U.S.
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
D.C.  20549
 
 FORM
10-Q
  (Mark
One)
 
 [X]            QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For
the quarterly period ended March 31, 2009
   [ 
]           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 For
the transition period from _______________ to _______________
 
 
 Commission
File Number
 
 Tianyin
Pharmaceutical Co., Inc.
 (Exact
name of registrant as specified in its charter)
 
 Delaware(State
      or other jurisdiction of incorporation or organization)
              
              (IRS Employer
      Identification No.)
 
 11th
Floor, South Tower, Jinjiang Times Garden
 107
Jin Li Road West
 Chengdu
, P. R. China, 610072
 +0086-028-86154737
 (Address,
including zip code, and telephone number,
 including
area code, of Registrant’s principal executive offices)
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [X ] No [ ]
 
 Indicate
by check mark whether the registrant is a large accelerate filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company.  See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
      Accelerated Filer
              
              
              Accelerated
      FilerNon-accelerated
      filer
              (do
      not check if a smaller reporting company)
              
              Smaller
      reporting company
              X
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act of 1934) Yes [  ] No
[X]
 
 
 
 As of May
13, 2009,we are
authorized to issue up to 50,000,000 shares of Common Stock, par value US$.001
per share and 10,000,000 shares of Series A Preferred Stock, of
which 16,421,662and 8,603,750respectively are currently issued and outstanding.
 
 
 
 
 TABLE
OF CONTENTS
 
 PagePART
      I - FINANCIAL INFORMATIONItem
      1.  Financial StatementsConsolidated
      Balance Sheets at
                  March
      31, 2009 (unaudited) and June 30, 2008
                4Unaudited
      Consolidated Statements of
                  Operations
      for the three and nine months ended
                  March
      31, 2009 and 2008
                5Unaudited
      Consolidated Statements of Cash Flows
                  for
      the nine months ended March 31, 2009 and 2008
                6Unaudited
      notes to Consolidated Financial Statements
                5Item
      2.  Management’s Discussion and Analysis or Plan of
      Operation
                15Item 3.Quantitative and
      Qualitative Disclosure About Market Risk
                21Item
      4T.  Controls and Procedures
                22PART
      II – OTHER INFORMATIONItem
      1.  Legal Proceedings
                23Item
      2.  Unregistered Sales of Equity Securities And Use Of
      Proceeds
                23Item
      3.  Defaults Upon Senior Securities
                23Item
      4.  Submission Of Matters To A Vote Of Security
      Holders
                23Item
      5.  Other Information
                24Item
      6.  Exhibits
                24
 
 
 
  2
  
 PART
I- FINANCIAL INFORMATION
 
 Report of Independent Registered Public
Accounting Firm
 
 To the
Board of Directors and Stockholders
 Tianyin
Pharmaceutical Co., Inc.:
 
 
 We have reviewed the accompanying
consolidated balance sheet of Tianyin Pharmaceutical Co., Inc. and Subsidiaries
(the “Company”) as of March 31, 2009, and the related consolidated statements of
operations and comprehensive income, and cash flows for the nine months ended
March 31, 2009 and 2008. These consolidated financial statements are the
responsibility of the Company's management.
 
 We conducted our reviews in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
 
 Based on our review, we are not aware
of any material modifications that should be made to the accompanying financial
statements for them to be in conformity with accounting principles generally
accepted in the United States of America.
 
 
 
 
 /s/ Patrizio & Zhao,
LLC
 Patrizio
& Zhao LLC
 
 
 Parsippany,
New Jersey
 April 28,
2009
  3
  
 Consolidated
Balance Sheets
 
 March 31,
                  
                  
                  June 30,2009
                  
                  
                  2008(Unaudited)Assets:Current
      assets:Cash and cash
      equivalents
                  
                  $
                  10,733,671
                  
                  
                  $
                  12,057,150Accounts receivable, net of
      allowance for doubtful accounts of $90,435and $90,064 at
      March 31, 2009 and June 30, 2008, respectively
                  
                  
                  4,991,353
                  
                  
                  
                  4,460,406Inventory
                  
                  
                  4,666,509
                  
                  
                  
                  3,555,691Advance payments
                  
                  
                  1,188,115
                  
                  
                  
                  -Other receivables
                  
                  
                  415,849
                  
                  
                  
                  371,815Other current
    assets
                  
                  
                  -
                  
                  
                  
                  247,139Total current
    assets:
                  
                  
                  21,995,497
                  
                  
                  
                  20,692,201Property
      and equipment, net:
                  
                  
                  8,292,735
                  
                  
                  
                  5,758,966Intangibles,
      net:
                  
                  
                  12,646,750
                  
                  
                  
                  10,307,754Total assets:
                  
                  $
                  42,934,982
                  
                  
                  $
                  36,758,921Liabilities
      and stockholders’ equity:Current
      liabilities:Accounts payable and accrued
      expenses
                  
                  $
                  1,266,619
                  
                  
                  $
                  1,337,682Short-term bank
    loans
                  
                  
                  1,399,075
                  
                  
                  
                  1,393,345VAT taxes payable
                  
                  
                  324,311
                  
                  
                  
                  277,090Income taxes
    payable
                  
                  
                  380,546
                  
                  
                  
                  341,214Payroll taxes
    payable
                  
                  
                  9,007
                  
                  
                  
                  39,939Dividends payable
                  
                  
                  -
                  
                  
                  
                  378,545Other current
      liabilities
                  
                  
                  391,272
                  
                  
                  
                  142,733Total current
      liabilities:
                  
                  
                  3,770,830
                  
                  
                  
                  3,910,548Total
liabilities:
                  
                  
                  3,770,830
                  
                  
                  
                  3,910,548Stockholders’
      equity:Common stock, $0.001 par value,
      50,000,000 shares authorized,16,064,428 and
      14,738,450 shares issued and outstanding atMarch 31, 2009
      and June 30, 2008
                  
                  
                  16,064
                  
                  
                  
                  14,739Common stock dividend
      distributable
                  
                  
                  217
                  
                  
                  
                  -Series A convertible preferred
      stock, $0.001 par value, 8,744,375 and9,384,375
      shares issued and outstanding at March 31, 2009and June 30,
      2008
                  
                  
                  8,744
                  
                  
                  
                  9,384Additional paid-in
      capital
                  
                  
                  19,445,520
                  
                  
                  
                  18,002,439Statutory reserve
                  
                  
                  2,031,451
                  
                  
                  
                  1,380,806Treasury stock
                  
                  
                  (102,737
                  )
                  
                  
                  -Retained earnings
                  
                  
                  14,991,010
                  
                  
                  
                  10,963,131Accumulated other comprehensive
      income
                  
                  
                  2,773,883
                  
                  
                  
                  2,477,874Total stockholders’
      equity:
                  
                  
                  39,164,152
                  
                  
                  
                  32,848,373Total liabilities and
      stockholders' equity:
                  
                  $
                  42,934,982
                  
                  
                  $
                  36,758,921
  The
accompanying notes are an integral part of these consolidated financial
statements.
 4
  
 Consolidated
Statements of Operations and Comprehensive Income
 (Unaudited)
 For
      the Three Months Ended
                  
                  
                  For
      the Nine Months EndedMarch 31,
                  
                  
                  March 31,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Sales:
                  
                  $
                  9,929,301
                  
                  
                  $
                  9,249,229
                  
                  
                  $
                  29,593,109
                  
                  
                  $
                  24,167,921Cost
      of sales:
                  
                  
                  5,069,133
                  
                  
                  
                  5,123,587
                  
                  
                  
                  14,696,736
                  
                  
                  
                  13,984,845Gross
      profit:
                  
                  
                  4,860,168
                  
                  
                  
                  4,125,642
                  
                  
                  
                  14,896,373
                  
                  
                  
                  10,183,076Operating
      expenses:Selling, general and
      administrative
                  
                  
                  2,481,188
                  
                  
                  
                  2,180,161
                  
                  
                  
                  7,709,861
                  
                  
                  
                  4,380,702Research and
      development
                  
                  
                  86,495
                  
                  
                  
                  89,372
                  
                  
                  
                  253,353
                  
                  
                  
                  150,930Total operating
      expenses:
                  
                  
                  2,567,683
                  
                  
                  
                  2,269,533
                  
                  
                  
                  7,963,214
                  
                  
                  
                  4,531,632Income
      from operations:
                  
                  
                  2,292,485
                  
                  
                  
                  1,856,109
                  
                  
                  
                  6,933,159
                  
                  
                  
                  5,651,444Other
      income (expenses):Other income
                  
                  
                  4,874
                  
                  
                  
                  -
                  
                  
                  
                  34,682
                  
                  
                  
                  -Interest expense
                  
                  
                  (20,821
                  )
                  
                  
                  (245,174
                  )
                  
                  
                  (75,515
                  )
                  
                  
                  (311,536
                  )Total other income
      (expenses):
                  
                  
                  (15,947
                  )
                  
                  
                  (245,174
                  )
                  
                  
                  (40,833
                  )
                  
                  
                  (311,536
                  )Income
      before provision for income tax:
                  
                  
                  2,276,538
                  
                  
                  
                  1,610,935
                  
                  
                  
                  6,892,326
                  
                  
                  
                  5,339,908Provision
      for income tax:
                  
                  
                  380,521
                  
                  
                  
                  337,132
                  
                  
                  
                  1,148,197
                  
                  
                  
                  893,779Net
      income:
                  
                  
                  1,896,017
                  
                  
                  
                  1,273,803
                  
                  
                  
                  5,744,129
                  
                  
                  
                  4,446,129Other
      comprehensive income (loss):Foreign currency translation
      adjustment
                  
                  
                  (50,359
                  )
                  
                  
                  793,507
                  
                  
                  
                  296,009
                  
                  
                  
                  1,368,473Comprehensive
      income:
                  
                  $
                  1,845,658
                  
                  
                  $
                  2,067,310
                  
                  
                  $
                  6,040,138
                  
                  
                  $
                  5,814,602Basic
      earnings per share:
                  
                  $
                  0.10
                  
                  
                  $
                  0.09
                  
                  
                  $
                  0.29
                  
                  
                  $
                  0.33Diluted
      earnings per share:
                  
                  $
                  0.10
                  
                  
                  $
                  0.05
                  
                  
                  $
                  0.23
                  
                  
                  $
                  0.27Weighted
      average number of common shares outstanding:Basic
                  
                  
                  15,987,334
                  
                  
                  
                  14,274,783
                  
                  
                  
                  15,902,618
                  
                  
                  
                  13,289,072Diluted
                  
                  
                  15,987,334
                  
                  
                  
                  24,455,363
                  
                  
                  
                  24,980,236
                  
                  
                  
                  16,707,369
  The
accompanying notes are an integral part of these consolidated financial
statements.
 5
  
 Consolidated
Statements of Cash Flows
 (Unaudited)
 For
      the Nine Months EndedMarch 31,2009
                  
                  
                  2008Cash
      flows from operating activities:Net
      Income
                  
                  $
                  5,744,129
                  
                  
                  $
                  4,446,129Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Depreciation and
      amortization
                  
                  
                  355,933
                  
                  
                  
                  273,060Changes in current assets and
      current liabilities:Accounts
      receivable
                  
                  
                  (512,429
                  )
                  
                  
                  (535,631
                  )Inventory
                  
                  
                  (1,095,822
                  )
                  
                  
                  (550,711
                  )Other
      receivables
                  
                  
                  628,103
                  
                  
                  
                  89,183Other
      current assets
                  
                  
                  (940,570
                  )
                  
                  
                  (2,005,616
                  )Accounts
      payable and accrued expenses
                  
                  
                  (76,119
                  )
                  
                  
                  (13,158
                  )VAT
      taxes payable
                  
                  
                  46,066
                  
                  
                  
                  9,280Income
      taxes payable
                  
                  
                  37,915
                  
                  
                  
                  13,565Payroll
      taxes payable
                  
                  
                  (31,085
                  )
                  
                  
                  4,254Other
      current liabilities
                  
                  
                  247,867
                  
                  
                  
                  26,753Total
adjustments:
                  
                  
                  (1,340,141
                  )
                  
                  
                  (2,689,021
                  )Net cash provided by operating
      activities:
                  
                  
                  4,403,988
                  
                  
                  
                  1,757,108Cash
      flows from investing activities:Additions to property and
      equipment
                  
                  
                  (57,994
                  )
                  
                  
                  (276,472
                  )Additions to
      intangibles
                  
                  
                  (2,416,425
                  )
                  
                  
                  (786,712
                  )Additions to construction in
      progress
                  
                  
                  (2,686,567
                  )
                  
                  
                  -Net cash used in investing
      activities:
                  
                  
                  (5,160,986
                  )
                  
                  
                  (1,063,184
                  )Cash
      flows from financing activities:Proceeds from capital
      contribution
                  
                  
                  -
                  
                  
                  
                  9,089,700Proceeds from (repayment of) bank
      loans
                  
                  
                  (512,575
                  )
                  
                  
                  2,674,873Repayment of shareholder
      loans
                  
                  
                  (102,737
                  )
                  
                  
                  (143,967
                  )Net cash provided by (used in)
      financing activities:
                  
                  
                  (615,312
                  )
                  
                  
                  11,620,606Effect
      of foreign currency translation on cash:
                  
                  
                  48,831
                  
                  
                  
                  685,138Net
      increase (decrease) in cash and cash equivalents:
                  
                  
                  (1,323,479
                  )
                  
                  
                  12,999,668Cash
      and cash equivalents – beginning:
                  
                  
                  12,057,150
                  
                  
                  
                  624,390Cash
      and cash equivalents – ending:
                  
                  $
                  10,733,671
                  
                  
                  $
                  13,624,058
  The
accompanying notes are an integral part of these consolidated financial
statements.
 6
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
1 –Organization and Nature of Business
  Tianyin
Pharmaceutical Co., Inc. (Formerly Viscorp, Inc.), a public shell company as
defined in Rule 12b-2 of the Exchange Act of 1934, established under the laws of
Delaware on August 20, 2002. The accompanying consolidated financial statements
include the financial statements of Tianyin Pharmaceutical Co., Inc. and its
subsidiaries (the “Company” or “Tianyin”). The Company’s primary business is to
research, manufacture, and sell pharmaceutical products.
  On
January 16, 2008, Viscorp Inc. (“Viscorp”) completed a reverse acquisition of
Raygere Limited (“Raygere”), which was incorporated in the British Virgin
Islands on January 26, 2007. To accomplish the exchange of shares Viscorp issued
12,790,800 shares of common stock on a one to one ratio for a 100% equity
interest in Raygere, per the terms of the Share Exchange and Bill of Sale of
assets of Viscorp and Charles Driscoll. Viscorp was delivered with zero assets
and zero liabilities at time of closing. Following the reverse acquisition,
Viscorp changed the name to Tianyin Pharmaceutical Co., Inc. The transaction was
regarded as a reverse merger whereby Raygere was considered to be the accounting
acquirer as its shareholders retained control of Tianyin after the exchange.
Although the Company is the legal parent company, the share exchange was treated
as a recapitalization of Raygere. Thus, Raygere is the continuing entity for
financial reporting purposes. The Financial Statements have been prepared as if
Raygere had always been the reporting company and then on the share exchange
date, had changed its name and reorganized its capital stock.
  In
September 2007, Raygere acquired 100% interest in Grandway Groups Holdings Ltd.
(“Grandway”), which was incorporated on May 25, 2007, in the city of Hong Kong,
the People’s Republic of China (“PRC”). On October 30, 2007, Grandway acquired
100% equity interest in Chengdu Tianyin Pharmaceutical Co., Ltd (“Chengdu
Tianyin”), which was incorporated on April 1, 1994 in the city of Chengdu, the
People’s Republic of China. As a result of the acquisition, Chengdu Tianyin
became the wholly owned subsidiary of Grandway and an indirect wholly owned
subsidiary or Raygere. The transaction was regarded as a reverse merger whereby
Chengdu Tianyin was considered to be the accounting acquirer as both Grandway
and Raygere were holding companies with no significant operations and Chengdu
Tianyin continues as the primary operating entity even after the exchange,
although Raygere is the legal parent company. As such, Chengdu Tianyin (and its
historical financial statements) is the continuing entity for financial
reporting purposes. The consolidated financial statements reflect all
predecessor statements of income and cash flow activities from the inception of
Chengdu Tianyin in July 2007.
  Tianyin
Pharmaceutical,Co., Inc’s common stock began trading on the American Stock
Exchange (the 'AMEX') under the ticker 'TPI' at market open on Wednesday,
October 1, 2008. The AMEX Panel's approval is contingent upon the Company being
in direct compliance with the Alternative Listing Standards at the time the
Company's common shares begin trading on the AMEX, and may be rescinded if the
Company is not in compliance with such standards. Once Tianyin's common shares
commence trading on the AMEX, the Company will enjoy all of the same privileges
and be subject to all of the same regulations as any other company whose shares
are listed on the AMEX, regardless of the Listing Standard used to determine the
Company's eligibility.
   Note
2 –Summary of Significant Accounting Policies
  Basis
Of Presentation
  The
Company’s Consolidated Financial Statements include the accounts of its direct
wholly-owned subsidiaries and its indirect proportionate share of subsidiaries
owned by the wholly-owned subsidiaries. All intercompany balances and
transactions are eliminated in consolidation. The accompanying unaudited
financial statements have been prepared in accordance with GAAP for interim
financial information and with the instructions to Form 10-Q and Regulation S-X
applicable to small business issuers. Accordingly, they do not include all of
the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements.
   7
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
2 –Summary of Significant Accounting Policies (continued)
  Basis
Of Presentation (continued)
  Interim
results are not necessarily indicative of results for a full year. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the financial position and the results of operations and cash
flows for the interim periods have been included.
  Interim
Financial Statement
  These
interim financial statements should be read in conjunction with the audited
financial statements for the year ended June 30, 2008, as not all disclosures
required by generally accepted accounting principles for annual financial
statements are presented. The interim financial statements follow the same
accounting policies and methods of computations as the audited financial
statements for the year ended June 30, 2008.
  Note
3– Earnings Per Share
  The
Company presents earnings per share on a basic and diluted basis. Basic earnings
per share have been computed by dividing net earnings by the weighted average
number of common shares outstanding. Diluted earnings per share has been
computed by dividing net earnings plus convertible preferred dividends and
interest expense (after-tax) on convertible debt by the weighted average number
of common shares outstanding including the dilutive effect of equity securities.
The weighted average number of common shares calculated for Diluted EPS excludes
the potential common stock that would be exercised under the options and
warrants granted to officers because the inclusion of the potential shares from
these options and warrants would cause an antidilutive effect by increasing the
net earnings per share.
  For the three months ended
                  
                  
                  For the nine months endedMarch
      31
                  
                  
                  March
      31
                  
                  
                  March
      31
                  
                  
                  March
      312009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Net
      income (numerator for diluted incomeper
      share when preferred stock convertible)
                  
                  $
                  1,896,017
                  
                  
                  $
                  1,273,803
                  
                  
                  $
                  5,744,129
                  
                  
                  $
                  4,446,129Less:
      Dividend attributable to preferredstockholders
                  
                  
                  346,578
                  
                  
                  
                  83,197
                  
                  
                  
                  1,065,603
                  
                  
                  
                  83,197Net
      income attributable to common stockholders (numerator for basic/diluted
      income per share when preferred stock nonconvertible)
                  
                  
                  1,549,439
                  
                  
                  
                  1,190,606
                  
                  
                  
                  4,678,526
                  
                  
                  
                  4,362,932Weighted
      average common shares(denominator
      for basic income per share)
                  
                  
                  15,987,334
                  
                  
                  
                  14,274,783
                  
                  
                  
                  15,902,618
                  
                  
                  
                  13,289,072Effect
      of diluted securities:Convertible
      preferred stock
                  
                  
                  -
                  
                  
                  
                  9,306,639
                  
                  
                  
                  9,044,060
                  
                  
                  
                  3,195,027Warrants
                  
                  
                  -
                  
                  
                  
                  873,941
                  
                  
                  
                  33,558
                  
                  
                  
                  223,270Weighted
      average common shares(denominator
      for diluted income per share)
                  
                  
                  15,987,334
                  
                  
                  
                  24,455,363
                  
                  
                  
                  24,980,236
                  
                  
                  
                  16,707,369Basic
      net income (loss) per share
                  
                  $
                  0.10
                  
                  
                  $
                  0.09
                  
                  
                  $
                  0.29
                  
                  
                  $
                  0.33Diluted
      net income (loss) per share
                  
                  $
                  0.10
                  
                  
                  $
                  0.05
                  
                  
                  $
                  0.23
                  
                  
                  $
                  0.27
 
   8
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
4– Accounts Receivable
  Trade
accounts receivable are stated at original invoice amount less allowance for
doubtful receivables made based on management’s periodic review of aging of
outstanding balances and customer credit history. Allowance for doubtful
accounts amounted to $90,435 and $90,064 at March 31, 2009 and June 30,
2008.
  Note
5– Inventory
  Inventory
at March 31, 2009 and June 30, 2008 consists of the following:
  March
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2008Raw
      materials
                  
                  $
                  1,308,519
                  
                  
                  $
                  584,003Packaging
      supplies
                  
                  
                  649,870
                  
                  
                  
                  1,327,283Work
      in process
                  
                  
                  1,924,334
                  
                  
                  
                  647,607Finished
      goods
                  
                  
                  783,786
                  
                  
                  
                  996,798Total
                  
                  $
                  4,666,509
                  
                  
                  $
                  3,555,691
  Note
6– Property and Equipment
  Property
and equipment at March 31, 2009 and June 30, 2008 consists of the
following:
  March
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2008Buildings
                  
                  $
                  5,175,726
                  
                  
                  $
                  5,154,528Machinery
      and equipment
                  
                  
                  1,200,827
                  
                  
                  
                  1,138,133Office
      equipment and furniture
                  
                  
                  48,777
                  
                  
                  
                  48,577Vehicles
                  
                  
                  397,340
                  
                  
                  
                  395,713Subtotal
                  
                  
                  6,822,670
                  
                  
                  
                  6,736,951Less:
      Accumulated depreciation
                  
                  
                  2,023,169
                  
                  
                  
                  1,780,4354,799,501
                  
                  
                  
                  4,956,516Add:
      Construction in progress
                  
                  
                  3,493,234
                  
                  
                  
                  802,450Total
                  
                  $
                  8,292,735
                  
                  
                  $
                  5,758,966
 
  Depreciation
expense for the three months ended March 31, 2009 and 2008 was $78,107 and
$81,715, and for the nine months ended March 31, 2009 and 2008 was $235,332 and
$233,248, respectively.
  Note
7– Intangible Assets
  Intangible
assets at March 31, 2009 and 2008 were as follows:
  March
      31,
                    
                    
                    June
      30,2009
                    
                    
                    2008Rights
      to use land
                    
                    $
                    1,450,350
                    
                    
                    $
                    1,444,410Approved
      drugs
                    
                    
                    11,557,033
                    
                    
                    
                    9,102,351Intangible
      assets
                    
                    
                    13,007,383
                    
                    
                    
                    10,546,761Less:
      accumulated amortization
                    
                    
                    360,633
                    
                    
                    
                    239,007Total
                    
                    $
                    12,646,750
                    
                    
                    $
                    10,307,754
  9
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
7– Intangible Assets (continued)
  Amortization
expense for the three months ended March 31, 2009 and 2008 was $40,214 and
$26,587, and for the nine months ended March 31, 2009 and 2008 was $120,602 and
$39,812, respectively.
  Note
8 – Accounts Payable and Accrued Expenses
  Accounts
payable and accrued expenses consist of the following:
  March
      31,
                  
                  
                  June
      30,2009
                  
                  
                  2008Accounts
      payable
                  
                  $
                  1,146,367
                  
                  
                  $
                  1,237,682Accrued
      expenses
                  
                  
                  120,252
                  
                  
                  
                  100,000Total
                  
                  $
                  1,266,619
                  
                  
                  $
                  1,337,682
  The
carrying value of accounts payable and accrued expenses approximates fair value
due to the short-term nature of these obligations.
  Note
9 – Short-Term Bank Loans
  Short-term
bank loans consist of the following:
  March
      31,
                
                
                June
      30,2009
                
                
                2008On
      July 11th,
      2007, the Company obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by July 10th,
      2008.The interestis
      to be calculated using an annual fixed interest rate of 8.541% and
      paidmonthly.
      The loan is secured by the Company’s property and
    equipment.
                
                $
                -
                
                
                $
                145,900On
      July 16th,
      2007, the Company obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by July 15th,
      2008.The interestis
      to be calculated using an annual fixed interest rate of 8.541% and
      paidmonthly.
      The loan is secured by the Company’s property and
    equipment.
                
                $
                -
                
                
                $
                145,900On
      July 25th,
      2007, the Company obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by July 24th,
      2008.The interestis
      to be calculated using an annual fixed interest rate of 8.892% and
      paidmonthly.
      The loan is secured by the Company’s property and
    equipment.
                
                $
                -
                
                
                $
                226,145On
      June 23th,
      2008, the Company obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by June 23th,2009.The
      interestis
      to be calculated using an annual fixed interest rate of 7.881% and
      paidmonthly.
      The loan is secured by the Company’s property and
    equipment.
                
                $
                879,000
                
                
                $
                875,400On
      July 11th,
      2008, the Company obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by June 10th,2009.The
      interestis
      to be calculated using an annual fixed interest rate of 7.881% and
      paid
                
                $
                520,075
                
                
                
                -monthly.
      The loan is secured by the Company’s property and
    equipment.Total
      short-term bank loans
                
                $
                1,399,075
                
                
                $
                1,393,345
  10
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
10 – Income Taxes (continued)
  Raygere
is incorporated in the British Virgin Islands. Under the corporate tax laws of
British Virgin Islands, it is not subject to tax on income or capital
gain.
  The
operating subsidiary Chengdu Tianyin is a wholly foreign-owned enterprise
incorporated in the PRC and subject to PRC Foreign Enterprise Income Tax
(“FEIT”) Law. Chengdu Tianyin is entitled to the preferential tax treatment for
Opening Up its production facility in Western China in Sichuan Province. The
applicable reduced preferential state EIT rate under this policy is 15% up to
December 31, 2010. Accordingly, the effective tax rate for Chengdu Tianyin for
the period from its date of incorporation to March 31, 2009 should be
15%.
  On March
16, 2007, the National People’s Congress of China enacted a new Corporate Income
Tax (“CIT”) law, under which FIEs and domestic companies would be subject to CIT
at a uniform rate of 25%. The new CIT law will become effective on January 1,
2008. Currently, the Company do not believe the new CIT law will affect the
preferential tax treatments enjoyed by them. Since the Company intend to
reinvest its earnings to further expand its businesses in mainland China, its
foreign invested enterprises do not intend to declare dividends to their
immediate foreign holding companies in the foreseeable future. Accordingly, as
of March 31, 2009, the Company has not recorded any withholding tax on the
retained earnings of its foreign invested enterprises in China.
  On
February 22, 2008, the Ministry of Finance (“MOF”) and the State Administration
of Taxation (“SAT”) jointly issued Cai Shui [2008] Circular 1 (“Circular 1”).
According to Article 4 of Circular 1, distributions of accumulated profits
earned by a FIE prior to January 1, 2008 to foreign investor(s) in 2008 will be
exempt from withholding tax (“WHT”) while distribution of the profit earned by
an FIE after January 1, 2008 to its foreign investor(s) shall be subject to
WHT.
  In July
2006, the FASB issued FASB Interpretation No.48, Accounting for Uncertainty in
Income Taxes (FIN 48). FIN 48 clarifies the accounting for income taxes by
prescribing a minimum probability threshold that a tax position must meet before
a financial statement benefit is recognized. The minimum threshold is defined in
FIN 48 as a tax position that is more likely than not to be sustained upon
examination by the applicable taxing authority, including resolution of any
related appeals or litigation processes, based on the technical merits of the
position. The Company does not recognize any benefits in the financial
statements for the nine months ending March 31, 2009.
  Note
11 – Stockholders’ Equity and Related Financing Agreements
  On
January 16, 2008 the shareholders of Raygere were issued 12,790,800 shares of
Viscorp’s Common Stock, under a Share Exchange Agreement (SEA) pursuant to a
claim of exemption under Section 4(2) of the Securities Act of 1933, as amended,
for issuances not involving a public offering. Under the SEA, after the transfer
of all of its shares, Raygere became a wholly-owned subsidiary of Viscorp, which
has changed its name to Tianyin Pharmaceutical Co., Inc. (hereinafter
Tianyin).
  On
January 16 and 25, 2008, Tianyin (formerly Viscorp.) completed private
financings totaling $15,225,000, with 27 accredited investors (the “January 2008
Financing”). The net proceeds from the financing were approximately $13,697,000.
Consummation of the financing was a condition to the completion of the Share
Exchange transaction with Raygere and the Raygere Stockholders under the Share
Exchange Agreement. The securities offered in the financing were sold pursuant
to a Securities Purchase Agreement (the “Purchase Agreement”) by and among
Tianyin (formerly Viscorp.), Raygere, the Raygere stockholders, Grandway and the
investors named in the Purchase Agreement (collectively, the
“Investors”).
   11
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
11 – Stockholders’ Equity and Related Financing Agreements
(continued)
  In
accordance with the Purchase Agreement, Tianyin (formerly Viscorp.) issued a
total of 152.25 Units of securities consisting of: (i) An aggregate of
$15,225,000 principal amount of Tianyin 10% convertible exchangeable notes due
on or before June 30, 2009 (the “Notes”); (ii) Five (5) year warrants to
purchase 4,757,814 shares of Tianyin Common Stock, $0.001 par value per share at
an initial exercise price of $2.50 per share (the “Class A Warrants”), and (iii)
Seven (7) year warrants to purchase 4,757,814 shares of Tianyin Common Stock at
an initial exercise price of $3.00 per share (the “Class B Warrants” and
together with the Class A Warrants, the “Warrants”). The exercise prices of the
Warrants are subject to weighted average and other anti-dilution
adjustments.
  Pursuant
to the terms of the Purchase Agreement, the $15,225,000 of Notes automatically
convert into an aggregate of 9,515,625 shares of Tianyin Series A convertible
preferred stock, par value 0.001 per share (the “Series A Preferred Stock”) on
March 11, 2008, the effective date of the authorization and designation of such
class. As issued, the Series A Preferred Stock:
  Pays an
annual dividend of 10%, payable at Tianyin’s option either in cash or (if such
shares have been registered for resale under the Securities Act of 1933, as
amended) in additional shares of Tianyin Common stock valued at $1.60 per
share;
  Has a
stated or liquidation value of $1.60 per share, or $15,225,000 as to all
9,515,625 shares of Series A Preferred Stock.
  Each
outstanding share of Series A Preferred Stock is convertible at any time at the
option of the holder into one (1) full share of Tianyin Common
stock.
  As of
June 30, 2008, there were 131,250 shares of Series A Preferred Stock converted
to 131,250 shares of Tianyin Common stock. For the three months ended September
2008, there were additional 490,625 shares of Series A Preferred Stock converted
to 490,625 shares of Tianyin Common stock. Therefore as of September 30, 2008,
there were 621,875 shares of Series A Preferred Stock converted to 490,625
shares of Tianyin Common stock.
  On May 9,
2008, Chengdu Tianyin issued 20,000 shares of Common stock to employees. The
company recorded this transaction to the General and Administrative expense at
the share price on the date of the issuance, amounting to $68,000.
  In
connection with the financing, Tianyin granted warrants to purchase 1,522,500
shares of Common Stock with an exercise price of US$1.60, $2.50 and $3.00 per
share to TriPoint Global Equities, LLC., the placement agent in the Financing.
These warrants have the same terms as the Warrants issued to Investors and are
included in the Units.
  On July
29, 2008, the Company issued 236,488 shares of common stock, representing the FY
2008 fourth quarter dividend (10% per annum) in accordance with the terms of the
Certificate of Designation of the Relative Rights and Preferences of the Series
A Convertible Preferred Stock.
  On
September 30, 2008, the Company recorded $361,497 as dividends to the investors
of the Company’s January 2008 financings, representing the quarterly dividend
(10% per annum) in accordance with the terms of the Certificate of Designation
of the Relative Rights and Preferences of the Series A Convertible Preferred
Stock. This resolution was approved by the Company’s Board and the Company
decided to issue common stock to those investors in lieu of cash.
   12
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
11 – Stockholders’ Equity and Related Financing Agreements
(continued)
  On
October 29, 2008, the Company issued 225,932 shares of common stock,
representing the FY 2009 first quarter dividend (10% per annum) in accordance
with the terms of the Certificate of Designation of the Relative Rights and
Preferences of the Series A Convertible Preferred Stock.
  On
December 31, 2008, the Company recorded $357,694 as dividends to the investors
of the Company’s January 2008 financings, representing the quarterly dividend
(10% per annum) in accordance with the terms of the Certificate of Designation
of the Relative Rights and Preferences of the Series A Convertible Preferred
Stock. This resolution was approved by the Company’s Board and the Company
decided issue common stock to those investors in lieu of cash.
  On
January 5, 2009, the Company issued 223,558 shares of common stock, representing
the FY 2009 second quarter dividend (10% per annum) in accordance with the terms
of the Certificate of Designation of the Relative Rights and Preferences of the
Series A Convertible Preferred Stock.
  On March
31, 2009, the Company recorded $346,578 as dividends to the investors of the
Company’s January 2008 financings, representing the quarterly dividend (10% per
annum) in accordance with the terms of the Certificate of Designation of the
Relative Rights and Preferences of the Series A Convertible Preferred Stock.
This resolution was approved by the Company’s Board and the Company decided to
issue common stock to those investors in lieu of cash.
  Note
12 – Employee Welfare Plan
  The
Company has established an employee welfare plan in accordance with Chinese laws
and regulations. Full-time employees of the Group in the PRC participate in a
government-mandated multi-employer defined contribution plan pursuant to which
certain pension benefits, medical care, unemployment insurance and other welfare
benefits are provided to employees. PRC labor regulations require the Group to
accrue for these benefits based on certain percentage of the employees’
salaries. The total contribution for such employee benefits was $114,157 and
$101,006 for the nine months ended March 31, 2009 and 2008,
respectively.
  Note
13– Statutory Common Welfare Fund
  As
stipulated by the People’s Republic of China (PRC), net income after taxation
can only be distributed as dividends after appropriation has been made for the
following:
  (i)
              Making
      up cumulative prior years’ losses, if
any;
 
 (ii)
              Allocations
      to the “Statutory surplus reserve” of at least 10% of income after tax, as
      determined under PRC accounting rules and regulations, until the fund
      amounts to 50% of the Company's registered
  capital;
 
 (iii)
              Allocations
      of 5-10% of income after tax, as determined under PRC accounting rules and
      regulations, to the Company's “Statutory common welfare fund”, which is
      established for the purpose of providing employee facilities and other
      collective benefits to the Company's
employees;
 
 Allocations
to the discretionary surplus reserve were approved in the shareholders’ general
meeting. The Company provided a reserve for the welfare fund $ 650,645 and $
444,612 for the nine months ended March 31, 2009 and 2008,
respectively.
  
   13
 Notes
to Consolidated Financial Statements
 March
31, 2009 and 2008
 (Unaudited)
  Note
14 – Risk Factors
  For the
nine months ended March 31, 2009, three major vendors accounted for
approximately 44% of the Company’s raw materials, while for the nine months
ended March 31, 2008, three major vendors accounted for approximately 36.4% of
the Company’s raw materials. Total purchases from these vendors were $7,331,047
and $5,690,098 for the nine months ended March 31, 2009 and 2008,
respectively.
  Five
major customers accounted for 16% and 45% of the net revenue for the nine months
ended March 31, 2009 and 2008. Total sales to these customers were $5,495,387
and $10,887,822, for the nine months ended March 31, 2009 and 2008,
respectively.
  The
Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC as well as by the general
state of the PRC’s economy. The Company's business may be influenced by changes
in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
  Note
15 - Concentrations of Credit Risk
  Financial
instruments which potentially subject the Company to credit risk consist
principally of cash on deposit with financial institutions. Management believes
that the financial institutions that hold the Company’s cash and cash
equivalents are financially sound and minimal credit risk exists with respect to
these investments.
  Note
16 – Supplemental Cash Flow Disclosures
  The
following is supplemental information relating to the consolidated statements of
cash flows:
  Nine months ended March 31,2009
                  
                  
                  2008Cash
      paid for interest
                  
                  $
                  75,515
                  
                  
                  $
                  311,536Cash
      paid for income taxes
                  
                  $
                  1,110,282
                  
                  
                  $
                  893,779
  Note
17 – Share Exchange
  On
January 16, 2008, the shareholders of Raygere entered into and consummated
certain transactions contemplated under a Share Exchange Agreement (the “SEA”)
with Viscorp. As part of the Share Exchange, the shareholders of Raygere were
issued 12,790,800 shares of Common Stock (the “Common Stock”) of Viscorp, which
represented 87.68% of the 14,587,200 issued and outstanding shares of Common
Stock of Viscorp immediately following the Share Exchange, but prior to private
financings that were executed on January 16 and January 25, 2008. See Note
11.
  Note
18 – Treasury Stock
  On
October 27, 2008, the board of directors approved the stock repurchase program
and authorized the repurchase of up to three (3) million shares of the Company’s
common stock on the open market or through privately negotiated transactions.
During the quarter ended March 31, 2009, the Company repurchased 79,285 shares
at an aggregate cost of $102,518.  The purpose of the repurchase
program was to reduce the number of shares outstanding and thus increasing the
price of remaining shares.
  Note
19 - Subsequent Events
  On April
14, 2009, the company announced that its Series A Preferred shareholders
approved an annual cash dividend of $0.10 per common share that will be paid
quarterly for each quarter of this fiscal year. The initial dividend of $.025
will be paid to common shareholders of record on April 30, 2009, with the actual
distribution occurring on or about June 10, 2009. The cash dividend will be paid
solely to common stockholders and will not be paid on shares owned by
management, advisors or other inside shareholders, all of whom have agreed to
waive receipt of the dividend.
   
 14
 
  
 Item
2
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
 
 The
following discussion and analysis of financial condition and results of
operations relates to the operations and financial condition reported in the
financial statements of Chengdu Tianyin for the nine months ended March 31, 2009
and 2008 and should be read in conjunction with such financial statements and
related notes included in this report.
 
 Overview
 
 We are
engaged primarily in the development, manufacturing, marketing and sale of
modernized traditional Chinese medicines and other pharmaceuticals in China. We
currently manufacture and market a comprehensive portfolio of 39 products, 22 of
which are listed in the highly selective National Medicine Catalog of the
National Medical Insurance program.  We have an extensive product
pipeline of 40 products which are pending regulatory approvals with the China
State Food and Drug Administration.
 
 Established
in 1994, Chengdu Tianyin is a manufacturer and supplier of modernized
traditional Chinese medicines.  The current management of Chengdu
Tianyin acquired 100% of the equity interest of Chengdu Tianyin in
2003.  On October 30, 2007, Grandway completed the acquisition of the
100% of the equity interest and now owns 100% of the equity interest of Chengdu
Tianyin, a company located in Chengdu, Sichuan Province of the PRC that operates
our business.
  Competitive
Environment
 
 The
market for pharmaceutical products is highly competitive. Our operations may be
affected by technological advances by competitors, industry consolidation,
patents granted to competitors, competitive combination products, new products
offered by our competitors, as well as new information provided by other
marketed products and/or other post-market studies.
 
 Development
and Growth Strategy
 
 The cornerstone of our
business development strategy relies upon our partnership-based research and
development efforts that support our ability to commercialize, produce, and
broaden our product pipeline allowing us to market and expand those products
through our sales and marketing infrastructure.In the first
nine months of our fiscal 2009 year, we continued this strategy and recognized
increased market penetration and revenue growth over our 2008 fiscal year.
Management plans to continue our emphasis on expanded and enhanced marketing and
sales in our 2009 fiscal year and beyond.  Part of this strategy
involves increasing and improving our marketing and sales activities to enhance
the market leadership of our key leading products and to increase the sales of
other products by expanding our sales force, solidifying our distribution
network and expanding our market segment coverage, while increasing our
marketing and promotional activities.
  As part
of our continuing growth strategy, we will continue our partnership-based
research and development efforts to further commercialize and broaden our
product pipeline. During the quarter we have made significant process with our
new product development.  We currently have 40 drug candidates under
the Chinese State Food and Drug Administration (SFDA) (“SFDA”) review and are
planning a series of market launches in the next few years from our product
pipeline. In the nine months of our 2009 fiscal year, we have received approval
from the SFDA to produce ten new products, including seven of which were awarded
during the first quarter of 2009.  These newly approved products
include:
   15
 
  1. Laonian Kechuan Tablets
(SFDA approval number H2008S02059) are used to treat chronic bronchitis.
In its review it was noted for its potential abilities to improve male sexual
function and female natural function, enhance immunity and the promotion of
recovery, and was found to be highly effective with fewer side effects as
compared with similar drugs that are currently in the marketplace.
  2. Fuke Zhidai Tablets
(SFDA approval number Z20083375)are used to treat abnormal leucorrhea
caused by chronic cervicitis, endometritis and endocolpitis. The tablet was also
found to potentially alleviate fever and restrain abnormal leucorrhea. The drug
was approved by SFDA with a clinical outcome that was noted for minimal side
effects and a remarkable outcome during its review.
  3. Tongbianling Capsule
(SFDA approval number Z20083424) are generic Traditional Chinese Medicine
which is noted for its highly effective treatment in alleviating one-time
abdominal distention constipation, bedridden constipation, and elderly chronic
constipation.
  4. Baotailing Tablets
(SFDA approval numberZ20093087)  are generic Traditional
Chinese Medicine which is used to give supplement to kidney and provide the
protection to fetus. In addition, this medicine can be used to treat threatened
abortion, habitual abortion and infertility caused by abortion.
  5. Duyiwei Dispersible
Tablets(SFDA
approval number Z20090239) can be used for relief the pain caused by the
surgical operations. This drug also can be used to treat bleeding, fracture and
dysmenorrhea.
 
 6.Compound Dantong Capsules
(SFDA approval number Z20093012) are generic Traditional Chinese Medicine
which is suitable to treat acute and chronic cholecystitis, cholangitis and
concurrent infection of Biliary Calculi. In addition, this drug Also can treat
postcholecystectomy syndrome.
 
 7. Mycophenolate Mofetil
Capsule(SFDA approval number H20080819) treat the reject reaction during
the homogeneous kidney transplantation, and treat refractory reject reaction. In
addition, this drug can be used with ciclosporin and cortin at the same
time.
 
 8.
Tongqiao Biyan Tablets(SFDA approval number Z20093063)are generic Traditional
Chinese Medicine that is able to treat snuffle and snivel, relief the
sore pain of forehead. In addition, this drug is suitable to treat chronic
rhinitis, allergic rhinitis and nasosinusitis.
 
 9. Child
Qingrezhike Oral Liquid(SFDA approval number Z20093060) treats children rheum
and cough.  In addition, it can provide relief from pain caused by
laryngopharynx.
 
 10. Yiqing
Capsules(SFDA approval number Z20093084) are generic Traditional Chinese
Medicine that are able to treat pain of the throat and gums, pharyngitis and
tonsillitis.
 
 
  Descriptions
of the function of the above products are as follows:
  
 
 16
 
  
 An
important aspect to support our growth strategy is recognizing  the
importance of the marketing of our products and increasing our ability to
produce and supply our sales infrastructure.  As part of the use of
proceeds from our private placement financing last year, we are building
production facilities on the vacant land of our current premises to accommodate
our growth.  The new production plant project will enhance our overall
production capacity by 3 times with an estimated expenditure of $5 million. The
capital required for the expansion of our facilities was sourced from our recent
$15.2 million financing completed in January 2008. The planned Gross Floor Area
(GFA) is about ten thousand square meters with state-of-the-art manufacturing
equipment. Construction started in July 2008 and operations are planned to
commence in May 2009. The new capacity is expected to be able to meet the
increasing market demand for our current products and support our new product
launches from our product pipeline. By the end of March 2009, we had almost
completed construction of new plant. Installation of the new manufacturing was
almost competed and we were beginning to prepare for the initial GMP
testing.
 
 Management
also plans to pursue strategic acquisitions and licensing opportunities as part
of our growth strategy in 2009 and beyond.   We plan to
selectively pursue strategic acquisition and licensing opportunities to further
consolidate our resources and expand our market coverage.  We believe
that strategic acquisitions and licensing provide effective means to broaden our
product lines, increase our market coverage and complement our research and
development capabilities.
 
 Management
believes that our emphasis on further commercializing and broadening our product
line coupled with the expansion of our production facility and capacity,
enhanced sales and marketing efforts should continue to yield significant
increases in revenue in 2009 and beyond. Additionally, we believe that our
growth and overall market coverage could be further improved by certain
strategic acquisitions or licensing opportunities. Additionally, we believe the
Pharmaceutical Industry could benefit from the expanded social reform which is
part of the recently announced government stimulus plan.
 
 Manufacturing,
Sales and Marketing
 
 We
support commercialized products with manufacturing, sales and marketing efforts.
We are also moving forward with additional investments to enhance our
infrastructure and business, including capital expenditures in new plant and
production tools and facilities, improved and advanced information technology
systems, and continued post-marketing studies and monitoring
studies.
 
 Management
continually reviews the business, including manufacturing operations, to
identify actions that will enhance long-term competitiveness. By continuously
streamlining the management of our production processes and improving the
formulations for our drugs, we believe we can recognize greater efficiencies in
the productions of our products ultimately reducing both direct and overhead
costs in our manufacturing processes.
 
 Discussion
on Operating Result
 
 The
following table shows the results of our business. All references to the results
of operations and financial condition are those of Chengdu Tianyin.
    
 17
   Comparison of results for the nine
months ended March 31, 2009 and 2008, the three months ended March 31, 2009 and
2008
 
 
 Three
      Months Ended March 31
                                    
                                    
                                    Nine
      Months Ended March 312009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
                                    
                                    
                                    2008Revenue
                                    
                                    $
                                    9,929,301
                                    
                                    
                                    $
                                    9,249,229
                                    
                                    
                                    $
                                    29,593,109
                                    
                                    
                                    $
                                    24,167,921Cost
      of revenue
                                    
                                    $
                                    5,069,133
                                    
                                    
                                    $
                                    5,123,587
                                    
                                    
                                    $
                                    14,696,736
                                    
                                    
                                    $
                                    13,984,845Gross
      profit
                                    
                                    $
                                    4,860,168
                                    
                                    
                                    $
                                    4,125,642
                                    
                                    
                                    $
                                    14,896,373
                                    
                                    
                                    $
                                    10,183,076Total
      expense
                                    
                                    $
                                    2,567,683
                                    
                                    
                                    $
                                    2,269,533
                                    
                                    
                                    $
                                    7,963,214
                                    
                                    
                                    $
                                    4,531,632Other
      income (expense)
                                    
                                    $
                                    (15,947
                                    )
                                    
                                    $
                                    (245,174
                                    )
                                    
                                    $
                                    (40,833
                                    )
                                    
                                    $
                                    (311,536
                                    )Income
      taxes
                                    
                                    $
                                    380,521
                                    
                                    
                                    $
                                    337,132
                                    
                                    
                                    $
                                    1,148,197
                                    
                                    
                                    $
                                    893,779Net
      profit (loss)
                                    
                                    $
                                    1,896,017
                                    
                                    
                                    $
                                    1,273,803
                                    
                                    
                                    $
                                    5,744,129
                                    
                                    
                                    $
                                    4,446,129Foreign
      currency translation adjustment
                                    
                                    $
                                    (50,359
                                    )
                                    
                                    $
                                    793,507
                                    
                                    
                                    $
                                    296,009
                                    
                                    
                                    $
                                    1,368,473Comprehensive
      income
                                    
                                    $
                                    1,845,658
                                    
                                    
                                    $
                                    2,067,310
                                    
                                    
                                    $
                                    6,040,138
                                    
                                    
                                    $
                                    5,814,602
  Revenue.Total
revenue were approximately US$9.9 million for the three months ended March 31,
2009 as compared to approximately US$9.2 million for the three months ended
March 31, 2008, an increase of approximately US$0.7 million or
7%.  During the three months ended March 31, 2009, our revenue did not
grow as quickly as originally expected to  “bottleneck” issues with
our manufacturing facility.  Additionally,
certain  adjustments to our product mix took longer than expected to
launch.  Revenue for the nine months ended March 31, 2009 was
approximately US$29.6 million.  This was an increase of roughly US$5.4
million or 22% as compared to total revenue of US$24.2 million for the nine
months ended March 31, 2008. The increase in our revenue was primarily the
result of our recent sales and marketing efforts.  Specifically, our
revenue growth was attributable to our sales channel expansion efforts that
increased our market penetration of our current
products.  Once  our new manufacturing facility commences
operation in May, we expect to completely resolve  the production
“bottleneck” issues.  Additionally, we expect to begin seeing
additional revenue growth due to the previously mentioned improvement to our
product mix.  As a result, management believes that our emphasis on
broadening our product pipeline coupled with our continued sales channel
expansions, along with our enhanced sales and marketing efforts and our
continued expansion of our production facility should continue to yield
increases to our revenue expectations for the remainder of this fiscal year and
beyond.
 
 Cost of
Revenue.Cost of revenue for the three months ended March 31,
2009 was approximately US$5.1 million or 51% of revenue as compared to US$5.1
million or 55% of revenue for the three months ended March 31, 2008. Cost of
revenue for the nine months ended March 31, 2009 was approximately US$14.7
million or 50% of revenue as compared to US$14.0 million or 58% of revenue for
the nine months ended March 31, 2008. Our cost of revenue is primarily composed
of the costs of direct raw materials, labor, depreciation and amortization of
manufacturing equipment and facilities, and other overhead. The increase of the
gross profit margin was mainly due to the optimization of product portfolio with
higher gross profit margin, enhanced cost control through the saving of material
consumption and manufacturing overhead, and production method improvement. We
anticipate further improvements in our cost of revenues as we continue to expand
our capacities and optimization of our production processes and product
mix.
 
 Gross Profit.As a
result of the above,gross profit for the three months ended March 31, 2009 was approximately
49% as compared to 45% for the three months ended March 31, 2008. Gross profit
for the nine months ended March 31, 2009 was approximately 50% as compared to
42% for the nine months ended March 31, 2008.
 
 Operating
Expenses.Selling, general and administrative and research and
development expenses were approximately US$2.6 million for the three months
ended March 31, 2009, as compared to approximately US$2.3 million for the three
months ended March 31, 2008, an increase of approximately US$0.3 million or
13%.  Selling, general and administrative and research and development
expenses were approximately US$7.9 million for the nine months ended March 31,
2009, as compared to approximately US$4.5 million for the nine months ended
March 31, 2008, an increase of approximately US$3.4 million or
76%.  The increase was primarily a result of the implementation of our
recent sales and marketing strategy that increased our sales payrolls and direct
marketing expenses. We anticipate these costs may continue to increase but will
be in line with our revenue growth.
    18
 
 Net Income.Net
income was approximately US$1.9 million for the three months ended March 31,
2009, as compared to net income of approximately US$1.3 million for the three
months ended March 31, 2008, an increase of US$0.6 million or
49%.  Net income was approximately US$5.7 million for the nine months
ended March 31, 2009, as compared to net income of approximately US$4.4 million
for the six months ended March 31, 2008, an increase of US$1.3 million or
29%.  The increase in our net income was primarily the result of
increases in our revenue along with improved product margins.
 
 Foreign Currency Translation
Adjustment.Our reporting currency is the US
dollar.  Our local currency, Renminbi (RMB), is our 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.  Translation adjustments resulting from this
process are included in accumulated other comprehensive income in the statement
of shareholders’ equity.  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.
 
 Currency
translation adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and amounted to US$ 296,009 as of March 31, 2009.  The balance sheet
amounts with the exception of equity at March 31, 2009 were translated at
6.82560 RMB to 1.00 US dollar as compared to 7.00220 RMB to 1.00 US dollar at
March 31, 2008.  The equity accounts were stated at their historical
rate.  The average translation rates for the three months ended March
31, 2009, and March 31, 2008 were RMB6.84659 and RMB7.17568,
respectively.  The average translation rates applied to income
statement accounts for the nine months ended March 31, 2009, and March 31, 2008
were RMB6.82827 and RMB7.39687.
 
 Comprehensive
Income.As a result of the above,the comprehensive
income, which adds the currency adjustment to net income, was US$6.0 million for
the nine months ended March 31, 2009, as compared to the comprehensive income of
US$5.8 million for the nine months ended March 31, 2008, an increase of US$0.2
million.
 
 Liquidity
and Capital Resources
 
 Discussion
of cash flow
 
 For the nine months ended March
      31,2009
                  
                  
                  2008Cash
      flow from operating activities
                  
                  
                  4,403,988
                  
                  
                  
                  1,757,108Cash
      flow from investing activities
                  
                  
                  (5,160,986
                  )
                  
                  
                  (1,063,184
                  )Cash
      flow from financing activities
                  
                  
                  (615,312
                  )
                  
                  
                  11,620,606
 
 Operating
activities
 
 As of
March 31, 2009, we had working capital totaling approximately US$18.2 million,
including cash and cash equivalents of US10.7 million.  On January 16, 2008
and January 25, 2008, we completed private financings totaling $15,225,000, with
27 accredited investors (the “January 2008 Financing”). The net proceeds from the January 2008 Financing were
approximately $13.7 million.
    19
 
 Net cash
generated from operating activities was US$4.4 million for the nine months ended
March 31, 2009 as compared to US$1.8 million for the same period of 2008. The
increase of cash generated from operating activities during the nine months
ended March 31, 2009 was primarily the result of revenue growth that brought a
significant increase in net income.
 
 Investing
activities
 
 Net cash
used in investing activities for the nine months ended March 31, 2009 and 2008
totaled US$5.2 million and US$1.1 million respectively and related to the
acquisition of intangible drug, and property and equipment. The increase of cash
used in investing activities during the nine months ended March 31, 2009 was
mainly due to our increased efforts in new drugs development. Additionally,
during the three months ended March 2009, we invested $2.7 million in theconstruction of our new
plant.
 
 
 Financing
activities
 
 Net cash
used in financing activities for the nine months ended March 31, 2009 totaled
US$0.6 million and mainly related to the repayment of long-term bank loans and
stock bought back. Net cash generated from financing activities for the nine
months ended March 31, 2008 was US$11.6 million and mainly related to the
proceeds from capital contribution.
 
 Borrowings
and Credit Facilities
 
 The bank
borrowing balance equals to the credit facilities as of March 31, 2009. The
short-term bank borrowings outstanding as of March 31, 2009 and 2008 were US$1.4
million and US$1.4 million which born an average interest rate of 7.56% and
7.88% per annum, respectively, And it was adjusted quarterly according to the
loan rate of the people’s bank of china. These loans are borrowed from various
financial institutions and represent the maximum amount of each facility. These
loans do not contain any financial covenants or restrictions. The borrowings
have one year terms and expire at various times throughout the year. These
facilities contain no specific renewal terms. The short-term bank borrowings of
US$1.4 million as of March 31, 2009 and as of March 31, 2008 were secured by the
property and equipment of Chengdu Tianyin.
 
 Stock
Repurchase Program
  On
October 27, 2008, the Board of Directors authorized the Company to repurchase up
to US$3.0 million of its common stock from time to time in the open-market or
through privately negotiated transactions. The Company's original announcement
stated that the buyback would be conducted through January 2009, but it shall be
conducted through June 30, 2009.
   On
January 30, 2009, we announced to begin the initial purchase of shares under its
previously announced stock repurchase program. These shares will be retired to
the treasury while reducing the number of outstanding shares of its common stock
or sold out wholly or partially when market turns better. The initial share
buyback illustrate our confidence in the long-term growth of the company and our
commitment to our shareholders and we have made significant progress toward our
new production facility.
   As of
March 31, 2009, the Company has approximately 16.0 million shares of common
stock outstanding and approximately 2.5 million shares are in the public float
as of today and totaled 79,285 shares have been bought back at prevailing market
prices and the repurchase activities are still continuing. With US$10.7 million
in net cash and equivalents on March 31, 2009 and positive cash flow, we believe
the Company is adequately funded to meet all of the working capital and capital
expenditure plans for 2009.
     20
   Cash
Dividend
  On March
26, we announced that the Board of Directors declared an annual cash dividend of
$0.10 per common share that will be paid quarterly. The initial dividend of
$.025 will be paid to common shareholders of record on April 30, 2009, with the
actual distribution occurring on or about June 10, 2009. The cash dividend will
be paid solely to common stockholders and will not be paid on shares owned by
management, advisors or other inside shareholders, all of whom have agreed to
waive receipt of the dividend.  The majority of the Company's Series A
Preferred Shareholders have approved the cash dividend as of April
14.
  Off-Balance
Sheet Arrangements
  We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.
 
 Critical
Accounting Policies and Estimates
 
 Please
refer to “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” in Tianyin 2009 10-K for disclosures regarding Tianyin’s
critical accounting policies and estimates. The interim financial statements
follow the same accounting policies and methods of computations as those for the
year ended June 30, 2008.  There were no new accounting policies and
estimates during the period ended March 31, 2009 which affected the
Company.
  Item
3. Quantitative and Qualitative
Disclosure About Market Risk
  Not
applicable
          21
   Item 4T.
CONTROLS AND PROCEDURES
 (a)
              Evaluation of
      disclosure controls and
procedures
 
  We
maintain disclosure controls and procedures designed to provide reasonable
assurance that material information required to be disclosed by us in the
reports we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and that the information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
We performed an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this report.
Based on this evaluation, our Chief Executive Officer and our Acting Chief
Financial Officer have concluded that our disclosure controls and procedures are
effective in ensuring that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified by the Securities and
Exchange Commission, and are effective in providing reasonable assurance that
information required to be disclosed by the Company in such reports is
accumulated and communicated to the Company’s management, including its Chief
Executive Officer and Acting Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.
  We do not
expect that our disclosure controls and procedures will prevent all errors and
all instances of fraud. Disclosure controls and procedures, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the disclosure controls and procedures are met. Further,
the design of disclosure controls and procedures must reflect the fact that
there are resource constraints, and the benefits must be considered relative to
their costs. Because of the inherent limitations in all disclosure controls and
procedures, no evaluation of disclosure controls and procedures can provide
absolute assurance that we have detected all our control deficiencies and
instances of fraud, if any. The design of disclosure controls and procedures
also is based partly on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future
conditions.
 
 (b)
              Changes in internal
      control over financial
reporting
 
 In
our Management’s Report on Internal Control Over Financial Reporting included in
our Form 10-K for the year ended June 30, 2008, management concluded that our
internal control over financial reporting was effective. Management did
however  identify a significant deficiency as of June 30, 2008,
as discussed below. A significant deficiency is a deficiency, or a
combination of deficiencies, that is less severe than a material weakness, yet
important enough to merit attention by those responsible for oversight of the
registrant’s financial reporting.
 
 Currently
we do not have sufficient in-house expertise in US GAAP
reporting.  Instead, we rely very much on the expertise and knowledge
of external financial advisors in US GAAP conversion.  External
financial advisors have helped prepare and review the consolidated financial
statements.  Although we have not identified any material errors with
our financial reporting or any material weaknesses with our internal controls,
no assurances can be given that there are no such material errors or weaknesses
existing.  To remediate this situation, we are seeking to recruit
experienced professionals to augment and upgrade our financial staff to address
issues of timeliness and completeness in US GAAP financial
reporting.  In addition, we do not believe we have sufficient
documentation with our existing financial processes, risk assessment and
internal controls.  We plan to work closely with external financial
advisors to document the existing financial processes, risk assessment and
internal controls systematically.
 
 We
believe that the remediation measures we are taking, if effectively implemented
and maintained, will remediate the significant deficiency discussed
above.
 
 Except as
described above, there have been no changes in our internal controls over
financial reporting that occurred during our last fiscal quarter to which this
Quarterly Report on Form 10-Q relates that have materially affected, or are
reasonably likely to materially affect our internal controls over financial
reporting.
 
   22
  PART II - OTHER
INFORMATION
  
  ITEM
1.                      
Legal Proceedings
 
 From time
to time, we may be involved in litigation relating to claims arising out of our
operations in the normal course of business.  We are not aware of any
pending or threatened legal proceeding that, if determined in a manner adverse
to us, could have a material adverse effect on our business and
operations.
 
 Item
1A.                     
Risk Factors
 
 Not
applicable.
 
 ITEM
2.                     
Unregistered Sales of Equity Securities and Use of Proceeds
 
 (a)
              On
      March 31, 2009, we issued 216,610shares of common stock to the investors
      of our 2009 financings as payment of the quarterly dividend per the terms
      of the Certificate of Designation of the Relative Rights and Preferences
      of the Series A Convertible Preferred Stock.  The dividend shares
      were issued to these investors pursuant to the exemption from registration
      provided by Section 4(2) of the Securities Act for issuances not involving
      any public offering.
  (b)
                Not
      applicable.
  (c)
                During
      the quarter ended March 31, 2009, we repurchased 79,285 shares at an
      aggregate cost of $102,518.
  Issuer
      Purchases of Equity Securities (1)Period
                          (a)
                            Total
      number of shares (or units) purchased
                          (b)
                            Average
      price paid per share (or unit)
                          (c
      )
                            Total
      number of shares (or units) purchased as part of publicly announced plans
      or programs
                          (d)
                            Maximum
      number (or approximate dollar value) of shares (or units) that may yet be
      purchased under the plans or programsJanuary
      1, 2009—January 31, 2009
                          11,400
                          1.34
                          11,400
                          2,988,600February
      1, 2009—February 28,2009
                          47,285
                          1.32
                          47,285
                          2,941,315March
      1, 2009—March 31, 2009
                          20,600
                          1.20
                          20,600
                          2,920,715Total
                          79,285
                          
                          79,285
                          2,920,715
 
 (1)
                On
      October 27, 2008, the board of directors approved the stock repurchase
      program and authorized the repurchase of up to three million shares of our
      common stock on the open market or through privately negotiated
      transactions. On January 30, 2009, we announced that we began the initial
      purchase of shares under this plan.  Although we originally
      announced that the buyback would be conducted through January 2009, we are
      able to conduct it through June 30, 2009, although the board reserved the
      right to terminate the buyback prior thereto or prior to its repurchase of
      all three million shares.
 ITEM
3.                    
Defaults upon Senior Securities
 
 (a)
                Not
      Applicable.
  (b)
              Not
      Applicable.
  ITEM
4.                   
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  In April
2009,  a majority of our Preferred shareholders approved a cash dividend of
$0.10 per common share that will be paid quarterly to our common stock
shareholders during the next twelve month period. The initial dividend of $.025
will be paid to shareholders of record on April 30, 2009, with the actual
distribution occurring on June 10, 2009.
   23
  ITEM
5.               
OTHER INFORMATION
 
 (a)           Not
Applicable
 
 ITEM
6.               
EXHIBITS
 
 (a) The
following exhibits are filed as part of this report.
  Exhibit
      No.
                          Document3.1
                          Articles
      of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 to
      our Annual Report on Form 10-K filed on September 29,
      2008).3.2
                          Bylaws
      (Incorporated by reference to Exhibit 3.2 to our Annual Report on Form
      10-K filed on September 29, 2008).31.1
                          Certification  of  Chief  Executive  Officer  required  by
      Rule 13a-14/15d-14(a) under the Exchange Act31.2
                          Certification
      of  Acting
      Chief Accounting Officer required by Rule 13a-14/15d-14(a) under the
      Exchange Act32.1
                          Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
                          Certification
      of Acting Chief Accounting Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
 
 
 
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
 
 
 Date:    May
15, 2009
 
 By:
TIANYIN PHARMACEUTICAL CO., INC.
 
 
 /s/  Dr.
Guoqing Jiang
 Name:  Dr.
Guoqing Jiang
 Title:   Chairman,
Chief Executive Officer and Acting Chief Accounting Officer
  24