FORWARD-LOOKING INFORMATION

This report contains forward-looking statements regarding our plans, expectations, estimates and beliefs. Actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may," and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We have based these forward-looking statements largely on our expectations.

Forward-looking statements are subject to risks and uncertainties, certain of which are beyond our control. Actual results could differ materially from those anticipated as a result of the factors described in the "Risk Factors" and detailed in our other Securities and Exchange Commission filings.

Because of these risks and uncertainties, the forward-looking events and circumstances discussed in this report or incorporated by reference might not transpire. Factors that cause actual results or conditions to differ from those anticipated by these and other forward-looking statements include those more fully described in the "Risk Factors" section and elsewhere in this report.

We did not conduct any operations during periods up through the date of the Share Exchange. However, we have included elsewhere in this report the historical consolidated financial statements of the Company and its subsidiaries, which we own as a result of the Share Exchange. The following discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of this report. Actual results may differ materially from those contained in any forward-looking statements.

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 the Company for the year ended June 30, 2009 and should be read in conjunction with such financial statements and related notes included in this report.

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 Chengdu Tianyin for the fiscal years ended June 30, 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 17 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.

In June 2009, Chengdu Tianyin invested $723,500 to establish a wholly-owned trading subsidiary, Chengdu Tianyin Medicine Trading Co., Ltd ("Tianyin Medicine Trading") for sales and distribution of medicine produced by Chengdu Tianyin. We expect the establishment of Tianyin Medicine Trading will help optimize our business model through better distribution channels. As at June 30, 2009, Tianyin Medicine Trading was still in the stage of registration and preparation for operations.

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 past fiscal year, we continued this strategy and increased market penetration and revenue growth in 2009. Management plans to continue our emphasis on expanded and enhanced marketing and sales in our 2010 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 17 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. As of September 10, 2009, we have received twelve new SFDA approvals as below:

Drug Name                            SFDA Approval Number

1.  Laonian Kechuan Tablets         (SFDA approval number H2008S02059)

2.  Fuke Zhidai Tablets             (SFDA approval number Z20083375)

3.  Tongbianling Capsule            (SFDA approval number Z20083424)

4.  Baotailing Tablets              (SFDA approval numberZ20093087)

5.  Duyiwei Dispersible Tablets     (SFDA approval number Z20090239)

6.  Compound Dantong Capsules       (SFDA approval number Z20093012)

7.  Mycophenolate Mofetil Capsule   (SFDA approval number H20080819)

8.  Tongqiao Biyan Tablets          (SFDA approval number Z20093063)

9.  Child Qingrezhike Oral Liquid   (SFDA approval number Z20093060)

10. Yiqing Capsules                 (SFDA approval number Z20093084)

11. Sanqi Tablets                   (SFDA approval number Z20093512)

12. Yinqiao Jiedu Tablets           (SFDA approval number Z20093555)

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

Laonian Kechuan Tablets is a drug that is 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 within the present marketplace.

Fuke Zhidai Tablets is a drug that is 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.

Tongbianling Capsule is a 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.

Bao Tai ling capsule is 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.

Duyiwei dispersible tablets can be used for relief the pain caused by the surgical operations. This drug also can be used to treat bleeding, fracture and dysmenorrhea.

Compound Dantong Capsules is a 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.

Mycophenolate Mofetil capsule is able to 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 the same time.

Tongqiao BiYan tablet is generic Traditional Chinese Medicine which 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.

Child Qingrezhike Oral Liquid is able to treat the children rheum and cough. In addition, it can relief the pain of laryngopharynx.

Yi Qing Capsules is generic Traditional Chinese Medicine which is able to treat sore pain of throat and gum, pharyngitis and tonsillitis.

Sanqi Tablets are a generic TCM that effectively treats traumatic injuries and stops bleeding without causing blood stasis, while also alleviating associated pain and reducing swelling. Sanqi is also used as a hemostatic for patients with internal bleeding or hemorrhagic diseases.

Yinqiao Jiedu Tablets are a generic TCM which are used mainly to treat acute respiratory system ailments, such as influenza and common cold. It is specifically used to clear the lungs and aid in function of the throat.

An important aspect to support our growth strategy is to meet the increasing demand from our customers and enhance production and sales infrastructure. As part of the use of proceeds from our private placement financing we have built production facilities on the vacant land of our current premises to accommodate our growth. The new production plant project should enhance our overall production capacity. We presently are estimating the new facilities should allow us to increase production activity threefold. We have estimated our expenditure on this project at approximately $5 million. The capital required for the expansion of our facilities was sourced from our $15.2 million financing completed in January 2008. The planned Gross Floor Area (GFA) is about ten thousand square meters with modern state-of-the-art manufacturing equipment. Construction started in July 2008 and trial operations commenced 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 June 2009, construction of our new plant was completed. The facility has recently passed GMP (Good Manufacturing Practice) certification and it has started mass production. Management estimates that the new capacity could dramatically increase our revenues as we bring on line the additional production capacity.

Management also plans to pursue strategic acquisitions and licensing opportunities as part of our growth strategy in 2010 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.

As part of these initiatives, in April 2009, we entered into a land supply agreement with the Sichuan Xinjin County Government to acquire 100 mu (approximately 66,700 square meters) of land within the Xinjin Chemical Industrial Park. We plan to establish a manufacturing plant for Active Pharmaceutical Ingredients ("API") of macrolides antibiotics on the site. We also plan to partner with Sichuan Mingxin Pharmaceutical Co., Ltd. in the launch of a new joint venture, Sichuan Jiangchuan Pharmaceutical Co., Ltd. (the "Sichuan Jiangchuan JV"), which will primarily engage in the research and development, manufacturing and sales & marketing of API and chemical intermediates of macrolides antibiotics. Although we have not yet entered into definitive agreements, we anticipate that the joint venture will ultimately be 95% owned by Tianyin. We currently plan to fund the Sichuan Jiangchuan JV in two phases with a total investment estimated to reach approximately US$20 million (Phase I: $10 million for plant construction, auxiliary facilities construction and equipment purchase. Phase II: $10 million for construction of high output manufacturing lines. We expect to fund the Sichuan Jiangchuan JV through internal cash flow, funds from the exercise of investor warrants from our previous financing and possible future financings. Our ability to complete this project is however subject to a number of factors such as our ability to obtain necessary regulatory approvals in China, our ability to negotiate definitive documents with our proposed JV partner and the ability to complete additional financings if we are unable to fund the project through internal cash flows or warrant exercises and therefore we cannot guarantee that we will be able to successfully complete the project as currently anticipated.

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 2010 and beyond. Additionally, we believe that our growth and overall market coverage could be further improved by certain strategic acquisitions or licensing opportunities such as through the proposed Sichuan Jiangchuan JV. In addition, 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 our commercialized products with various manufacturing, sales and marketing efforts. We are also in the process of enhancing our infrastructure and business via additional additional investments, 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.

In June 2009 we engaged a major advertising firm to commence a marketing initiative for our Xuelian Chongcao Oral Liquid (Xuelian Chongcao) product that will include prominent, prime-time advertisements on China Central Television (CCTV). CCTV is China's most famous television station and is viewed by roughly 98% of households throughout China. We anticipate this advertisement initiative should expand the brand awareness for this product materially. We anticipate the increasing brand awareness should drive incremental sales materially and lay the groundwork for this product to follow similar growth histories of Ginko Mihuan and Xuelian Chongcao which have become significant products for our Company.

Fiscal Year 2010 Financial Guidance

Tianyin is forecasting continued robust growth for our 2010 fiscal year. Given current positive trends we anticipate revenues could exceed $59 million during this period, generating a potential minimum net income of approximately $10.5 million. This potentially represents revenue and net income growth of approximately 38% and 33%, respectively as compared to our fiscal year end 2009. Management estimates that approximately $7 million, or 12% of total revenues should result from products that were launched during fiscal 2009 and estimates that sales of the Company's flagship product, Ginko Mihuan, should grow by approximately 80% to $20 million in fiscal 2010. Forecasted net income does not include non-cash expenses associated with stock compensation plans, stock option expenses and/or future interest expense.

Our continued growth will be supported by a number of initiatives, including:

? Receiving Good Manufacture Practice ("GMP") certification for Tianyin's new production facility that we estimate will increase our capacity for solid dosage by 300%, which should enable future growth for up to 20 additional products;

? Launching a wholesale business component focused exclusively on distributing higher margin, specialty products for other pharmaceutical manufactures through our existing sales force and distribution channels;

? Capitalizing on the new Chinese Healthcare Reform Act that we anticipate will increase demand for approximately 20 of the total 22 drugs that Tianyin currently has listed in the reimbursement catalog;

? Expanding our targeted marketing strategy, including multi-media and television advertising, to bolster our brand's and to promote our higher gross-profit-margin products, such as Ginkgo Mihuan Oral Liquid and Xuelian Cangcao;

? Expanding collaboration with universities and research organizations to complement Tianyin's internal drug development efforts allowing us to scale our pipeline of drugs; and

? Continuing to look for complementary acquisitions that are primarily focused on existing product line, that may increase the depth and breadth of our existing portfolio.

This guidance does not include any future acquisitions or the proposed Sichuan Jiangchuan JV. Management will continue to evaluate its business outlook as necessary and communicate any changes on a quarterly basis or as when appropriate. At June 30, 2009, other than discussions with Sichuan Mingxin Pharmaceutical Co., Ltd. regarding the establishment of the proposed Sichuan Jiangchuan JV, the Company has yet to reach any formal agreements nor is it involved in any definitive discussions regarding potential acquisitions.

Discussion on Operating Results

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 fiscal years ended June 30, 2009 and 2008

Year Ended June 30                                                 2009             2008
Revenues                                                       $ 42,894,355     $ 33,459,609
Cost of revenues                                               $ 21,516,065     $ 18,802,225
Gross profit                                                   $ 21,378,290     $ 14,657,384
Selling, general and administrative and research and
development expenses                                           $ 11,661,695     $  7,088,663
Other expense                                                  $    169,881     $    368,113
Income taxes                                                   $  1,639,104     $  1,229,300
Net profit (Loss)                                              $  7,907,610     $  5,971,308
Foreign adjustment                                             $     73,506     $  2,044,766
Comprehensive income (Loss)                                    $  7,981,116     $  8,016,074

Revenue. Total revenue were approximately US$42.9 million for the fiscal years ended June 30, 2009 as compared to approximately US$33.5 million for the fiscal years ended June 30, 2008, an increase of approximately US$9.4 million or 28%. 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. 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 significant revenue growth in our fiscal year 2010 and beyond.

Cost of Revenue. Cost of revenue for the fiscal years ended June 30, 2009 was approximately US$21.5 million or 50.2% of revenue as compared to US$18.8 million or 56.2% of revenue for the fiscal years ended June 30, 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 decrease in our cost of revenue was materially due to an increase in higher margin products in our sales mix along with enhanced cost controls processes that we implemented that yielded greater efficiencies in our production and manufacturing processes. We believe we should be able to further improve our margins and further reduce our cost of revenue by continuing to expand our efforts to increase our sales mix with a greater number of higher margin products and by continuing to improve our production and manufacturing processes.

Gross profit. As a result of the above, gross profit for the fiscal years ended June 30, 2009 was approximately 49.8% as compared to 43.8% for the fiscal years ended June 30, 2008.

Operating Expenses. Selling, general and administrative and research and development expenses were approximately US$11.7 million for the fiscal years ended June 30, 2009, as compared to approximately US$7.1 million for the fiscal years ended June 30, 2008, an increase of approximately US$4.6 million or 64.5%. 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$7.9 million for the fiscal years ended June 30, 2009, as compared to net income of approximately US$6.0 million for the fiscal years ended June 30, 2008, an increase of US$1.9 million or 32.4%. 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$ 73,506 as of June 30, 2009. The balance sheet amounts with the exception of equity at June 30, 2009 were translated at
6.82593 RMB to 1.00 US dollar as compared to 6.85401 RMB to 1.00 US dollar at June 30, 2008. The equity accounts were stated at their historical rate. The average translation rates applied to income statement accounts for the years ended June 30, 2009 and 2008 were the average exchange rates during the years.

Comprehensive Income. As a result of the above, the comprehensive income, which adds the currency adjustment to net income, was US$7.98 million for the fiscal years ended June 30, 2009, as compared to the comprehensive income of US$8.02 million for the fiscal years ended June 30, 2008, a decrease of US$0.04 million. The currency adjustment for the fiscal year ended June 30, 2008 was significant, During the year ended June 30, 2008, the exchange rate changed from
7.6155 RMB to 1.00 US dollar to 6.8540 RMB to 1.00 dollar. As such, the overall foreign current translation adjustment was approximately $2,045,000 for the 12 months ended June 30, 2008. For the year ended June 30, 2009, the exchange rate was more stable. Thereby, the foreign currency translation adjustment was only roughly $74,000 for our 2009 fiscal year.

Liquidity and Capital Resources
Discussion of cash flow

                                          For the fiscal years ended June 30,
                                             2009                     2008
Cash flow from operating activities   $        8,336,998       $        3,708,917
Cash flow from investing activities           (7,843,281 )             (4,670,844 )
Cash flow from financing activities             (185,531 )             12,072,898

Operating activities

As of June 30, 2009, we had working capital totaling approximately US$19.3 million, including cash and cash equivalents of US12.4 million. On January 16, 2008 and January 25, 2008, we completed private financings totaling $15,225,000, with 27 accredited investors (the "January 2008 Financing"). The net proceeds from the January 2008 Financing were approximately $13.7 million.

Net cash generated from operating activities was US$8.3 million for the fiscal years ended June 30, 2009 as compared to US$3.7 million for the same period of 2008. The increase of cash generated from operating activities during the fiscal years ended June 30, 2009 was primarily the result of revenue growth that brought a significant increase in net income.

With US$12.4 million in net cash and equivalents on June 30, 2009 and positive cash flow, we believe, except as otherwise needed to fund the proposed the Sichuan Jiangchuan JV, the Company is adequately funded to meet all of our working capital and capital expenditure plans for 2009.

Investing activities

Net cash used in investing activities for the fiscal years ended June 30, 2009 and 2008 totaled US$7.8 million and US$4.7 million respectively and related to the acquisition of intangible drug, and property and equipment. The increase of cash used in investing activities during the fiscal years ended June 30, 2009 was mainly due to our increased efforts in new drugs development and the construction of our new production plant project

Financing activities

Net cash used in financing activities for the fiscal years ended June 30, 2009 totaled US$0.2 million and mainly related to the stock bought back and dividends payment. Net cash generated from financing activities for the fiscal years ended June 30, 2008 was US$12 million and mainly related to the proceeds from capital contribution.

Borrowings and Credit Facilities

The bank borrowing balance equals to the credit facilities as of June 30, 2009. The short-term bank borrowings outstanding as of June 30, 2009 and 2008 were US$1.4 million and US$1.4 million which born an average interest rate of 5.6286% and 7.881% per annum, respectively, and it was adjusted quarterly according to the loan rate of the People's Bank of China. These loans are borrowed from various financial institutions and represent the maximum amount of each facility. These loans do not contain any financial covenants or restrictions. The borrowings have one year terms and expire at various times throughout the year. These facilities contain no specific renewal terms. The short-term bank borrowings of US$1.4 million as of June 30, 2009 and as of June 30, 2008 were . . .