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Chengdu Tianyin Pharmaceutical Co. Ltd. effected a reverse merger with VisCorp (OTC:VSCO) on January 16, and at the same time, the company announced that it had successfully raised $10.2 million in a private placement. Tianyin Pharmaceutical Co., Inc. will become the new name of the company.

Chengdu Tianyin, which was founded in 1994, manufactures traditional China medicines and other pharmaceuticals. It has two manufacturing facilities and more than 1,100 employees, including a sales force of 500. Current management took over the company in 2003. The company manufactures 34 products, 22 of which are listed in the National Medicine Catalog of the National Medical Insurance program. Another 51 products are awaiting approval from the SFDA.

In fiscal 2007, which ended June 30, 2007, Chengdu Tianyin reported revenues of $20.4 million and net income of $4.2 million.

To complete the reverse merger, VisCorp issued 12,790,800 shares of VisCorp common stock to Raygere Ltd., the BVI-based holding company that owns Chengdu Tianyin. In total, the new company will have 14,587,500 shares of stock outstanding after the new shares have been issued.

The $10.2 million in new capital, which came from 24 accredited investors, will be reduced by placement costs to just $9.2 million. Chengdu Tianyin will use the money to expand its manufacturing plant in Chengdu. The company is in talks with two additional investors, who could add between $3 million and $5 million to the total. Chengdu Tianyin expects this transaction to close before January 31, 2008.

In exchange for the money raised thus far, Chengdu Tianyin will issue 102.25 units that consist of:

• $10,225,000 10% convertible exchangeable notes due on or before June 30, 2009
• 5-year warrants to buy 3,195,313 shares of stock at $2.50 each
• 7-year warrants to buy 3,195,313 shares of stock at $3.00 each

Two days after the merger was completed, Chengdu Tianyin/VisCorp remains a very thinly traded stock. It is currently lower by 30 cents on the session at $2.40, which gives the company a market capitalization of $35 million.

Disclosure: none.

Source: VisCorp Reverse Merges to Become Tianyin Pharma