Tianyin Pharmaceutical 10-Q/A 2011 Q3 Quarterly report (amended)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

       [X]            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

        [  ]           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.)

23rd Floor, Unionsun Yangkuo Plaza

No. 2, Block 3, Renmin Road South

Chengdu, P. R. China, 610041

+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 45 days. Yes [X ] No [ ]

Indicate by check mark whether the registrant is a large accelerated 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 filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes [  ] No [X]

As of May 16, 2011,we are authorized to issue up to 50,000,000 shares of Common Stock, par value $0.001 per share and 10,000,000 shares of Series A Preferred Stock, of which 29,396,276 and -0- preferred shares respectively are outstanding.

EXPLANATORY NOTE

We are filing this Form 10-Q/A for the period ended March 31, 2011 (“Amended Report”) to correct an error in applying FASB Accounting Standards Codification Topic 815-40-15, "Derivatives and Hedging - Contracts in Entity's Own Equity" ("ASC 815-40") by Tianyin Pharmaceutical Co., Inc. (the “Company” or “TPI”) as of September 30, 2009, which would have resulted in the Company classifying and recognizing its Series A and Series B warrants previously issued by the Company as a liability rather than as stockholders' equity. This Amended Report is being filed to amend the disclosures affected by the corrected application of ASC 815-40. This Amended Report may not reflect events occurring after the filing of the Form 10-Q on May 16, 2011, nor does it modify or update those disclosures presented therein, except with regard to the modifications described in this Explanatory Note. As such, this Amended Report continues to speak as of May 16, 2011. Accordingly, this Amended Report should be read in conjunction with the Original Report and our other reports filed with the SEC subsequent to the filing of our Original Report, including any amendments to those filings.

In addition, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as a result of this Amended Report, the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, filed and furnished, respectively, as exhibits to the Original Report have been re-executed and re-filed as of the date of this Amended Report and are included as exhibits hereto.

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PART I- FINANCIAL INFORMATION

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Tianyin Pharmaceutical Co., Inc.

We have reviewed the accompanying consolidated balance sheet of Tianyin Pharmaceutical Co., Inc. (the “Company”) as of March 31, 2011, and the related consolidated statements of operations, consolidated statements of comprehensive income for the three months and nine months ended March 31, 2011 and 2010, and cash flows for the nine months ended March 31, 2011 and 2010. These interim consolidated financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Tianyin Pharmaceutical Co., Inc. as of June 30, 2010, and the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated September 24, 2010, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of June 30, 2010, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

Parsippany, New Jersey

May 13, 2011

(Except for Note 1, 9, 15, 17 and 19 as to which the date is August 22 , 2011)

3

TIANYIN PHARMACEUTICAL CO., INC.

Consolidated Balance Sheets

	March 31,			June 30,
	2011			2010
	(Restated)			(Restated)
Assets
Current assets:
Cash and cash equivalents	$	31,066,927		$	27,009,066
Accounts receivable, net of allowance for doubtful accounts of $436,515		9,742,186			8,185,240
and $421,079 at March 31, 2011 and June 30, 2010, respectively
Inventory		5,431,746			3,588,824
Advance payments		397,020			382,980
Loans receivable		-			294,600
Other current assets		31,831			77,283
Total current assets		46,669,710			39,537,993
Property and equipment, net		25,596,835			14,968,822
Intangibles, net		15,295,417			15,232,286
Total assets	$	87,561,962		$	69,739,101
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	1,556,489		$	1,715,781
Accounts payable – construction related		2,389,461			2,248,849
Short-term bank loans		2,748,600			1,473,000
VAT taxes payable		746,997			658,312
Income taxes payable		1,333,674			861,614
Other taxes payable		159,356			19,564
Dividends payable		34,661			72,995
Other current liabilities		537,834			429,135
Total current liabilities		9,507,072			7,479,250
Warrants liability		-			4,733,872
Total liabilities		9,507,072			12,213,122
Equity
Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 shares authorized,		29,396			27,326
29,396,276 and 27,371,526 shares issued and outstanding at
March 31, 2011 and June 30, 2010, respectively
Series A convertible preferred stock, $0.001 par value -0- and 1,360,250		-			1,360
shares issued and outstanding at March 31, 2011 and June 30, 2010,
Respectively
Additional paid-in capital		30,065,452			25,046,388
Statutory reserve		3,732,883			3,732,883
Treasury stock		(111,587	)		(111,587	)
Retained earnings		38,810,128			25,530,906
Accumulated other comprehensive income		5,096,149			2,845,076
Total stockholders’ equity		77,622,421			57,072,352
Noncontrolling interest		432,469			453,627
Total equity		78,054,890			57,525,979
Total liabilities and equity	$	87,561,962		$	69,739,101

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

4

TIANYIN PHARMACEUTICAL CO., INC.

Consolidated Statements of Operations

	For the Three Months Ended						For the Nine Months Ended
	March 31,						March 31,
	2011			2010			2011			2010
	(Restated)			(Restated)			(Restated)			(Restated)
Sales	$	24,880,980		$	15,917,771		$	72,165,647		$	44,259,352
Cost of sales		14,044,670			7,493,230			39,183,982			21,019,960
Gross profit		10,836,310			8,424,541			32,981,665			23,239,392
Operating expenses:
Selling, general and administrative		5,517,647			4,607,897			17,252,309			13,135,398
Research and development		286,020			218,515			802,696			608,385
Total operating expenses		5,803,667			4,826,412			18,055,005			13,743,783
Income from operations		5,032,643			3,598,129			14,926,660			9,495,609
Other income (expenses):
Interest income		33,083			54,431			90,681			34,436
Interest expense		(29,791	)		(58,276	)		(72,599	)		(58,276	)
Change in fair value of warrants liability		345,147			2,187,112			1,627,551			(4,630,261	)
Other income (expenses)		-			-			-			(39,510	)
Total other Income (Expenses)		348,439			2,183,267			1,645,633			(4,693,611	)
Income before provision for income tax		5,381,082			5,781,396			16,572,293			4,801,998
Provision for income tax		1,323,665			686,161			3,171,172			1,767,852
Net income		4,057,417			5,095,235			13,401,121			3,034,146
Less: Net (loss) attributable to noncontrolling interest		(4,492	)		(1,357	)		(21,121	)		(2,397	)
Net income attributable to Tianyin Pharmaceutical Co., Inc.		4,061,909			5,096,592			13,422,242			3,036,543
Basic earnings per share	$	0.14		$	0.19		$	0.47		$	0.11
Diluted earnings per share	$	0.14		$	0.16		$	0.45		$	0.10
Weighted average number of common shares
outstanding
Basic		28,218,732			26,363,749			28,031,064			23,650,332
Diluted		29,822,596			31,631,330			30,062,270			29,931,923

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

5

TIANYIN PHARMACEUTICAL CO., INC.

Consolidated Statements of Comprehensive Income

	For the Three Months Ended					For the Nine Months Ended
	March 31,					March 31,
	2011		2010			2011		2010
	(Restated)		(Restated)			(Restated)		(Restated)
Net income	$	4,057,417	$	5,095,235		$	13,401,121	$	3,034,146
Other comprehensive income
Foreign currency translation adjustment		484,258		(155	)		2,251,109		46,808
Total other comprehensive income		484,258		(155	)		2,251,109		46,808
Comprehensive income		4,541,675		5,095,080			15,652,230		3,080,954
Comprehensive income attributable to the
noncontrolling interest		106,872		(1,393	)		496,634		8,328
Comprehensive income attributable to
Tianyin Pharmaceutical Co., Inc.	$	4,434,803	$	5,096,473		$	15,155,596	$	3,072,626

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

6

TIANYIN PHARMACEUTICAL CO., INC.

Consolidated Statements of Cash Flows

	For the Nine Months Ended
	March 31,
	2011			2010
	(Restated)			(Restated)
Cash flows from operating activities:
Net Income	$	13,401,121		$	3,034,146
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization		893,896			678,372
Bad debt expense		-			96,734
Change in fair value of warrants liability		(1,627,551	)		4,630,261
Share-based payments		1,913,453			1,274,516
Loss on disposal of fixed assets		-			39,510
Changes in assets and liabilities:
Accounts receivable		(1,235,887	)		(2,725,110	)
Inventory		(1,682,777	)		190,744
Other current assets		46,400			457,487
Accounts payable and accrued expenses		(267,848	)		437,483
Accounts payable – construction related		280,295			2,887,122
VAT taxes payable		36,038			87,300
Income taxes payable		433,118			195,177
Other taxes payable		164,187			5,175
Dividends payable		(18,138	)		-
Other current liabilities		(131,682	)		195,931
Total adjustments		(1,196,496	)		8,450,702
Net cash provided by operating activities		12,204,625			11,484,848
Cash flows from investing activities:
Additions to property and equipment		(10,317,824	)		(5,338,740	)
Additions to intangible assets – approved drugs		-			(2,742,168	)
Loans receivable		300,300			(293,280	)
Net cash used in investing activities		(10,017,524	)		(8,374,188	)
Cash flows from financing activities:
Proceeds from bank loans		1,201,200			65,988
Additional paid-in capital		-			8,864,825
Contribution from minority shareholders		-			439,920
Dividends paid		(54,857	)		(1,577,068	)
Net cash provided by financing activities		1,146,343			7,793,665
Effect of foreign currency translation on cash		724,417			2,852
Net increase in cash and cash equivalents		4,057,861			10,907,177
Cash and cash equivalents – beginning		27,009,066			12,352,223
Cash and cash equivalents – ending	$	31,066,927		$	23,259,400
Supplemental schedule of non cash activities
Advance payments exchanged for intangible assets – drug	$	-		$	807,986

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

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Note 1 – Organization and Nature of Business

Tianyin Pharmaceutical Inc. (the “Company” or “TPI”), 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 TPI and its subsidiaries. TPI’s primary business is to develop, manufacture, and sell pharmaceutical products.

On January 16, 2008, Viscorp Inc. (“Viscorp”) completed a reverse acquisition of Raygere Limited (“Raygere”), which was incorporated in the British Virgin Islands on January 26, 2007 (the “Share Exchange”). To accomplish the Share Exchange, 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 the time of closing. Following the Share Exchange, Viscorp changed the name to Tianyin Pharmaceutical Inc. The transaction was regarded as a reverse merger whereby Raygere was considered to be the accounting acquirer as its shareholders retained control of TPI after the exchange. Although the Company is the legal parent company, the Share Exchange was treated as a recapitalization of Raygere. Thus, Raygere is the continuing entity for financial reporting purposes. The financial statements have been prepared as if Raygere had always been the reporting company and then on the date of the Share Exchange, had changed its name and reorganized its capital stock.

In September 2007, Raygere acquired 100% interest in Grandway Groups Holdings Ltd. (“Grandway”), which was incorporated on May 25, 2007, in the Special Administrative Region 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 of 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 TPI in July 2007.

In June 2009, TPI invested $723,500 to establish a wholly-owned trading subsidiary, Tianyin Medicine Trading Co., Ltd (“Tianyin Medicine Trading” or “TMT”) for sales and distribution of medicine produced by TPI. As of December 31, 2010, the financial results of TMT are consolidated into the consolidated financial statements presented herein.

On August 21, 2009, Sichuan Jiangchuan Pharmaceutical Co., Ltd (“Jiangchuan” or “JCM”) was established by TPI, Sichuan Mingxin Pharmaceutical and an individual investor with raw material pharmaceutical production as its major business. Total registered capital of JCM is $2,934,000, of which TPI accounts for 77%. As of December 31, 2010, registered capital of $1,173,600 has been invested and the results of JCM are consolidated into the consolidated financial statements presented herein.

Note 9 – Income Taxes

Raygere is incorporated in the British Virgin Islands.  Under the corporate tax laws of the British Virgin Islands, Raygere is not subject to tax on income or capital gains.

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 a preferential tax treatment as a direct result of opening a production facility in Western China in Sichuan Province. The applicable reduced preferential state Enterprise Income Tax (“EIT”) rate under this policy was 15% until December 31, 2010 and increased to 25% on January 1, 2011. The Company’s TMT subsidiary and JCM partnership, both domestic invested companies, also are taxed at the 25% rate.

As a result of our requirement to restate certain financial results as further described in Footnote 17 below, we have determined that the PRC FEIT law does not require a non-cash gain and/or loss due to fair value changes in the value of warrants to trigger a taxable event.  Therefore, we believe that the non-cash gains and/or losses attributed to the reclassification of our warrants should not change the effective tax treatment of our income tax provisions.

In July 2006, the FASB issued FASB Interpretation No.48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined in FIN 48 as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company did not recognize any benefits in the financial statements for nine months ended March 31, 2011.

8

Note 15 – Earnings Per Share

The Company presents earnings per share (“EPS”) 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.

	Three Months Ended March 31,
	2011  (Restated)		2010  (Restated)
Net income attributable to Tianyin Pharmaceutical Co., Inc.	$	4,061,909	$	5,096,592
(numerator for diluted income per share)
Less: Dividend attributable to preferred stockholders		34,661		82,541
Net income attributable to common stockholders		4,027,248		5,014,051
(numerator for basic income per share)
Weighted average common shares
(denominator for basic income per share)		28,218,732		26,363,749
Effect of diluted securities:
Convertible preferred stock		1,148,656		2,125,528
Warrants		455,208		3,142,053
Weighted average common shares

(denominator for diluted income per share)		29,822,596		31,631,330
Basic net income per share	$	0.14	$	0.19
Diluted net income per share	$	0.14	$	0.16

	Nine Months Ended March 31,
	2011 (Restated)		2010 (Restated)
Net income attributable to Tianyin Pharmaceutical Co., Inc.	$	13,422,242	$	3,036,543
(numerator for diluted income per share)
Less: Dividend attributable to preferred stockholders		143,019		414,762
Net income attributable to common stockholders		13,279,223		2,621,781
(numerator for basic income per share)
Weighted average common shares
(denominator for basic income per share)		28,031,064		23,650,332
Effect of diluted securities:
Convertible preferred stock		1,290,748		3,354,810
Warrants		740,458		2,926,781
Weighted average common shares
(denominator for diluted income per share)		30,062,270		29,931,923
Basic net income per share	$	0.47	$	0.11
Diluted net income per share	$	0.45	$	0.10

Note 17 – Non Cash Financial Impact Analysis of Warrants

Under ASC 815-40-15, the Company’s accounting treatment of the warrants including Series A and B warrants from July 1, 2009 until December 31, 2010 is subject to revisions. Due to the presence of certain anti-dilutive clauses in both warrants during the above period, these financial instruments were re-categorized as liabilities while they were previously treated as equity.

9

Since the removal of the anti-dilutive clauses in all series of warrants by January 14, 2011, the warrants were re-categorized as equity in the third quarter of fiscal year 2011 while the accounting issues related to the warrants ceased to exist.

Based on the exercise data and weighted valuation, the Company calculated the non-cash impact for the fiscal year 2010 and the first two quarters of fiscal year 2011.The analysis indicated that the impact from the warrants for fiscal year 2010 was a loss of $(0.16) million, or (1.07)% to pretax net income of $14.7 million and a gain of $1.28 million, or 12.9% to net income for the first two quarters of fiscal year 2011 of $9.9 million.

The foregoing accounting treatment has been review by the staff of the SEC, as part of its review of our Form 10-K for the fiscal year ended June 30, 2010 and certain other periodic reports. We have requested that the staff to waive the requirement to amend or restate prior periods due to the fact that 1) the changes would be based on non-cash/non-operational charges, and were subsequently removed; 2) the confusion it could potentially cause to investors; and 3) the hardship that could be caused to the Company and its shareholders. Notwithstanding our request, the staff required that the Company amend or restate prior periods based on the above noted potential non-cash/non-operation financial changes to its financial statements.

Note 19 – Restatement of 2011 and 2010 Financial Statements

The Company re-evaluated the accounting for its Series A and B warrants (the "Warrants") issued in conjunction with the financing on January 16 and 25, 2008 pursuant to FASB ASC 815-40 and determined that due to certain down round protection clauses, the Warrants could not be indexed to its own stock and as such, should be classified as liability, rather than equity, which would result in a non-cash, non-operational gain or loss. Therefore, the Company restated the consolidated financial statements for the quarters ended September 30, 2010, December 31, 2010 and March 31, 2011. The Company will also make corresponding revisions to its financial statements for the fiscal year ended June 30, 2010 in the Form 10-K for the fiscal year ended June 30, 2011. The anti-dilutive clauses in the warrants were removed on January 14, 2011.

In order to determine the fair value of TPI’s warrants, the Company engaged a valuation specialty firm to utilize a market-oriented valuation platform, which was developed using transaction data from secondary trading markets based on empirical data.  The restatement resulted in adjustments to the following financial statement line items as of and for the period indicated:

Consolidated Statements of Balance Sheets (Unaudited)

	March 31,		March 31,
	2011		2011
	(As Reported Currently)		(As Reported Originally)		Effect of change
Equity
Additional paid-in capital		30,065,452		31,536,139	$	(1,470,687	)
Retained earnings		38,810,128		37,339,441	$	1,470,687

Consolidated Statements of Operations (Unaudited)

	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2011		2011
	(As Reported Currently)		(As Reported Originally)		Effect of change
Other income (expenses):
Change in Fair Value of warrants liability		345,147		-		345,147
Total other income (expenses)		348,439		3,292		345,147
Income before provision for income taxes		5,381,082		5,035,935		345,147
Net income		4,057,417		3,712,270		345,147
Net income attributable to Tianyin Pharmaceutical Co., Inc.		4,061,909		3,716,762		345,147
Basic earnings per share	$	0.14	$	0.13		0.01
Diluted earnings per share	$	0.14	$	0.12		0.02

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	For the Three Months Ended March 31,		For the Three Months Ended March 31,
	2010		2010
	(As Reported Currently)		(As Reported Originally)			Effect of change
Other income (expenses):
Change in Fair Value of warrants liability		2,187,112		-			2,187,112
Total other income (expenses)		2,183,267		(3,845	)		2,187,112
Income before provision for income taxes		5,781,396		3,594,284			2,187,112
Net income		5,095,235		2,908,123			2,187,112
Net income attributable to Tianyin Pharmaceutical Co., Inc.		5,096,592		2,909,480			2,187,112
Basic earnings per share	$	0.19	$	0.11			0.08
Diluted earnings per share	$	0.16	$	0.09			0.07

Consolidated Statements of Operations (Unaudited)

	For the Nine Months Ended March 31,		For the Nine Months Ended March 31,
	2011		2011
	(As Reported Currently)		(As Reported Originally)		Effect of change
Other income (expenses):
Change in Fair Value of warrants liability		1,627,551		-		1,627,551
Total other income (expenses)		1,645,633		18,082		1,627,551
Income before provision for income taxes		16,572,293		14,944,742		1,627,551
Net income		13,401,121		11,773,570		1,627,551
Net income attributable to Tianyin Pharmaceutical Co., Inc.		13,422,242		11,794,691		1,627,551
Basic earnings per share	$	0.47	$	0.42		0.05
Diluted earnings per share	$	0.45	$	0.39		0.06

Consolidated Statements of Operations (Unaudited)

	For the Nine Months Ended March 31,			For the Nine Months Ended March 31,
	2010			2010
	(As Reported Currently)			(As Reported Originally)			Effect of change
Other income (expenses):
Change in Fair Value of warrants liability		(4,630,261	)		-		$	(4,630,261	)
Total other income (expenses)		(4,693,611	)		(63,350	)	$	(4,630,261	)
Income before provision for income taxes		4,801,998			9,432,259		$	(4,630,261	)
Net income		3,034,146			7,664,407		$	(4,630,261	)
Net income attributable to Tianyin Pharmaceutical Co., Inc.		3,036,543			7,666,804		$	(4,630,261	)
Basic earnings per share	$	0.11		$	0.31			(0.20	)
Diluted earnings per share	$	0.10		$	0.26			(0.16	)

11

Consolidated Statements of Cash Flows (Unaudited)

	For the Nine Months Ended
	March 31,
	2011			2011		Effect of change
	(As Reported Currently)			(As Reported Originally)
Cash flows from operating activities:
Net Income	$	13,401,121		$	11,773,570		1,627,551
Change in fair value of warrants liability		(1,627,551	)		-		(1,627,551	)
Total adjustments		(1,196,496	)		431,055		(1,627,551	)

	For the Nine Months Ended
	March 31,
	2010		2010
	(As Reported Currently)		(As Reported Originally)		Effect of Change
Cash flows from operating activities:
Net Income	$	3,034,146	$	7,664,407	$	(4,630,261	)
Change in fair value of warrants liability		4,630,261		-	$	4,630,261
Total adjustments		8,450,702		3,820,441	$	4,630,261

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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 TPI for the periods ended March 31, 2011 and 2010 and should be read in conjunction with such financial statements and related notes included in this report and the Company’s Annual Report on Form 10-K for the year ended June 30, 2010.

Under ASC 815-40-15, the Company’s accounting treatment of the warrants including Series A and B warrants from July 1, 2009 until December 31, 2010 is subject to revisions. Due to the presence of certain anti-dilutive clauses in both warrants during the above period, these financial instruments were re-categorized as liabilities while they were previously treated as equity. Since the removal of the anti-dilutive clauses in both series of warrants on January 14, 2011, the warrants were re-categorized as equity in the third quarter of fiscal year 2011 while the accounting issues related to the warrants ceased to exist. Due to the non-cash and non-operational nature of these charges, readers are recommended to use pro forma numbers that exclude these charges to evaluate the operation of the company.

The information set forth below includes forward-looking statements. Certain factors that could cause results to differ materially from those projected in the forward-looking statements are set forth below. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

Discussion of Operating Results

The following table shows the results of our business. All references to the results of operations and financial conditions are on a consolidated basis that includes Chengdu Tianyin Pharmaceutical Co., Ltd (“Chengdu Tianyin”), Tianyin Medicine Trading Co., Ltd (“TMT”) and Sichuan Jiangchuan Pharmaceutical Co., Ltd (“JCM”).

Comparison of results for the three months ended March 31, 2011 and 2010 (in $ millions):

		Three Months Ended March 31,
		2011		2010
		(Restated)		(Restated)
Sales	$	24.9	$	15.9
Cost of sales	$	14.0	$	7.5
Gross profit	$	10.8	$	8.4
Operating expenses	$	5.8	$	4.8
Provision for income taxes	$	1.3	$	0.7
Net income	$	4.1	$	5.1
Foreign exchange adjustment	$	0.5	$	(0.0)
Comprehensive income	$	4.5	$	5.1

Net Income (restated) reached $4.1 million for the quarter ended March 31, 2011, as compared to net income of $5.1 million for the quarter ended March 31, 2010, a net decrease of $1.0 million. Net profit margins for the quarter ended March 31, 2011 decreases to 16.5% from 32.1% for the quarter ended March 31, 2010. The non-cash financial impacts from warrants mainly contribute to the difference between these comparable periods. The pro forma net income results illustrate the operational improvements.

Net Income (pro forma) reached $3.7 million for the quarter ended March 31, 2011, as compared to net income of $2.9 million for the quarter ended March 31, 2010, a net increase of $0.8 million or 27.6% year over year. Net profit margins for the quarter ended March 31, 2011 decreases to 14.9% from 18.3% for the quarter ended March 31, 2010 mainly attributable to 1) recent pricing pressure on the generic pharmaceutical business, 2) lower margin TMT distribution revenue, and 3) increase of tax provisions to 25% starting January 2011 from the previous 15% for Chengdu Tianyin after the expiration of the three year tax benefit for high tech enterprise. We expect the stabilization of the net profit margin at approximately 15% going forward under the current pharmaceutical sales market condition.

Comprehensive Income (restated) that includes the currency adjustment to net income was $4.5 million for the quarter ended March 31, 2011, as compared to the comprehensive income of $5.1 million for the quarter ended March 31, 2010, a decrease of $0.6 million. The non-cash financial impacts from warrants mainly contribute to the difference between these comparable periods. The pro forma net income results illustrate the operational improvements.

Comprehensive Income (pro forma) that includes the currency adjustment to net income was $4.2 million for the quarter ended March 31, 2011, as compared to the comprehensive income of $2.9 million for the quarter ended March 31, 2010, an increase of $1.3 million or 44.8% year over year.

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Critical Accounting Policies and Estimates

Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended June 30, 2010, for disclosures regarding TPI’s critical accounting policies and estimates as well as updates further disclosed in our interim financial statements as described in this Form 10-Q/A.

Item 4. 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 March 31, 2011. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that as of March 31, 2011, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission, and are effective in providing reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure as a result of the material weakness described herein.  

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, 2010, management concluded that our internal controls over financial reporting were effective. Management did however identify a significant deficiency as of June 30, 2010, as discussed in our Form 10-K for the year ended June 30, 2010. In connection with our review of our internal controls and procedures over financial reporting as of our last fiscal quarter, ended March 31, 2011, and based on certain comments that we received from the staff of the SEC regarding the accounting treatment and subsequently the non-cash/non-operational financial charges of Series A and B Warrants, which resulted in our having to amend and restate financial statements from July 1, 2009 till December 31, 2010, management has concluded that the Company has a material weakness.  A  material   weakness is a control  deficiency,  or  combination  of control deficiencies,  that  results  in more than a remote  likelihood  that a material misstatement  of the  financial  statements  will not be  prevented or detected. Management identified the following material weaknesses during its assessment of our internal control over financial reporting as of March 31, 2011. 

● Lack of sufficient knowledge regarding U.S. GAAP reporting by our existing accounting staff.  

    ●         Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control;

●         Lack of sufficient documentation with our existing financial processes, risk assessment and internal controls.

Currently we do not have sufficient in-house expertise in US GAAP reporting. Additionally, Mr. Hongcai Li, the financial controller at our operating subsidiary recently resigned due to personal reasons.  Since the end of our last fiscal quarter, management has met on numerous occasions and discussed the following plans to remedy the material weaknesses discussed above. We are seeking to do the following,

1. Recruit experienced professionals to augment and upgrade our financial staff for sufficient US GAAP financial reporting.  We believe that additional accounting staff trained in U.S. GAAP would improve our controls and procedures, specifically with regard to the preparation of our financial statements; and

2. The Company has made efforts to improve our current accounting staff’s knowledge of U.S. accounting standards. 

We believe that the remediation measures we are taking, if effectively implemented and maintained, will remediate the material weaknesses discussed above.  

Except as described above, there have been no changes in our internal controls over financial reporting that occurred during the fiscal quarter to which this Quarterly Report on Form 10-Q/A relates that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS

 (a) The following exhibits are filed as part of this report.

Exhibit No.	Document
3.1	Articles of Incorporation, as amended (Incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K filed on September 29, 2010).
3.2	Bylaws (Incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K filed on September 29, 2010).
31.1	Certification  of  Chief  Executive  Officer  required  by Rule 13a-14/15d-14(a) under the Exchange Act
31.2	Certification of  Chief Accounting Officer required by Rule 13a-14/15d-14(a) under the Exchange Act
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Acting Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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:  August 22, 2011 

By: TIANYIN PHARMACEUTICAL INC.

/s/  Dr. Guoqing Jiang
	Name:  Dr. Guoqing Jiang
	Title:    Chairman, Chief Executive Officer
/s/  Dr. James Jiayuan Tong
	Name:  Dr. James Jiayuan Tong
	Title:    Chief Financial Officer, Chief Accounting Officer,
	Chief Business and Development Officer, Director

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