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 nine months ended March 31, 2009 and 2008 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 40 products which are pending regulatory approvals with the China State Food and Drug Administration.

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.

Competitive Environment

The market for pharmaceutical products is highly 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.

Development and Growth Strategy

The cornerstone of our business development strategy relies upon our partnership-based research and development efforts that 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 nine months of our fiscal 2009 year, we continued this strategy and recognized increased market penetration and revenue growth over our 2008 fiscal year. Management plans to continue our emphasis on expanded and enhanced marketing and sales in our 2009 fiscal year and beyond. 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 continuing growth strategy, we will continue our partnership-based research and development efforts to further commercialize and broaden our product pipeline. During the quarter we have made significant process with our new product development. We currently have 40 drug candidates under the Chinese State Food and Drug Administration (SFDA) ("SFDA") review and are planning a series of market launches in the next few years from our product pipeline. In the nine months of our 2009 fiscal year, we have received approval from the SFDA to produce ten new products, including seven of which were awarded during the first quarter of 2009. These newly approved products include:

1. Laonian Kechuan Tablets (SFDA approval number H2008S02059) are 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 that are currently in the marketplace.

2. Fuke Zhidai Tablets (SFDA approval number Z20083375) are 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.

3. Tongbianling Capsule (SFDA approval number Z20083424) are generic Traditional Chinese Medicine which is noted for its highly effective treatment in alleviating one-time abdominal distention constipation, bedridden constipation, and elderly chronic constipation.

4. Baotailing Tablets (SFDA approval numberZ20093087) are generic Traditional Chinese Medicine which is used to give supplement to kidney and provide the protection to fetus. In addition, this medicine can be used to treat threatened abortion, habitual abortion and infertility caused by abortion.

5. Duyiwei Dispersible Tablets (SFDA approval number Z20090239) can be used for relief the pain caused by the surgical operations. This drug also can be used to treat bleeding, fracture and dysmenorrhea.

6. Compound Dantong Capsules (SFDA approval number Z20093012) are generic Traditional Chinese Medicine which is suitable to treat acute and chronic cholecystitis, cholangitis and concurrent infection of Biliary Calculi. In addition, this drug Also can treat postcholecystectomy syndrome.

7. Mycophenolate Mofetil Capsule(SFDA approval number H20080819) treat the reject reaction during the homogeneous kidney transplantation, and treat refractory reject reaction. In addition, this drug can be used with ciclosporin and cortin at the same time.

8. Tongqiao Biyan Tablets(SFDA approval number Z20093063) are generic Traditional Chinese Medicine that is able to treat snuffle and snivel, relief the sore pain of forehead. In addition, this drug is suitable to treat chronic rhinitis, allergic rhinitis and nasosinusitis.

9. Child Qingrezhike Oral Liquid(SFDA approval number Z20093060) treats children rheum and cough. In addition, it can provide relief from pain caused by laryngopharynx.

10. Yiqing Capsules(SFDA approval number Z20093084) are generic Traditional Chinese Medicine that are able to treat pain of the throat and gums, pharyngitis and tonsillitis.

Descriptions of the function of the above products are as follows:

An important aspect to support our growth strategy is recognizing the importance of the marketing of our products and increasing our ability to produce and supply our sales infrastructure. As part of the use of proceeds from our private placement financing last year, 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 3 times with an 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 Area (GFA) is about ten thousand square meters with state-of-the-art manufacturing equipment. Construction started in July 2008 and operations are planned to commence in May 2009. The new capacity is expected to be able to meet the increasing market demand for our current products and support our new product launches from our product pipeline. By the end of March 2009, we had almost completed construction of new plant. Installation of the new manufacturing was almost competed and we were beginning to prepare for the initial GMP testing.

Management also plans to pursue strategic acquisitions and licensing opportunities as part of our growth strategy in 2009 and beyond. 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 and beyond. Additionally, we believe that our growth and overall market coverage could be further improved by certain strategic acquisitions or licensing opportunities. Additionally, we believe the Pharmaceutical Industry could benefit from the expanded social reform which is part of the recently announced government stimulus plan.

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.

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 nine months ended March 31, 2009 and 2008, the three months ended March 31, 2009 and 2008

                                             Three Months Ended March 31          Nine Months Ended March 31
                                                2009               2008              2009              2008
Revenue                                    $     9,929,301      $ 9,249,229     $   29,593,109     $ 24,167,921
Cost of revenue                            $     5,069,133      $ 5,123,587     $   14,696,736     $ 13,984,845
Gross profit                               $     4,860,168      $ 4,125,642     $   14,896,373     $ 10,183,076
Total expense                              $     2,567,683      $ 2,269,533     $    7,963,214     $  4,531,632
Other income (expense)                     $       (15,947 )    $  (245,174 )   $      (40,833 )   $   (311,536 )
Income taxes                               $       380,521      $   337,132     $    1,148,197     $    893,779
Net profit (loss)                          $     1,896,017      $ 1,273,803     $    5,744,129     $  4,446,129
Foreign currency translation adjustment    $       (50,359 )    $   793,507     $      296,009     $  1,368,473
Comprehensive income                       $     1,845,658      $ 2,067,310     $    6,040,138     $  5,814,602

Revenue. Total revenue were approximately US$9.9 million for the three months ended March 31, 2009 as compared to approximately US$9.2 million for the three months ended March 31, 2008, an increase of approximately US$0.7 million or 7%. During the three months ended March 31, 2009, our revenue did not grow as quickly as originally expected to "bottleneck" issues with our manufacturing facility. Additionally, certain adjustments to our product mix took longer than expected to launch. Revenue for the nine months ended March 31, 2009 was approximately US$29.6 million. This was an increase of roughly US$5.4 million or 22% as compared to total revenue of US$24.2 million for the nine months ended March 31, 2008. The increase in our revenue was primarily 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. Once our new manufacturing facility commences operation in May, we expect to completely resolve the production "bottleneck" issues. Additionally, we expect to begin seeing additional revenue growth due to the previously mentioned improvement to our product mix. As a result, 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 and beyond.

Cost of Revenue. Cost of revenue for the three months ended March 31, 2009 was approximately US$5.1 million or 51% of revenue as compared to US$5.1 million or 55% of revenue for the three months ended March 31, 2008. Cost of revenue for the nine months ended March 31, 2009 was approximately US$14.7 million or 50% of revenue as compared to US$14.0 million or 58% of revenue for the nine months ended March 31, 2008. 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 increase of the gross profit margin was mainly due to the optimization of product portfolio with higher gross profit margin, enhanced cost control through the saving of material consumption and manufacturing overhead, and production method improvement. We anticipate further improvements in our cost of revenues as we continue to expand our capacities and optimization of our production processes and product mix.

Gross Profit. As a result of the above, gross profit for the three months ended March 31, 2009 was approximately 49% as compared to 45% for the three months ended March 31, 2008. Gross profit for the nine months ended March 31, 2009 was approximately 50% as compared to 42% for the nine months ended March 31, 2008.

Operating Expenses. Selling, general and administrative and research and development expenses were approximately US$2.6 million for the three months ended March 31, 2009, as compared to approximately US$2.3 million for the three months ended March 31, 2008, an increase of approximately US$0.3 million or 13%. Selling, general and administrative and research and development expenses were approximately US$7.9 million for the nine months ended March 31, 2009, as compared to approximately US$4.5 million for the nine months ended March 31, 2008, an increase of approximately US$3.4 million or 76%. The increase was primarily a result of the implementation 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$1.9 million for the three months ended March 31, 2009, as compared to net income of approximately US$1.3 million for the three months ended March 31, 2008, an increase of US$0.6 million or 49%. Net income was approximately US$5.7 million for the nine months ended March 31, 2009, as compared to net income of approximately US$4.4 million for the six months ended March 31, 2008, an increase of US$1.3 million or 29%. The increase in our net income was primarily the result of increases in our revenue along with improved product margins.

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$ 296,009 as of March 31, 2009. The balance sheet amounts with the exception of equity at March 31, 2009 were translated at 6.82560 RMB to 1.00 US dollar as compared to 7.00220 RMB to 1.00 US dollar at March 31, 2008. The equity accounts were stated at their historical rate. The average translation rates for the three months ended March 31, 2009, and March 31, 2008 were RMB6.84659 and RMB7.17568, respectively. The average translation rates applied to income statement accounts for the nine months ended March 31, 2009, and March 31, 2008 were RMB6.82827 and RMB7.39687.

Comprehensive Income. As a result of the above, the comprehensive income, which adds the currency adjustment to net income, was US$6.0 million for the nine months ended March 31, 2009, as compared to the comprehensive income of US$5.8 million for the nine months ended March 31, 2008, an increase of US$0.2 million.