- Second Quarter Revenue Increased 69.8% to $7.7 million - Gross
Margins Increased from 37% to 41% - Second Quarter Net Income
Increased 67.5% to $1.7 million - First Six Months Revenues
Increased 82% to $14.9 million and Net Income Increased 65% to $3.2
million for the Same Period - Growth Driven by New Distribution
Partners and Increased Demand for Products CHENGDU, China, Feb. 14
/Xinhua-PRNewswire-FirstCall/ -- Tianyin Pharmaceutical, Inc.,
(OTC:VSCO) (BULLETIN BOARD: VSCO) , a manufacturer and supplier of
modernized traditional Chinese medicine (TCM) based in Chengdu,
China, today announced fiscal results for its second quarter ending
December 31, 2007. Total revenue for the second quarter of 2008
increased 69.8% to approximately $7.7 million compared to
approximately $4.3 million for the second quarter of 2007. Cost of
goods sold for the second quarter of 2008 was approximately $4.6
million, yielding a gross profit of approximately $3.2 million and
gross margins of 41%, compared to approximately $1.6 million in
gross profit at a gross margin of 37.2% during the second quarter
of 2007. Operating income for the second quarter of 2008 totaled
approximately $2 million, representing a 68% increase from the $1.2
million reported for the second quarter of 2007 and was directly
related to the increase in revenues. Operating margins were 25.5%
and 27.1% for the second quarter of 2008 and 2007, respectively.
For the second quarter of 2008, net income was approximately $1.7
million, an increase of 67.5% from $986,317 recorded during the
second quarter of 2007. The Company incurred taxes of $300,000 and
$160,000 for the second quarter of 2008 and 2007, respectively,
which equated to an effective tax rate of 15% and 13.6%. Tianyin
had 14.6 million shares outstanding on February 12, 2008. Tianyin
has experienced significant growth over the previous period due to
their continuous efforts in penetrating the market. The Company
signed six sizable regional distributors who facilitated the reach
of Tianyin's products into previously inaccessible market regions.
Tianyin increased its sales force at the district level and thus
increased its coverage at drug stores, clinics, hospitals and
distributors. The Company also witnessed stronger than expected
demand for leading products including Qinrejiedu Oral Liquid and
Ginkgo Mihuan. Television-based marketing for Arphshuangxing also
contributed to the increased demand by generating additional sales
in the regions where campaigns aired. "We are very pleased with our
performance for both the second quarter and year to date. 2008 has
proven to be an inflection point for our Company after we entered
the U.S. capital markets with a $15 million investment by a diverse
group of institutional investors in support of our highly qualified
and competent management team," stated Dr. Guoqing Jiang, Chief
Executive Officer of Tianyin. "These results are the culmination of
hard work, prudent planning and solid execution on behalf of our
entire organization. The underlying growth dynamics, supported by
increases in disposable income and improving fundamentals in the
overall modern traditional Chinese medicine industry provide
further confirmation that we are properly positioned to capitalize
on this opportunity on a go forward basis." Six Month Results For
the six months ended December 31, 2007, revenues increased
approximately 82% to $14.9 million compared to the same period in
2006. Gross profit was $6.1 million for the first six months of
2008, representing an increase of 94.3% from the first six months
of 2007. Gross margins were 40.6% for the first six months of 2008
compared to 38% for the same period in 2007. Income from operations
was $3.8 million for the first six months of 2008, representing an
increase of 65% over the first six months of 2007. Operating
margins were 25.4% for the first six months of 2008 compared to 28%
for the first six months of 2007. Net income was $3.2 million for
the six months ended December 31, 2007, an increase of 65% from the
same period in 2006. Balance Sheet and Cash Flow The Company had a
current ratio of 2.6 to 1 and $4.6 million in cash and accounts
receivable on December 31, 2007. The Company reported $1.3 million
in short-term notes and no long-term debt. For the first six months
of 2008, the Company provided $1.75 million in cash for operations,
the main driver for cash flow was net income of $3.2 million and a
significant increase in revenues. On January 28, 2008, subsequent
to the end of their second quarter, Tianyin announced a private
placement of $15.2 million. "I would like to thank all of the
investors who participated in our recent private placement. This
capital will be used to significantly expand our production
capacity during the coming six to twelve months to meet demand
supported by the continued growth in expenditures per capita on
Traditional Chinese Medicines (TCMs) and government support for
additional cost reimbursement of our products," stated Jiang.
"TCM's have been deeply ingrained in Chinese culture for thousands
of years and long been perceived by many Chinese to be both safe
and efficacious. Strong government support to include more TCM's to
the list of medicines subject to reimbursement in the National
Medicine Catalog, along with the Chinese SFDA's plan to release
more product approvals will be advantageous for the future growth
prospects for our large pipeline of new products." Conference Call
The Company will host a conference call to discuss the 2008 second
quarter financial results on Thursday, February 14, 2008 at 4:15
p.m. EST. Interested participants should call 800-762-8908 within
the United States, or US +1-480- 629-1990 if calling
internationally. It is advisable to dial in approximately 5-10
minutes prior to the 4:15 p.m. EST start time. There will be a
playback available until March 15, 2008. To listen to the playback,
please call 800- 406-7325 from within the United States, or US
+1-303-590-3030 internationally. Please use pass code 3843464 for
the replay. The call will also be Web cast at the following link:
http://viavid.net/dce.aspx?sid=00004BD5 About Tianyin
Pharmaceuticals Tianyin is a manufacturer and supplier of
modernized Traditional Chinese Medicine ("TCM") in China. It was
established in 1994 and acquired by current management team in
August 2003. It has a comprehensive product portfolio of 34
modernized TCMs in the market, 22 of which are listed in the highly
selective National Medicine Catalog of the National Medical
Insurance Program. Tianyin owns and operates two GMP manufacturing
facilities and an R&D platform supported by leading Chinese
academic institutions. The Company has a pipeline of 51
pharmaceutical products pending approval. Tianyin has an extensive
nationwide distribution network throughout China with a sales force
of 523 salespeople. Tianyin is headquartered in Chengdu, Sichuan
Province with two manufacturing facilities and a total of 869
employees. Tianyin achieved revenue of $20.4 million and net income
of $3.95 million in FY2007 ending June 30, 2007. Safe Harbor
Statement The Statements which are not historical facts contained
in this press release are forward-looking statements that involve
certain risks and uncertainties including but not limited to risks
associated with the uncertainty of future financial results,
additional financing requirements, development of new products,
government approval processes, the impact of competitive products
or pricing, technological changes, the effect of economic
conditions and other uncertainties detailed in the Company's
filings with the Securities and Exchange Commission. -- FINANCIAL
TABLES TO FOLLOW -- PART I - FINANCIAL INFORMATION BALANCE SHEET AS
OF DECEMBER 31, 2007 (UNAUDITED) ASSETS CURRENT ASSETS Cash and
cash equivalents $1,359,417 Accounts receivable, net of allowance
of $32,860 3,260,179 Inventory 1,632,624 Advance payment to vendors
1,068,009 Other receivables 781,751 Total Current Assets 8,101,980
PROPERTY AND EQUIPMENT, NET 4,729,442 INTANGIBLES, NET 6,056,407
Total Assets $18,887,829 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES Accounts payable and accrued expenses $991,250
Short-term bank loans 1,309,305 Due to shareholders 145,517 VAT
taxes payable 202,313 Income tax payable 296,912 Payroll taxes
payable 22,254 Other payables 194,998 Total Current Liabilities
3,162,549 STOCKHOLDERS' EQUITY Capital contribution 363,000
Additional paid-in capital 4,347,508 Statutory reserve 683,437
Retained earnings 9,323,261 Accumulated other comprehensive income
1,008,074 Total Stockholders' Equity 15,725,280 Total Liabilities
and Stockholders' Equity $18,887,829 STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (UNAUDITED) Six Months Ended Three Months
Ended December 31, December 31, 2007 2006 2007 2006 SALES
$14,918,692 $8,210,022 $7,749,199 $4,344,846 COST OF GOODS SOLD
8,861,258 5,091,764 4,567,429 2,702,593 GROSS PROFIT 6,057,434
3,118,258 3,181,770 1,642,253 EXPENSES Selling, general and
administrative 2,200,541 801,776 1,172,062 457,519 Research and
development 61,558 13,380 34,106 6,269 Total Expenses 2,262,099
815,156 1,206,168 463,788 INCOME FROM OPERATIONS 3,795,335
2,303,102 1,975,602 1,178,466 OTHER INCOME (EXPENSES) Other income
-- 1,432 -- Interest expense (66,362) (71,745) (31,659) (36,604)
Total Other Income (Expenses) (66,362) (70,313) (31,659) (36,604)
INCOME BEFORE PROVISION FOR INCOME TAX 3,728,973 2,232,789
1,943,943 1,141,862 PROVISION FOR INCOME TAX 556,646 310,936
291,572 155,545 NET INCOME 3,172,327 1,921,853 1,652,371 986,317
OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment
574,966 106,623 391,115 62,937 COMPREHENSIVE INCOME $3,747,293
$2,028,476 $2,043,486 $1,049,254 STATEMENTS OF CASH FLOWS FOR THE
SIX MONTHS ENDED DECEMBER 31, (UNAUDITED) 2007 2006 CASH FLOWS FROM
OPERATING ACTIVITIES Net Income $3,172,327 $1,921,853 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 164,758 221,171 Bad debt
expense -- 19,308 Changes in current assets and current
liabilities: Accounts receivable (6,899) (1,392,038) Inventory
306,194 (400,339) Advance payments to vendors (1,040,484) 462,864
Other receivables (624,610) 22,354 Accounts payable and accrued
expenses (252,002) 355,753 VAT taxes payable (16,051) 19,584 Income
tax payable (20,953) (683) Payroll taxes payable (1,707) (13,584)
Other payables 66,426 (174,200) Total Adjustments (1,425,328)
(879,810) Net Cash Provided by Operating Activities 1,746,999
1,042,043 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of
property and equipment (133,591) (50,719) Additions to intangibles
-- (860,200) Net Cash Used by Investing Activities (133,591)
(910,919) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of
short-term bank loans (801,540) -- Repayment of shareholder loans
-- (13) Repayment of long-term bank loans (121,569) (40,123) Net
Cash Used by Financing Activities (923,109) (40,136) EFFECT OF
FOREIGN CURRENCY TRANSLATION ON 44,728 18,970 CASH NET INCREASE IN
CASH AND CASH EQUIVALENTS 735,027 109,958 CASH AND CASH EQUIVALENTS
- BEGINNING 624,390 740,780 CASH AND CASH EQUIVALENTS - ENDING
$1,359,417 $850,738 DATASOURCE: Tianyin Pharmaceutical, Inc.
CONTACT: Investor Relations, Alan Sheinwald, of HC International,
Partner, +1-914-669-0222,
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