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 December 31, 2008






[ 
]           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
February  12, 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 16,064,428and 8,744,375respectively are
currently issued and outstanding.














TABLE
OF CONTENTS





PagePART
      I - FINANCIAL INFORMATIONItem
      1.  Financial StatementsConsolidated
      Balance Sheet at
                December
      31, 2008 (unaudited) and June 30, 2007
              2Unaudited
      Consolidated Statements of
                Operations
      for the three and six months ended
                December
      31, 2008 and 2007
              3Unaudited
      Consolidated Statements of Cash Flows
                for
      the six months ended December 31, 2008
              4Unaudited
      notes to Consolidated Financial Statements
              5Item
      2.  Management’s Discussion and Analysis or Plan of
      Operation
              12Item 3.Quantitative and
      Qualitative Disclosure About Market Risk
              16Item
      4T.  Controls and Procedures
              18PART
      II – OTHER INFORMATIONItem
      1.  Legal Proceedings
              19Item
      2.  Unregistered Sales of Equity Securities And Use Of
      Proceeds
              19Item
      3.  Defaults Upon Senior Securities
              19Item
      4.  Submission Of Matters To A Vote Of Security
      Holders
              19Item
      5.  Other Information
              20Item
      6.  Exhibits
              20












2








PART
I- FINANCIAL INFORMATION





TIANYIN
PHARMACEUTICAL CO. INC.








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 December 31, 2008, and the related consolidated statements
of operations and comprehensive income, and cash flows for the six months ended
December 31, 2008 and 2007. These consolidated financial statements are the
responsibility of our'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


February
2, 2009









3






Tianyin
Pharmaceutical Co., Inc.


Consolidated
Balance Sheets


(Unaudited)




December
      31,
                    
                    
                    June
      30,2008
                    
                    
                    2008(Unaudited)Assets:Current
      assets:Cash and cash
      equivalents
                    
                    $
                    12,673,338
                    
                    
                    $
                    12,057,150Accounts receivable, net of
      allowance for doubtful accounts of $90,558and $90,064 at
      December 31, 2008 and June 30, 2008, respectively
                    
                    
                    4,351,959
                    
                    
                    
                    4,460,406Inventory
                    
                    
                    4,695,104
                    
                    
                    
                    3,555,691Advance payments
                    
                    
                    2,159,424
                    
                    
                    
                    -Other receivables
                    
                    
                    436,520
                    
                    
                    
                    371,815Other current
    assets
                    
                    
                    20,000
                    
                    
                    
                    247,139Total current
    assets:
                    
                    
                    24,336,345
                    
                    
                    
                    20,692,201Property
      and equipment, net:
                    
                    
                    6,204,568
                    
                    
                    
                    5,758,966Intangibles,
      net:
                    
                    
                    10,414,298
                    
                    
                    
                    10,307,754Total assets:
                    
                    $
                    40,955,211
                    
                    
                    $
                    36,758,921Liabilities
      and stockholders’ equity:Current
      liabilities:Accounts payable and accrued
      expenses
                    
                    $
                    1,224,733
                    
                    
                    $
                    1,337,682Short-term bank
    loans
                    
                    
                    1,400,985
                    
                    
                    
                    1,393,345VAT taxes payable
                    
                    
                    350,143
                    
                    
                    
                    277,090Income taxes
    payable
                    
                    
                    409,483
                    
                    
                    
                    341,214Payroll taxes
    payable
                    
                    
                    4,385
                    
                    
                    
                    39,939Dividends payable
                    
                    
                    -
                    
                    
                    
                    378,545Other current
      liabilities
                    
                    
                    144,250
                    
                    
                    
                    142,733Total current
      liabilities:
                    
                    
                    3,533,979
                    
                    
                    
                    3,910,548Total
liabilities:
                    
                    
                    3,533,979
                    
                    
                    
                    3,910,548Stockholders’
      equity:Common stock, $0.001 par value,
      50,000,000 shares authorized,15,691,495 and
      14,738,450 shares issued and outstanding atDecember 31,
      2008 and June 30, 2008
                    
                    
                    15,692
                    
                    
                    
                    14,739Common stock dividend
      distributable
                    
                    
                    224
                    
                    
                    
                    -Series A convertible preferred
      stock, $0.001 par value, 8,893,750 and9,384,375
      shares issued and outstanding at December 31, 2008and June 30,
      2008
                    
                    
                    8,894
                    
                    
                    
                    9,384Additional paid-in
      capital
                    
                    
                    19,099,158
                    
                    
                    
                    18,002,439Statutory reserve
                    
                    
                    1,815,823
                    
                    
                    
                    1,380,806Retained earnings
                    
                    
                    13,657,200
                    
                    
                    
                    10,963,131Accumulated other comprehensive
      income
                    
                    
                    2,824,241
                    
                    
                    
                    2,477,874Total stockholders’
      equity:
                    
                    
                    37,421,232
                    
                    
                    
                    32,848,373Total liabilities and
      stockholders' equity:
                    
                    $
                    40,955,211
                    
                    
                    $
                    36,758,921


The accompanying notes are an integral part of these
consolidated financial statements.






4




Tianyin
Pharmaceutical Co., Inc.


Consolidated
Statements of Operations and Comprehensive Income


(Unaudited)






For
      the Three Months Ended
                
                
                For
      the Six Months EndedDecember 31,
                
                
                December 31,2008
                
                
                2007
                
                
                2008
                
                
                2007Sales:
                
                $
                10,101,869
                
                
                $
                7,749,199
                
                
                $
                19,663,809
                
                
                $
                14,918,692Cost
      of goods sold:
                
                
                4,944,980
                
                
                
                4,567,429
                
                
                
                9,627,603
                
                
                
                8,861,258Gross
      profit:
                
                
                5,156,889
                
                
                
                3,181,770
                
                
                
                10,036,206
                
                
                
                6,057,434Operating
      expenses:Selling, general and
      administrative
                
                
                2,595,311
                
                
                
                1,172,062
                
                
                
                5,228,672
                
                
                
                2,200,541Research and
      development
                
                
                84,220
                
                
                
                34,106
                
                
                
                166,858
                
                
                
                61,558Total operating
      expenses:
                
                
                2,679,531
                
                
                
                1,206,168
                
                
                
                5,395,530
                
                
                
                2,262,099Income
      from operations:
                
                
                2,477,358
                
                
                
                1,975,602
                
                
                
                4,640,676
                
                
                
                3,795,335Other
      income (expenses):Other income
                
                
                15,564
                
                
                
                -
                
                
                
                29,808
                
                
                
                -Interest expense
                
                
                (26,975
                )
                
                
                (31,659
                )
                
                
                (54,695
                )
                
                
                (66,362
                )Total other income
      (expenses):
                
                
                (11,411
                )
                
                
                (31,659
                )
                
                
                (24,887
                )
                
                
                (66,362
                )Income
      before provision for income tax:
                
                
                2,465,947
                
                
                
                1,943,943
                
                
                
                4,615,789
                
                
                
                3,728,973Provision
      for income tax:
                
                
                408,827
                
                
                
                291,572
                
                
                
                767,677
                
                
                
                556,646Net
      income:
                
                
                2,057,120
                
                
                
                1,652,371
                
                
                
                3,848,112
                
                
                
                3,172,327Other
      comprehensive income:Foreign currency translation
      adjustment
                
                
                256,933
                
                
                
                391,115
                
                
                
                346,367
                
                
                
                574,966Comprehensive
      income:
                
                $
                2,314,053
                
                
                $
                2,043,486
                
                
                $
                4,194,479
                
                
                $
                3,747,293Basic
      earnings per share:
                
                $
                0.11
                
                
                $
                0.13
                
                
                $
                0.20
                
                
                $
                0.25Diluted
      earnings per share:
                
                $
                0.13
                
                
                $
                0.13
                
                
                $
                0.16
                
                
                $
                0.25Weighted
      average number of common shares outstanding:Basic
                
                
                15,691,495
                
                
                
                12,790,800
                
                
                
                15,637,623
                
                
                
                12,790,800Diluted
                
                
                15,691,495
                
                
                
                12,790,800
                
                
                
                24,697,018
                
                
                
                12,790,800


The accompanying notes are an
integral part of these consolidated financial statements.






5


Tianyin Pharmaceutical Co., Inc.


Consolidated
Statements of Cash Flows


(Unaudited)


For
      the Six Months EndedDecember 31,2008
                    
                    
                    2007Cash
      flows from operating activities:Net
      Income
                    
                    $
                    3,848,112
                    
                    
                    $
                    3,172,327Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Depreciation and
      amortization
                    
                    
                    237,619
                    
                    
                    
                    164,758Changes in current assets and
      current liabilities:Accounts
      receivable
                    
                    
                    132,660
                    
                    
                    
                    (6,899
                    )Inventory
                    
                    
                    (1,117,856
                    )
                    
                    
                    306,194Other
      receivables
                    
                    
                    608,042
                    
                    
                    
                    (624,610
                    )Other
      current assets
                    
                    
                    227,140
                    
                    
                    
                    -Accounts
      payable and accrued expenses
                    
                    
                    (119,588
                    )
                    
                    
                    (252,002
                    )VAT
      taxes payable
                    
                    
                    71,402
                    
                    
                    
                    (16,051
                    )Income
      taxes payable
                    
                    
                    66,275
                    
                    
                    
                    (20,953
                    )Payroll
      taxes payable
                    
                    
                    (35,705
                    )
                    
                    
                    (1,707
                    )Other
      current liabilities
                    
                    
                    732
                    
                    
                    
                    66,426Total
adjustments:
                    
                    
                    70,721
                    
                    
                    
                    (384,844
                    )Net cash provided by operating
      activities:
                    
                    
                    3,918,833
                    
                    
                    
                    2,787,483Cash
      flows from investing activities:Additions to property and
      equipment
                    
                    
                    (570,491
                    )
                    
                    
                    (133,591
                    )Additions to
      intangibles
                    
                    
                    (130,323
                    )
                    
                    
                    -Advance payments for research and
      development
                    
                    
                    (2,155,450
                    )
                    
                    
                    (1,040,484
                    )Net cash used in investing
      activities:
                    
                    
                    (2,856,264
                    )
                    
                    
                    (1,174,075
                    )Cash
      flows from financing activities:Repayment of short-term bank
      loans
                    
                    
                    -
                    
                    
                    
                    (801,540
                    )Repayment of long-term bank
      loans
                    
                    
                    (512,505
                    )
                    
                    
                    (121,569
                    )Net cash used in financing
      activities:
                    
                    
                    (512,505
                    )
                    
                    
                    (923,109
                    )Effect
      of foreign currency translation on cash:
                    
                    
                    66,124
                    
                    
                    
                    44,728Net
      increase in cash and cash equivalents:
                    
                    
                    616,188
                    
                    
                    
                    735,027Cash
      and cash equivalents – beginning:
                    
                    
                    12,057,150
                    
                    
                    
                    624,390Cash
      and cash equivalents – ending:
                    
                    $
                    12,673,338
                    
                    
                    $
                    1,359,417


The accompanying notes are an
integral part of these consolidated financial
statements.






6




Tianyin
Pharmaceutical Co., Inc.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007








NOTE
1 – ORAGANIZATION 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, was 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. Our primary business is to research, manufacture, and sell
pharmaceutical products.





On
January 16, 2008, Viscorp Inc. 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 our corporate 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 weTianyin 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.,
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 common stock began trading on the NYSE Alterntext
(formerly the American Stock Exchange) under the ticker “TPI” at market open on
Wednesday, October 1, 2008.




NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





BASIS OF PRESENTATION





Our
Consolidated Financial Statements include the accounts of our direct
wholly-owned subsidiaries and of our 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 generally accepted
accounting principles (GAAP) applicable to interim financial information and
with the requirements of Form 10-Q and Rule 10-01 of Regulation S-X of the
Securities and Exchange Commission. 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






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 STATEMENTS





These
interim financial statements should be read in conjunction with the audited
financial statements for the year ended June 30, 2008 as are included in our
Annual Report on Form 10-K, 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





We
present 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 EndedDecember 31,2008
                
                
                2007Net
      income (numerator for diluted income per share)
                
                $
                2,057,120
                
                
                $
                1,652,371Less:
      Dividend attributable to preferred stockholders
                
                
                357,694
                
                
                
                -Net
      income attributable to common stock holders(numerator
      for basic income per share)
                
                
                1,699,426
                
                
                
                1,652,371Weighted
      average common shares(denominator
      for basic income per share)
                
                
                15,691,495
                
                
                
                12,790,800Effect
      of diluted securities:
                
                
                -
                
                
                
                -Weighted
      average common shares(denominator
      for diluted income per share)
                
                
                15,691,495
                
                
                
                12,790,800Basic
      net income per share
                
                $
                0.11
                
                
                $
                0.13Diluted
      net income per share
                
                $
                0.13
                
                
                $
                0.13








8





NOTE
3 – EARNINGS PER SHARE (continued)





For
      the Six Months EndedDecember 31,2008
                
                
                2007Net
      income (numerator for diluted income per share)
                
                $
                3,848,112
                
                
                $
                3,172,327Less:
      Dividend attributable to preferred stockholders
                
                
                719,025
                
                
                
                -Net
      income attributable to common stock holders(numerator
      for basic income per share)
                
                
                3,129,087
                
                
                
                3,172,327Weighted
      average common shares(denominator
      for basic income per share)
                
                
                15,637,623
                
                
                
                12,790,800Effect
      of diluted securities:Convertible
      preferred stock
                
                
                8,947,622
                
                
                
                -Warrants
                
                
                111,773
                
                
                
                -Weighted
      average common shares(denominator
      for diluted income per share)
                
                
                24,697,018
                
                
                
                12,790,800Basic
      net income per share
                
                $
                0.20
                
                
                $
                0.25Diluted
      net income per share
                
                $
                0.16
                
                
                $
                0.25





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 $90,558 and $90,064 at December 31, 2008 and June 30,
2008.





NOTE
5– INVENTORY





Inventory
at December 31, 2008 and June 30, 2008 consists of the following:


December 31, 2008
                
                
                June 30, 2008Raw
      materials
                
                $
                1,124,024
                
                
                $
                584,003Packaging
      supplies
                
                
                1,001,882
                
                
                
                1,327,283Work
      in process
                
                
                1,706,811
                
                
                
                647,607Finished
      goods
                
                
                862,387
                
                
                
                996,798Total
                
                $
                4,695,104
                
                
                $
                3,555,691





NOTE
6– ADVANCE PAYMENTS





We make
advances to certain institutes for medical research and development which
amounted to $2,159,424 and $-0- as of December 31, 2008 and June 30, 2008,
respectively.






9






NOTE
7– PROPERTY AND EQUIPMENT





Property
and equipment at December 31, 2008 and June 30, 2008 consists of the
following:


December 31, 2008
                
                
                June 30, 2008Building
                
                $
                5,182,791
                
                
                $
                5,154,528Manufacturing
      equipment
                
                
                1,202,467
                
                
                
                1,138,133Office
      equipment and furniture
                
                
                48,844
                
                
                
                48,577Vehicles
                
                
                397,882
                
                
                
                395,713Subtotal
                
                
                6,831,984
                
                
                
                6,736,951Less:
      Accumulated depreciation
                
                
                1,947,716
                
                
                
                1,780,4354,884,268
                
                
                
                4,956,516Add:
      Construction in progress
                
                
                1,320,300
                
                
                
                802,450Total
                
                $
                6,204,568
                
                
                $
                5,758,966





Depreciation
expense for the three months ended December 31, 2008 and 2007 was $78,009 and
76,606, for the six months ended December 31, 2008 and 2007 was $157,229 and
$151,533, respectively.





NOTE
8– INTANGIBLE ASSETS





Intangible
assets at December 31, 2008 and June 30, 2008 were as following:





December 31, 2008
                  
                  
                  June 30, 2008Rights
      to use land
                  
                  $
                  1,452,330
                  
                  
                  $
                  1,444,410Approved
      drugs
                  
                  
                  9,282,824
                  
                  
                  
                  9,102,351Intangible
      assets
                  
                  
                  10,735,154
                  
                  
                  
                  10,546,761Less:
      accumulated amortization
                  
                  
                  320,856
                  
                  
                  
                  239,007Total
                  
                  $
                  10,414,298
                  
                  
                  $
                  10,307,754


Amortization
expense for the three months ended December 31, 2008 and 2007 was $40,203 and
$6,687, and for the six months ended December 31, 2008 and 2007 amounted to
$80,390 and $13,225, respectively.





NOTE
9 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES





Accounts
payable and accrued expenses consist of the following:





December 31, 2008
                
                
                June 30, 2008Accounts
      payable
                
                $
                1,164,480
                
                
                $
                1,237,682Accrued
      expenses
                
                
                60,253
                
                
                
                100,000Total
                
                $
                1,224,733
                
                
                $
                1,337,682





The
carrying value of accounts payable and accrued expenses approximates fair value
due to the short-term nature of these obligations.







10






NOTE
10 – SHORT-TERM BANK LOANS


Short-term
bank loans consist of the following:





December 31,
              
              
              June 30,2008
              
              
              2008On
      July 11, 2007, we obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by July 10, 2008. The
      interestis
      to be calculated using an annual fixed interest rate of 8.541% and
      paidmonthly.
      The loan is secured by our property and equipment.
              
              $
              -
              
              
              $
              145,900On
      July 16, 2007, we obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by July 15, 2008. The
      interestis
      to be calculated using an annual fixed interest rate of 8.541% and
      paidmonthly.
      The loan is secured by our property and equipment.
              
              $
              -
              
              
              $
              145,900On
      July 25, 2007, we obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by July 24, 2008. The
      interestis
      to be calculated using an annual fixed interest rate of 8.892% and
      paidmonthly.
      The loan is secured by our property and equipment.
              
              $
              -
              
              
              $
              226,145On
      June 23, 2008, we obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by June 23, 2009. The
      interestis
      to be calculated using an annual fixed interest rate of 7.881% and
      paidmonthly.
      The loan is secured by our property and equipment.
              
              $
              880,200
              
              
              $
              875,400On
      June 23, 2008, we obtained a loan from Agricultural Bank
ofChina,
      of which the principal is to be paid in full by June 23, 2009. The
      interestis
      to be calculated using an annual fixed interest rate of 7.881% and
      paidmonthly.
      The loan is secured by our property and equipment.
              
              $
              520,785
              
              
              $
              -Total
      short-term bank loans
              
              $
              1,400,985
              
              
              $
              1,393,345





NOTE
11 – INCOME TAXES





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 September 30, 2008 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, we do not believe the new CIT law will affect the preferential
tax treatments enjoyed by them. Since we intend to reinvest our 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 December 31,
2008, we have not recorded any withholding tax on the retained earnings of its
foreign invested enterprises in China.








11






NOTE
11 – INCOME TAXES (continued)





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. We do not recognize any benefits in the financial statements for the
six months ended December 31, 2008.





NOTE
12 – 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”). 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.







12






NOTE
12 – STOCKHOLDERS’ EQUITY AND RELATED FINANCING AGREEMENTS
(continued)





·
            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.





On May 9,
2008, Chengdu Tianyin issued 20,000 shares of Common stock to employees. We
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, we issued 236,488 shares of common stock, representing the fiscal year
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, we recorded $361,331 as dividends to the investors of the
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 our Board and we decided issue common stock to those
investors in lieu of cash.





On
October 30, 2008, we issued 225,932 shares of common stock, representing the
fiscal year 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, we recorded $357,694 as dividends to the investors of our
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 our Board and we decided issue common stock to those
investors in lieu of cash.





NOTE
13 – EMPLOYEE WELFARE PLAN





We have
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 $60,412 and
$53,907 for the six months ended December 31, 2008 and 2007,
respectively.









13






NOTE
14– 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 our registered
capital;





(iii)
            Allocations
      of 5-10% of income after tax, as determined under PRC accounting rules and
      regulations, to our “Statutory common welfare fund”, which is established
      for the purpose of providing employee facilities and other collective
      benefits to our employees;





Allocations
to the discretionary surplus reserve were approved in the shareholders’ general
meeting. We provide a reserve for the welfare fund $435,017 and $317,233 for the
six months ended December 31, 2008 and 2007, respectively.





NOTE
15 – RISK FACTORS





The six
months ended December 31, 2008, three major vendors accounted for approximately
38% of our raw materials, while the six months ended December 31, 2007, three
major vendors accounted for approximately 32% of our raw materials. Total
purchases from these vendors were $4,337,100 and $3,843,590 for the six months
ended December 31, 2008 and 2007, respectively.





Five
major customers accounted for 18% the net revenue for the six months ended
December 31, 2008 and three major customers accounted for 33% the net revenue
for the six months ended December 31, 2007. Total sales to these customers were
$3,534,956 and $4,916,866, for the six months ended December 31, 2008 and 2007,
respectively.





Our
operations are carried out in the PRC. Accordingly, our 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. Our business may be influenced by change 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
16 - CONCENTRATIONS OF CREDIT RISK





Financial
instruments which potentially subject us to credit risk consist principally of
cash on deposit with financial institutions. Management believes that the
financial institutions that hold our cash and cash equivalents are financially
sound and minimal credit risk exists with respect to these
investments.






14






NOTE
17 – SUPPLEMENTAL CASH FLOW DISCLOSURES





The
following is supplemental information relating to the consolidated statements of
cash flows:





Six Months Ended December
    31,2008
                
                
                2007Cash
      paid for interest
                
                $
                54,695
                
                
                $
                66,362Cash
      paid for income taxes
                
                $
                359,609
                
                
                $
                577,599





NOTE
18 – 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, 2008 and January 25, 2008. See Note
12.





NOTE
19 - SUBSEQUENT EVENTS





In
October 2008, our Board of Directors authorized a stock repurchase program.  Under the stockrepurchase program, we may purchase outstanding shares of our
common stock on the open market at such times and prices determined in the sole
discretion of management. From January 1, 2009 to January 31, 2009, we
repurchased an aggregate of 11,400 shares for a total of $15,327.  From
February 1, 2009 through the date of this Report, we repurchased an aggregate of
32,560 shares for a total of $42,517.45.



























15






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 six months ended December 31,
2008 and 2007 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 22 products which are pending regulatory approvals with the China
State Food and Drug Administration.  It is common in China that drug
applications are denied by SFDA because most of them are just
generic.





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.








Development
and growth strategy





The
cornerstone of our business development strategy relies upon our
partnership-based research and development efforts. These
efforts 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 half of our fiscal
2009 year, we continued this strategy and recognized increased market
penetration and revenue growth in 2008.  Management plans to continue
our emphasis on expanded and enhanced marketing and sales in our 2009 fiscal
year.  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 growth strategy, we will continue our partnership-based
research and development efforts to further commercialize and broaden our
product pipeline. We currently have 47 drug candidates under the Chinese State
Food and Drug Administration (“SFDA”) review and are planning a series of market
launches in the next few years from our product pipeline. In the six months of
our 2009 fiscal year, we have received approval from the SFDA to produce Laonian
Kechuan Tablets (SFDA approval number H2008S02059), Fuke Zhidai Tablets (SFDA
approval number Z20083375) and Tongbianling Capsule (SFDA approval number
Z20083424).




Laonian
Kechuan Tablets are a drug that is 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 within the present marketplace.




Fuke
Zhidai Tablets is a drug that is 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.






16






Tongbianling
Capsule is a generic Traditional Chinese Medince (“TCM’).  It is noted
for its highly effective treatment in alleviating one-time abdominal
distention constipation, bedridden constipation, and elderly chronic
constipation.




An
important aspect to supporting our development strategy is recognizing the
importance of meeting the demand of our products and increasing our ability to
produce and supply our sales infrastructure.  As part of the use of
proceeds from our recent private placement financings, 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 three times with our 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 Areas (ÒGFAÓ) is approximately ten thousand square meters with state-
of-the-art equipment. Construction started in July 2008 and operations are
planned to begin in January 2009. The new capacity is expected to meet the
increasing market demand of our current products and support our new product
launches from our product pipeline.


Management
also plans to pursue strategic acquisitions and licensing opportunities as part
of our growth strategy in 2009. 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.  Additionally, we believe that our growth and
overall market coverage could be approved by certain strategic acquisitions or
licensing opportunities.








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.  We further believe the Pharmaceutical
Industry could also be a beneficiary of revenue growth as a result of expanded
social reform by the recently announced government stimulus plan and that our
growth could also be strengthened by strategic acquisitions and/or further
licensing opportunities.





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.









17




Competitive
environment





The
market for pharmaceutical products is 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.





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.





Comparison of results for the six
months ended December 31, 2008 and 2007,the three months ended December 31,
2008 and 2007





Three
      Months Ended
                      December
      31
                    
                    
                    Six
      Months Ended
                      December
      312008
                    
                    
                    2007
                    
                    
                    2008
                    
                    
                    2007Revenue
                    
                    $
                    10,101,869
                    
                    
                    $
                    7,749,199
                    
                    
                    $
                    19,663,809
                    
                    
                    $
                    14,918,692Cost
      of revenue
                    
                    $
                    4,944,980
                    
                    
                    $
                    4,567,429
                    
                    
                    $
                    9,627,603
                    
                    
                    $
                    8,861,258Gross
      profit
                    
                    $
                    5,156,889
                    
                    
                    $
                    3,181,770
                    
                    
                    $
                    10,036,206
                    
                    
                    $
                    6,057,434Operating
      expense
                    
                    $
                    2,595,311
                    
                    
                    $
                    1,172,062
                    
                    
                    $
                    5,228,672
                    
                    
                    $
                    2,200,541Other
      income (expense)
                    
                    $
                    -11,411
                    
                    
                    $
                    -31,659
                    
                    
                    $
                    -24,887
                    
                    
                    $
                    -66,362Income
      taxes
                    
                    $
                    408,827
                    
                    
                    $
                    291,572
                    
                    
                    $
                    767,677
                    
                    
                    $
                    556,646Net
      profit (loss)
                    
                    $
                    2,057,120
                    
                    
                    $
                    1,652,371
                    
                    
                    $
                    3,848,112
                    
                    
                    $
                    3,172,327Foreign
      currency translation adjustment
                    
                    $
                    256,933
                    
                    
                    $
                    391,115
                    
                    
                    $
                    346,367
                    
                    
                    $
                    574,966Comprehensive
      income
                    
                    $
                    2,314,053
                    
                    
                    $
                    2,043,486
                    
                    
                    $
                    4,194,479
                    
                    
                    $
                    3,747,293


Revenue.Total
revenue was approximately US$10.1 million for the three months ended December
31, 2008 as compared to approximately US$7.7 million for the three months ended
December 31, 2007, an increase of approximately US$2.35 million or
30%.  Revenue for the six months ended December 31, 2008 was
approximately US$19.7 million.  This was an increase of roughly US$4.7
million or 32% as compared to total revenue of US$14.9 million for the six
months ended December 31, 2007. The increase in our revenue was materially 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.  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.





Cost of
Revenue.Cost of revenue for the three months ended December
31, 2008 was approximately US$4.9 million or 49% of revenue as compared to
US$4.6 million or 59% of revenue for the three months ended December 31, 2007.
Cost of revenue for the six months ended December 31, 2008 was approximately
US$9.6 million or 49% of revenue as compared to US$8.87 million or 59% of
revenue for the six months ended December 31, 2007.  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 decrease in our costs of revenue was materially attributable
to our increased production of higher margin products supported by costs savings
we realized from improvements that we made in costs controls that reduced both
direct and overhead cost in our manufacturing process.  We anticipate
further improvements in our cost of revenues as we continue to expand our
facilities and realize economies of scale and improve our
processes.








18





Gross profit.  As a result
of the above,gross profit for the three months ended December 31, 2008
was approximately 51% as compared to 41% for the three months ended December 31,
2007.





Operating
Expenses.Selling and general and administrative expenses were
approximately US$2.6 million for the three months ended December 31, 2008, as
compared to approximately US$1.2 million for the three months ended December 31,
2007, an increase of approximately US$1.42 million or 121%.  Selling
and general and administrative expenses were approximately US$5.2 million for
the six months ended December 31, 2008, as compared to approximately US$2.2
million for the six months ended December 31, 2007, an increase of approximately
US$3.03 million or 138%.  The increase was materially a result of the
implementaion 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.





Net income.Net
income was approximately US$2.1 million for the three months ended December 31,
2008, as compared to net income of approximately US$1.7 million for the three
months ended December 31, 2007, an increase of US$0.4 million or
24%.  Net income was approximately US$3.9 million for the six months
ended December 31, 2008, as compared to net income of approximately US$3.2
million for the six months ended December 31, 2007, an increase of US$0.7
million or 21%.  The increase in our net income was materially the
result of increases in our revenue along with improved product margins and
efficiencies partially offset by increases in sales and marketing
costs.





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$ 256,933 as of December 31, 2008.  The balance
sheet amounts with the exception of equity at December 31, 2008 were translated
at 6.81663 RMB to 1.00 US dollar as compared to 7.29395 RMB to 1.00 US dollar at
December 31, 2007.  The equity accounts were stated at their
historical rate.  The average translation rates for the three months
ended December 31, 2008, and December 31, 2007 were RMB6.82786 and RMB7.44345,
respectively.  The average translation rates applied to income
statement accounts for the six months ended December 31, 2008, and December 31,
2007 were RMB6.82920 and RMB7.50626.





Comprehensive
Income.As a result of the above,the comprehensive
income, which adds the currency adjustment to Net Income, was US$4.19 million
for the six months ended December 31, 2008, as compared to the comprehensive
income of US$3.75 million for the six months ended December 31, 2007, an
increase of US$0.44 million.





Liquidity
and Capital Resources





Discussion
of cash flow





For
      the six months ended December 31,2008
                  
                  
                  2007Cash
      flow from operating activities
                  
                  
                  3,918,833
                  
                  
                  
                  2,787,483Cash
      flow from investing activities
                  
                  
                  (2,856,264
                  )
                  
                  
                  (1,174,075
                  )Cash
      flow from financing activities
                  
                  
                  (512,505
                  )
                  
                  
                  (923,109
                  )







19






Operating
activities





As of
December 31, 2008, we had working capital totaling approximately US$20.8
million, including cash and cash equivalents of US12.7 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.





Net cash
generated from operating activities was US$3.9 million for the six months ended
December 31, 2008 as compared to US$2.8 million for the same period of 2007. The
increase of cash generated from operating activities during the six months ended
December 31, 2008 was primarily the result of revenue growth that bring an
increase in net income.





Investing
activities





Net cash
used in investing activities for the six months ended December 31, 2008 and 2007
totaled US$2.9 million and US$1.2 million respectively and related to the
acquisition of intangible drug, and property and equipment. The increase of cash
used in investing activities during the six months ended December 31, 2008 was
mainly due to our increased efforts in new drugs development.





Financing
activities





Net cash
used in financing activities for the six months ended December 31, 2008 totaled
US$0.5 million and mainly related to the repayment of long-term loans. Net cash
used in financing activities for the six months ended December 31, 2007 was
US$0.9 million and mainly related to the repayment of short-term
loans.





Borrowings
and Credit Facilities





The bank
borrowing balance equals to the credit facilities as of December 31, 2008. The
short-term bank borrowings outstanding as of December 31, 2007 and 2008 were
US$1.4 million and US$1.4 million which born an average interest rate of 7.56%
and 7.881% 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 December 31, 2008 and as of December 31, 2007
were secured by the property and equipment of Chengdu Tianyin.





Stock
Repurchase Program




On
October 27, 2008, the Board of Directors authorized us 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. Our 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. The initial share buyback illustrate our confidence in our long-term
growth of  and our commitment to our shareholders and we have made
significant progress toward our new production facility.




As of
December 31, 2008, we have approximately 15.7 million shares of common
stock outstanding and approximately 2.5 million shares are in the public float
as of today. With US$12.7 million in net cash and equivalents on December 31,
2008 and positive cash flow, we believe we are adequately funded to meet all of
the working capital and capital expenditure plans for 2009.








20






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 2008 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 December 31, 2008 which affected
us.




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 the existence of the significant definiciency in our internal control
over financial reporting discussed below, our management, including our Chief
Executive Officer and Acting Chief Financial Officer, concluded that our
disclosure controls and procedures were not effective at the reasonable
assurance level as of the end of the period covered by this report.





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, although it identified
a significant deficiency as of June 30, 2008, 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 December 31,
      2008, we issued 223,558 shares of common stock to the investors of our
      2008 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)
            Not
      Applicable.





ITEM
3. Defaults upon Senior Securities





(a)
            Not
      Applicable.







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





We did
solicit votes from our shareholders during the period covered by this
report.  On October 30, 2008 we mailed out a proxy statement
soliciting votes to re-elect our Board of Directors at our Annual Shareholder
Meeting, which was held on December 9, 2008.  All of our directors
were re-elected; the following shows the voting tabulation for such
election:





Director
      Nominee
            FOR
      (# and %)
            WITHHELD
      (# and %)Dr.
      Guoqing Jiang
            14,701,123
      (95%)
            0Prof.
      Zunjian Zhang, Ph.D
            14,701,123
      (95%)
            0Professor
      Jianping Hou, Ph.D
            14,701,123
      (95%)
            0James
      T. McCubbin
            14,701,123
      (95%)
            0Stewart
      Shiang Lor
            14,701,123
      (95%)
            0










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
      and Acting Chief Accounting Officer  required  by Rule
      13a-14/15d-14(a) under the Exchange Act32.1
                Certification
      of Chief Executive Officer and 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: February
17, 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