Tianyin Pharmaceutical 10-Q 13 Mar 15 2015 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Dec. 31, 2014	Mar. 13, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	TIANYIN PHARMACEUTICAL CO., INC.
Entity Central Index Key	1362718
Amendment Flag	FALSE
Current Fiscal Year End Date	-24
Document Type	10-Q
Document Period End Date	31-Dec-14
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		29,432,791

Consolidated_Balance_Sheets_Un

Consolidated Balance Sheets (Unaudited) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$11,619,292	$16,120,041
Restricted cash	419,139	994,017
Accounts receivable, net of allowance for doubtful accounts of $102,590 and $102,401 at December 31, 2014 and June 30, 2014, respectively	2,273,805	9,074,576
Inventory	6,266,299	3,841,712
Loan receivable		1,981,280
Deferred tax assets	994,918	1,180,510
Prepaid research and development expenses - current portion	3,525,167
Other current assets	885,284	587,384
Total current assets	25,983,904	33,779,520
Property and equipment, net	46,490,692	45,378,356
Intangibles, net	27,340,736	27,699,733
Prepaid research and development expenses	1,057,550
Goodwill	211,510	211,120
Total assets	101,084,392	107,068,729
Current liabilities:
Accounts payable and accrued expenses	298,349	1,592,459
Accounts payable - construction related	821,377	2,238,927
Short-term bank loans	2,928,600	4,547,200
Income tax payable		35,832
Other taxes payable	61,792	390,490
Other current liabilities	391,104	522,995
Total current liabilities	4,501,222	9,327,903
Total liabilities	4,501,222	9,327,903
Stockholders' equity:
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no shares issued and outstanding at December 31, 2014 and June 30, 2014
Common stock, $0.001 par value, 50,000,000 shares authorized, 29,546,276 shares issued, 29,432,791 shares outstanding at December 31, 2014 and June 30, 2014	29,546	29,546
Additional paid-in capital	27,809,515	30,189,802
Treasury stock, 113,485 shares at cost	-135,925	-135,925
Statutory reserve	7,148,893	6,976,412
Retained earnings	51,132,786	50,193,258
Accumulated other comprehensive income	10,598,355	10,423,712
Total stockholders' equity	96,583,170	97,676,805
Noncontrolling interest		64,021
Total equity	96,583,170	97,740,826
Total liabilities and equity	$101,084,392	$107,068,729

Consolidated_Balance_Sheets_Un1

Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Balance Sheets [Abstract]
Allowance for doubtful accounts	$102,590	$102,401
Treasury stock, shares	113,485	113,485
Preferred stock, par value	$0.00	$0.00
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$0.00	$0.00
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	29,546,276	29,546,276
Common stock, shares outstanding	29,432,791	29,432,791

Consolidated_Statements_of_Ope

Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Statements Of Operations [Abstract]
Sales	$6,691,740	$13,923,166	$16,425,121	$28,671,714
Cost of sales	3,041,483	7,705,869	7,696,946	16,460,902
Gross profit	3,650,257	6,217,297	8,728,175	12,210,812
Operating expenses
Selling expenses	1,216,952	2,428,675	2,845,800	4,967,919
General and administrative expenses	1,253,361	1,082,395	2,189,417	2,111,161
Research and development	914,607	252,014	2,007,250	503,328
Total operating expenses	3,384,920	3,763,084	7,042,467	7,582,408
Income from operations	265,337	2,454,213	1,685,708	4,628,404
Other income (expenses):
Interest income	13,002	86,424	13,819	108,734
Interest expense	-69,819	-119,821	-158,657	-222,722
Total other income (expenses)	-56,817	-33,397	-144,838	-113,988
Income before provision for income taxes	208,520	2,420,816	1,540,870	4,514,416
Provision for income taxes	82,336	727,757	437,164	1,361,865
Net income	126,184	1,693,059	1,103,706	3,152,551
Less: Net income (loss) attributable to noncontrolling interest	0	-50,549	-8,303	-106,180
Net income attributable to Tianyin Pharmaceutical Co., Inc.	$126,184	$1,743,608	$1,112,009	$3,258,731
Basic and diluted earnings per share	$0	$0.06	$0.04	$0.11
Weighted average number of common shares outstanding:
Basic and diluted	29,432,791	29,382,791	29,432,791	29,382,791

Consolidated_Statements_of_Com

Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Statements Of Comprehensive Income [Abstract]
Net income	$126,184	$1,693,059	$1,103,706	$3,152,551
Other comprehensive income
Foreign currency translation adjustment	173,910	435,429	174,638	1,048,091
Total other comprehensive income	173,910	435,429	174,638	1,048,091
Total Comprehensive income	300,094	2,128,488	1,278,344	4,200,642
Less: Comprehensive income (loss) attributable to the noncontrolling interest		-49,912	-8,308	-104,386
Comprehensive income attributable to Tianyin Pharmaceutical Co., Inc.	$300,094	$2,178,400	$1,286,652	$4,305,028

Consolidated_Statements_of_Cas

Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cash flows from operating activities:
Net Income	$1,103,706	$3,152,551
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,285,722	1,297,519
Deferred tax assets	185,592
Changes in current assets and current liabilities:
Accounts receivable	6,813,344	-563,334
Inventory	-2,416,004	61,748
Prepaid research and development expenses	-4,579,900
Other current assets	-296,633	314,887
Accounts payable and accrued expenses	-1,296,255	99,102
Accounts payable - construction related	-1,420,812	-2,736,906
Income tax and other taxes payable	-365,093	-259,470
Other current liabilities	-132,776	18,527
Net cash provided by (used in) operating activities	-1,119,109	1,384,624
Cash flows from investing activities:
Addition of Construction in process	-1,903,684	-367,234
Collection of loans receivable	1,983,720
Acquisition of non-controlling interests	-2,436,000
Net cash used in investing activities	-2,355,964	-367,234
Cash flows from financing activities:
Changes in restricted cash	576,360	4,558,680
Repayment of short-term bank loans	-1,626,000	-1,400,166
Net cash provided by (used in) financing activities	-1,049,640	3,158,514
Effect of foreign currency translation on cash	23,964	304,207
Net increase (decrease) in cash and cash equivalents	-4,500,749	4,480,111
Cash and cash equivalents - beginning of period	16,120,041	26,827,008
Cash and cash equivalents - end of period	11,619,292	31,307,119
Supplemental disclosures of cash activities
Cash paid for interest	150,808	222,645
Cash paid for income taxes	$306,992	$1,340,918

Organization_and_Nature_of_Bus

Organization and Nature of Business	6 Months Ended
	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION AND NATURE OF BUSINESS	NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
	Tianyin Pharmaceutical (the “Company” or “TPI”), was established under the laws of Delaware. The Company’s primary business is to research, manufacture and sell pharmaceutical products in China through its wholly owned subsidiaries.
	The following chart describes the Company’s current corporate structure:

Basis_of_Presentation_and_Cons

Basis of Presentation and Consolidation	6 Months Ended
	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BASIS OF PRESENTATION AND CONSOLIDATION	NOTE 2 – BASIS OF PRESENTATION AND CONSOLIDATION
	The unaudited consolidated financial statements include the accounts of TPI and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. The accompanying unaudited financial statements have been prepared in accordance with US GAAP applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosures required by US GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments, which include only normal recurring 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.
	These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended June 30, 2014, included in the Company’s annual report on Form 10-K filed with the U.S. Securities Exchange Commission on December 9, 2014, as not all disclosures required by US GAAP for annual financial statements are presented. The interim consolidated financial statements follow the same accounting policies and methods of computations as the audited consolidated financial statements for the year ended June 30, 2014.
	In preparing the accompanying unaudited consolidated financial statements, we evaluated the period from December 31, 2014 through the date the financial statements were issued for material subsequent events requiring recognition or disclosure. No such events were identified for this period.
	The Company uses the United States dollar (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The subsidiaries within the Company maintain their books and records in their respective functional currency, being the primary currency of the economic environment in which their operations are conducted. Assets and liabilities of a subsidiary with functional currency other than U.S. Dollar are translated into U.S. Dollars using the applicable exchange rates prevailing at the balance sheet date. Items on the statements of comprehensive income and cash flows are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as a component of accumulated other comprehensive income.
	Certain amounts for prior periods have been reclassified to conform to the current period presentation.

Acquisition_Of_NonControlling_

Acquisition Of Non-Controlling Interest	6 Months Ended
	Dec. 31, 2014
Acquisition of Non-Controlling Interest [Abstract]
ACQUISITION OF NON-CONTROLLING INTEREST	NOTE 3 – ACQUISITION OF NON-CONTROLLING INTEREST
	On September 30, 2014, the Company’s subsidiary, Chengdu Tianyin, acquired the remaining 13% of Sichuan Jiangchuan Pharmaceutical Co. Ltd (“JCM”) for RMB 15 million (approximately $2.4 million) from an unrelated individual. Total payment of RMB 15 million was made on October 8, 2014. JCM became a wholly owned subsidiary of Chengdu Tianyin on September 30, 2014.

Inventory

Inventory	6 Months Ended
	Dec. 31, 2014
Inventory [Abstract]
INVENTORY	NOTE 4 – INVENTORY
	Inventory as of December 31, 2014 and June 30, 2014 consists of the following:
		December 31,		June 30,
		2014		2014
	Raw materials	$	2,450,113	$	690,355
	Packaging supplies		1,006,334		387,599
	Work in process		972,615		1,088,880
	Finished goods		1,837,237		1,674,878
		$	6,266,299	$	3,841,712

Prepaid_Research_and_Developme

Prepaid Research and Development Expense	6 Months Ended
	Dec. 31, 2014
Prepaid Research and Development Expense [Abstract]
PREPAID RESEARCH AND DEVELOPMENT EXPENSE	NOTE 5 – PREPAID RESEARCH AND DEVELOPMENT EXPENSE
	In July 2014, the Company’s subsidiary, Chengdu Tianyin, entered into a research and development agreement with a pharmaceutical research company, Kang Lu Biomedical Co. (KL). KL is a reputable TCM research company that specializes in the product development and CFDA application process for mTCM extracts and healthcare products. Persuant to the agreement, KL will provide research and development expanding formulation varieties from Gingko Mihuan Oral Liquid (GMOL) to Capsule formulation. The total contract price is RMB 65 million (approximately $10.5 million). The first payment of RMB 39 million (approximately $6.3 million) was paid in July 2014. The project is expected to be completed before August 2017. The total contract price will be amortized over the term of the agreement which is a period of three years on a straight line basis.

ShortTerm_Bank_Loans

Short-Term Bank Loans	6 Months Ended
	Dec. 31, 2014
Short-Term Bank Loans [Abstract]
SHORT-TERM BANK LOANS	NOTE 6 – SHORT-TERM BANK LOANS
	Short-term bank loans consist of the following:
	2,928,600
		December 31,			June 30,
		2014			2014
	On October 30, 2013, the Company obtained a loan from China CITIC Bank, which matures on October 30, 2014. The interest is calculated using an annual fixed interest rate of 7.20% and paid monthly. The loan was guaranteed by the Company’s CEO, Dr. Jiang and a third party. Loan principal of $1,618,600 was repaid in October 2014, and the remaining loan principal of $2,928,600 is in default and currently being discussed with the bank for loan renewal till July 2015.	$	2,928,600		$	4,547,200
	Total short-term bank loans	$		$	4,547,200

Income_Taxes

Income Taxes	6 Months Ended
	Dec. 31, 2014
Income Taxes [Abstract]
INCOME TAXES	NOTE 7 – INCOME TAXES
	The Company's subsidiary, 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 subsidiaries in China are all subject to 25% income tax rate. The tax write- offs and loss profit credit could only be applied to the individual subsidiaries of TPI.
	In July 2006, the FASB issued ASC 740 that 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 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 the fiscal year ended June 30, 2014 and for the six months ended December 31, 2014.
	The comparison of income tax expense at the U.S. statutory rate of 35% in 2014 and 2013, to the Company’s effective tax is as follows:
		Six months ended
		December 31,
		2014			2013
	U.S. Statutory rate	$	539,305		$	1,580,046
	Tax rate difference between China and U.S.		(152,005	)		(450,750	)
	Change in valuation allowance		49,864			232,569
	Effective tax	$	437,164		$	1,361,865
	The provisions for income taxes are summarized as follows:
		Six months ended
		December 31,
		2014			2013
	Current	$	251,571		$	1,361,865
	Deferred		135,729			-
	Valuation allowance		49,864			-
	Total	$	437,164		$	1,361,865

Risk_Factors

Risk Factors	6 Months Ended
	Dec. 31, 2014
Risk Factors [Abstract]
RISK FACTORS	NOTE 8 – RISK FACTORS
	The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be adversely influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. Specifically, the Company's business may be negatively influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Risk_of_Concentrations_and_Cre

Risk of Concentrations and Credit Risk	6 Months Ended
	Dec. 31, 2014
Risk of Concentrations and Credit Risk [Abstract]
RISK OF CONCENTRATIONS AND CREDIT RISK	NOTE 9 – RISK OF CONCENTRATIONS AND CREDIT RISK
	Concentrations
	In terms of individual product sales, our major product Gingko Mihuan Oral Liquid (GMOL) represented 59% or $9.6 million of total sales for the six months ended December 31, 2014, as compared to 40% or $11.4 million of total sales for the six months ended December 31, 2013.  For the quarter ended December 31, 2014, GMOL sales represented 60% or $4.0 million as compared to 45% or $6.3 million for the quarter ended December 31, 2013.
	For the six months ended December 31, 2014, one single customer accounted for 23% of the Company’s total sales compared with no customer with more than 10% of the Company’s sales for the six months ended December 31, 2013.
	Purchases from one vendor accounted for 54% of the Company’s total purchases for the six months ended December 31, 2014 as compared to four vendors accounted for 18%, 14%, 12% and 11% respectively of the Company’s total purchases for the six months ended December 31, 2013.
	Credit Risk
	Financial instruments, which potentially subject the Company to credit risk consist principally of cash on deposit with financial institutions. Management believes that the financial institutions that hold the Company’s cash and cash equivalents are financially sound and minimal credit risk exists with respect to these investments. Due to the state ownership of China’s majority of financial institutions, the policies that regulate the banking industry also presents a unique risk that impacts all industrial segments in China. The traditional industries such as pharmaceutical manufacturing without exception may also be affected in terms of capital expenditure for GMP certification, raw material purchases and etc.

Inventory_Tables

Inventory (Tables)	6 Months Ended
	Dec. 31, 2014
Inventory [Abstract]
Schedule of inventory
		December 31,		June 30,
		2014		2014
	Raw materials	$	2,450,113	$	690,355
	Packaging supplies		1,006,334		387,599
	Work in process		972,615		1,088,880
	Finished goods		1,837,237		1,674,878
		$	6,266,299	$	3,841,712

ShortTerm_Bank_Loans_Tables

Short-Term Bank Loans (Tables)	6 Months Ended
	Dec. 31, 2014
Short-Term Bank Loans [Abstract]
Schedule of short-term bank loans		December 31,		June 30,
		2014		2014
	On October 30, 2013, the Company obtained a loan from China CITIC Bank, which matures on October 30, 2014. The interest is calculated using an annual fixed interest rate of 7.20% and paid monthly. The loan was guaranteed by the Company’s CEO, Dr. Jiang and a third party. Loan principal of $1,618,600 was repaid in October 2014, and the remaining loan principal of $2,928,600 is in default and currently being discussed with the bank for loan renewal till July 2015.	$	2,928,600	$	4,547,200
	Total short-term bank loans	$	2,928,600	$	4,547,200

Income_Taxes_Tables

Income Taxes (Tables)	6 Months Ended
	Dec. 31, 2014
Income Taxes [Abstract]
Summary of comparison of income tax expense		Six months ended
		December 31,
		2014			2013
	U.S. Statutory rate	$	539,305		$	1,580,046
	Tax rate difference between China and U.S.		(152,005	)		(450,750	)
	Change in valuation allowance		49,864			232,569
	Effective tax	$	437,164		$	1,361,865
Summary of provisions for income taxes
		Six months ended
		December 31,
		2014			2013
	Current	$	251,571		$	1,361,865
	Deferred		135,729			-
	Valuation allowance		49,864			-
	Total	$	437,164		$	1,361,865

Acquisition_Of_NonControlling_1

Acquisition Of Non-Controlling Interest (Details) (JCM [Member])	0 Months Ended
In Millions, unless otherwise specified	Oct. 08, 2014	Oct. 08, 2014	Sep. 30, 2014
	USD ($)	CNY
Business Acquisition [Line Items]
Percentage of Non controlling interest in subsidiary company			13.00%
Payment to acquire subsidiary company	$2.40	15

Inventory_Details

Inventory (Details) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Schedule of inventory
Raw materials	$2,450,113	$690,355
Packaging supplies	1,006,334	387,599
Work in process	972,615	1,088,880
Finished goods	1,837,237	1,674,878
Total	$6,266,299	$3,841,712

Prepaid_Research_and_Developme1

Prepaid Research and Development Expense (Details) (KL [Member])	1 Months Ended
In Millions, unless otherwise specified	Jul. 31, 2014	Jul. 31, 2014
	USD ($)	CNY
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Contract price for research and development	$10.50	65
Initial payment for research and development	$6.30	39
Project completion date	The project is expected to be completed before August 2017. The total contract price will be amortized over the term of the agreement which is a period of three years on a straight line basis.	The project is expected to be completed before August 2017. The total contract price will be amortized over the term of the agreement which is a period of three years on a straight line basis.

ShortTerm_Bank_Loans_Details

Short-Term Bank Loans (Details) (USD $)	Dec. 31, 2014	Jun. 30, 2014
Schedule of short-term bank loans
Total short-term bank loans	$2,928,600	$4,547,200
Fixed interest rate of 7.2% [Member]
Schedule of short-term bank loans
Total short-term bank loans	$2,928,600	$4,547,200

ShortTerm_Bank_Loans_Details_T

Short-Term Bank Loans (Details Textual) (Fixed interest rate of 7.2% [Member], USD $)	0 Months Ended
	Oct. 30, 2013
Fixed interest rate of 7.2% [Member]
Short-Term Bank Loans (Textual)
Annual fixed interest rate of short-term bank loans	7.20%
Maturity date	30-Oct-14
Loan principal amount repaid	$1,618,600
Remaining loan principal	$2,928,600
Terms of the remaining loan	The remaining loan principal of $2,928,600 is in default and are currently being discussed with the bank for loan renewal till July 2015.

Income_Taxes_Details

Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Income Taxes [Abstract]
U.S. Statutory rate			$539,305	$1,580,046
Tax rate difference between China and U.S.			-152,005	-450,750
Change in valuation allowance			49,864	232,569
Effective tax	$82,336	$727,757	$437,164	$1,361,865

Income_Taxes_Details_1

Income Taxes (Details 1) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Income Taxes [Abstract]
Current			$251,571	$1,361,865
Deferred			135,729
Valuation allowance			49,864	232,569
Total	$82,336	$727,757	$437,164	$1,361,865

Income_Taxes_Details_Textual

Income Taxes (Details Textual)	6 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Income Taxes (Textual)
Effective tax rates	35.00%	35.00%
Operating subsidiaries in China [Member]
Income Taxes (Textual)
Effective tax rates	25.00%

Risk_of_Concentrations_and_Cre1

Risk of Concentrations and Credit Risk (Details) (USD $)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Vendor I [Member]
Risk of Concentrations and Credit Risk (Textual)
Percentage of materials purchased from vendors			54.00%	18.00%
Vendor II [Member]
Risk of Concentrations and Credit Risk (Textual)
Percentage of materials purchased from vendors				14.00%
Vendor III [Member]
Risk of Concentrations and Credit Risk (Textual)
Percentage of materials purchased from vendors				12.00%
Vendor IV [Member]
Risk of Concentrations and Credit Risk (Textual)
Percentage of materials purchased from vendors				11.00%
No Customer [Member]
Risk of Concentrations and Credit Risk (Textual)
Concentration risk, percentage				10.00%
Customer One [Member]
Risk of Concentrations and Credit Risk (Textual)
Concentration risk, percentage			23.00%
Sales [Member] | GMOL [Member]
Risk of Concentrations and Credit Risk (Textual)
Concentration risk, percentage	60.00%	45.00%	59.00%	40.00%
Sales revenue, goods, net	$4	$6.30	$9.60	$11.40