li is the majority shareholder of Tianshi Pharmaceutical.

Rent expense

Since 2003, the Company has leased office space and manufacturing facilities from Tianshi Group. The lease expires at the end of 2007 and requires annual rent at 1% of the Company's total gross revenues. In addition, the Company is obligated to pay insurance, maintenance and other expenses related to the premises. Rent expense amounted to $595,494 in 2004.