- 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,

Copyright