Annual Report (10-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the fiscal year ended June 30, 2015.

	OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File No. 1-32674

AOXING PHARMACEUTICAL COMPANY, INC.

(Exact Name of Registrant as Specified in its Charter)

Florida	65-0636168
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer ID Number)

444 Washington Blvd, Suite 3338, Jersey City, NJ 07310

(Address of principal executive offices)

Issuer's Telephone Number, including Area Code: 646-367-1747

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange Where Registered
Common Stock, $.001 par value	NYSE MKT

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 406 of the Securities Act. Yes __ No √

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes __ No √

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 90 days. Yes √ No __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes √ No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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. (Check One)

Large accelerated filer ___ Accelerated filer ___ Non-accelerated filer ___ Smaller reporting company X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No √

The aggregate market value of the Registrant’s common stock, $.001 par value, held by non-affiliates as of December 31, 2014, the last business day of the second fiscal quarter, was $11,482,953.

As of October 9, 2015 the number of shares outstanding of the Registrant’s common stock was 72,172,200 with $.001 par value.

DOCUMENTS INCORPORATED BY REFERENCE: None.

FORWARD-LOOKING STATEMENTS: NO ASSURANCES INTENDED

This Annual Report on Form 10-K (including the section regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, as well as information relating to Aoxing Pharmaceutical Company, Inc. that represents management’s assumptions based on the information currently available to management. Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. When used in this document and other documents, releases and reports released by us, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “the facts suggest” and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect our current view of future events and are subject to certain risks and uncertainties as noted below. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results could differ materially from those anticipated in these forward-looking statements. Actual events, transactions and results may materially differ from the anticipated events, transactions or results described in such statements. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize. Many factors could cause actual results to differ materially from our forward looking statements, including those set forth in Item 1A of this report. Other unknown, unidentified or unpredictable factors could materially and adversely impact our future results. We undertake no obligation and do not intend to update, revise or otherwise publicly release any revisions to our forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.

We file reports with the Securities and Exchange Commission (“SEC” or “Commission”). You can read and copy any materials we file with the Commission at its Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition, the Commission maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission, including our reports.

Our fiscal year ends on June 30, and any references herein to “Fiscal 2015” mean the year ended June 30, 2015, and references to other “Fiscal” years mean the year ending June 30 of the year indicated.

PART 1

Item 1. Business

Aoxing Pharmaceutical Company, Inc. (“Aoxing Pharma” or “Company”) has one operating subsidiary, Hebei Aoxing Pharmaceutical Co., Inc. (“Hebei Aoxing”), which is organized under the laws of the People’s Republic of China (“PRC”). Since 2002, Hebei Aoxing has been engaged in developing narcotics and pain management products. In 2008 Hebei Aoxing supplemented its product lines by acquiring Shijiazhuang Lerentang Pharmaceutical Company, Ltd. (“LRT”), a specialty pharmaceutical company focusing on herbal pain related therapeutics. The Company owns 95% of the equity in Hebei Aoxing.

History of the Company

The Company was incorporated in the State of Florida on January 23, 1996. In 2006 the Company liquidated its previous business assets and acquired 60% of Hebei Aoxing. On May 1, 2008 the Company completed the acquisition of an additional 35% interest in Hebei Aoxing from Zhenjiang Yue, our Chief Executive Officer.

On April 16, 2008, Hebei Aoxing completed the acquisition of 100% of the registered capital of Shijiazhuang Lerentang Pharmaceutical Company Limited (“LRT”). LRT was engaged in the manufacture and distribution of Chinese traditional medicines focusing on pain management related therapeutics within China. In exchange for transfer of ownership of LRT to Hebei Aoxing, the Company paid to the shareholders of LRT 80 million Renminbi and related expenses (approximately $12.4 million in total) and issued 4 million shares of common stock. Subsequently the Company undertook the integration of LRT’s business and operations into Hebei Aoxing, which resulted in a requirement that our manufacturing facilities be relicensed by the government. In April 2011, the combined Hebei Aoxing and LRT manufacturing facility received GMP certification from the Chinese State Food and Drug Administration (CFDA) for its production lines. The certification marked the completion of the integration of LRT into Hebei Aoxing. LRT’s business is currently operated under Hebei Aoxing.

On April 26, 2010, Aoxing Pharma and Johnson Matthey Plc entered into an agreement to establish a joint venture focused on research, development, manufacturing and marketing of active pharmaceutical ingredients ("API') for narcotics and neurological drugs for the China market. Under the terms of the agreement, Macfarlan Smith Ltd, a wholly owned subsidiary of Johnson Matthey Plc, headquartered in the United Kingdom, will contribute technology expertise and capital to the joint venture. Hebei Aoxing will contribute capital, fixed assets and related API manufacturing licenses. The joint venture company is called Hebei Aoxing API Pharmaceutical Company, Ltd. Hebei Aoxing has a 51% stake in the joint venture, while Macfarlan Smith (Hong Kong) Ltd (a wholly owned subsidiary of Johnson Matthey Pacific Ltd) holds 49%. Each joint venturer has equal representation on a board of directors that will oversee a management team responsible for corporate strategies and operations. The joint venture is located on the Hebei Aoxing campus in Xinle City, 200 kilometers southwest of Beijing. The total capital investment was projected to be approximately $15 million during the first five years at the time of establishment. Approximately $1 million of capital resources had been invested in the joint venture as of June 30, 2015.

The slower than planned investment has been mainly the result of delays in securing API manufacturing licenses and the Company’s focus on its core business.

Pharmaceutical Market in China

The market for pharmaceutical products in China has been growing dramatically during the past decade. The growth in the Chinese pharmaceutical market is driven by several factors including improving standards of living and an increase in disposable income fueled by the growing economy, the aging population, the increasing participation in the State Basic Medical Insurance System and the increase in government spending on public health care. Nevertheless, the pharmaceutical market in China is highly fragmented. We believe there are over 3,000 small enterprises currently engaged in the development, manufacture and sale of pharmaceutical products, and we expect significant consolidation of pharmaceutical business, products and technologies in China in near future. However, based on recent statistics provided by the CFDA, there are only 13 pharmaceutical companies designated by the CFDA as narcotic drug producers in China, and we are one of them.

Narcotics and Pain Management

Since its inception in 2002, Hebei Aoxing has been focusing on research, development, manufacturing and distribution of a variety of narcotics and pain management pharmaceutical products in China. A significant portion of its facility is dedicated to conducting the narcotic drug business with GMP manufacturing capability for drugs in tablet, capsule, injectable, oral solution and granulated formulations - the remainder of the facility is dedicated to the herbal pharmaceutical products acquired from LRT. Over the years, the company has developed a compelling pipeline in narcotics and pain management drugs, including Naloxone, Tilidine, Oxycodone, and Buprenorphine.

Narcotics, also known as opioids, are chemical substances that have a morphine-like action in the body. They are prescribed when other pain medications and therapies fail to work. Opioids are used mostly for their analgesic properties to treat severe pain (fentanyl, hydromorphone, methadone, morphine and pethidine), moderate to severe pain (buprenorphine and oxycodone) and mild to moderate pain (codeine, dihydrocodeine and dextropropoxyphene), as well as to induce or supplement anaesthesia (fentanyl and fentanyl analogues such as alfentanil and remifentanil). They are also used as cough suppressants (codeine, dihydrocodeine and, to a lesser extent, pholcodine and ethylmorphine), to treat gastrointestinal disorders, mainly diarrhea (codeine and diphenoxylate), and in the treatment of addiction to opioids (buprenorphine and methadone). Certain analgesic opioids, such as hydrocodone or oxycodone, are compounded in mixtures with non-opiate drugs to provide analgesic action (analgesic-antipyretic preparations). These drugs are often used in combination with other medications such as antidepressants, anticonvulsants, and non-narcotic pain relievers. Opioids are the strongest pain medicines available and may become addictive if used on a long-term basis.

Scientific research suggests that opioids relieve pain in two ways. First, they attach to opioid receptors, which are specific proteins on the surface of cells in the brain, spinal cord and gastrointestinal tract. These drugs interfere with the transmission of pain messages to the brain. Second, they work in the brain to alter the sensation of pain. These drugs do not take the pain away, but they do reduce and alter the patient’s perception of the pain. There are four broad classes of narcotics: (1) endogenous opioid peptides (opioids produced naturally in the body); (2) opiates, such as the naturally occurring alkaloids, morphine, codeine, thebaine, papaverine, and the non-alkaloid heroin (processed morphine); (3) semi-synthetic opioids, created from the natural opioids, such as hydromorphone, hydrocodone, and oxycodone; and (4) fully synthetic opioids, such as fentanyl, pethidine, methadone, and propoxyphene.

Opioid drugs have been associated with illicit drug abuse and drug related crime since the onset of their medical use. The United Nations and its member States coordinate responses to this problem through international drug control conventions. Over 95 per cent of the Member States of the United Nations are now parties to the international drug control conventions, or the “Single Convention on Narcotic Drugs, 1961,” organized by International Narcotics Control Board (“INCB”). The conventions contain the basic legal structure, obligations, tools and guidance that are needed for all States to achieve the main aims of the international drug control system: controlled universal availability of narcotic drugs and psychotropic substances for medical and scientific purposes only; prevention of drug abuse, drug trafficking and other forms of drug-related crime; and the undertaking of effective remedial action when prevention does not fully succeed. As such, the conventions constitute the world’s agreed proportionate response to the global problems of illicit drug abuse and trafficking and the world’s agreed legal framework for international drug control.

China entered the “Single Convention on Narcotic Drugs, 1961” in 1985, which resulted in the gradual loosening of government policy toward the control of analgesic supplies. Before 2000, the average consumption of analgesics in China was less than 1% of the consumption in industrialized countries. There were only six varieties of analgesics available in production. By 2010, Chinese government had approved the production of 25 varieties of analgesics. In the near future, patients in China will find 30 varieties and over 80 specifications of different types of analgesics. Worldwide, there are about 123 varieties of narcotics and pain medicines.

Marketed Products

Each of our pharmaceutical products has certain medicinal functions and has demonstrated safety and efficacy in accordance with the CFDA requirements for the treatment of one or more therapeutic indications. Our products are produced in various formulations, such as injection, tablets, capsules, oral solution and powders. Our manufacturing facility in China is GMP certified, fully integrated with manufacturing support systems including quality assurance, quality control and regulatory compliance. We have developed our own independent quality control systems in accordance with CFDA regulations. Our quality assurance team devotes significant attention to quality control for designing, manufacturing and testing our products, and is also responsible for ensuring that we are in compliance with all applicable national and local regulations and standards, as well as our internal policies. Our senior management team is also actively involved in setting quality assurance policies and managing internal and external quality performance. These support systems enable us to maintain high standards of quality for our products and deliver reliable products to our customers on a timely basis.

We have more than 100 products under licenses from CFDA. The following is a brief description of the two products that generate most of our revenue.

Zhongtongan: Zhongtongam is a capsule of herbal extraction manufactured under modern GMP standards for the indication of oral and dental pain. We expanded its use to include gynecological and orthopedic application in 2011. Zhongtongan has accounted for more than 90% of our total sales in each of the past four fiscal years.

Bismuth Potassium Citrate: An oral solution containing bismuth subcitrate potassium, for the treatment of chronic gastritis and stomachache due to excessive stomach acid.

Newly Approved Product

On June 8, 2015, the China Food and Drug Administration ("CFDA") issued to Aoxing Pharma's subsidiary licenses to produce Tilidine Hydrochloride tablets (“Tilidine HCL”). Registration Certificate 2015S00391 was issued for the 50mg tablet; Registration Certificate 2015S00390 was issued for the 100mg tablet. This approval is the culmination of multiple years of research, development and regulatory activities. Our entry into the market will be a significant break-through in China's fight to treat pain. Tilidine HCL tablets offer a convenient medium for delivery of this drug, which is essential in the fight against pain. We will be the sole producer of Tilidine HCL tablets in China.

Tilidine hydrochloride is an orally-absorbed synthetic narcotic analgesic. It is used in 50mg or 100mg dosage strength for relief of acute, moderate to severe pain, and chronic cancer-related pain. Tilidine hydrochloride is currently selling in European countries, including Germany, Belgium, Ireland, Italy and Switzerland and is not available in China at the moment.

It is estimated that there are at least 50 million operation procedures performed in Chinese hospitals and clinical centers every year, and 50% of these procedures require acute post-operative pain treatment. In addition, there are estimated to be over 2.2 million newly diagnosed cancer patients every year, and 60% of them are unable to receive necessary pain management under the current treatment paradigm. According to the New England Journal of Medicine, cancer has become the No. 1 cause of death, contributing to 20% of adult deaths in China.

Our Phase III clinical study of Tilidine Hydrochloride tablets was a multi-center, randomized, double-blind and active-control study which covered two pivotal trials: (1) a trial of 200 patients with post-operative pain for the indication of acute moderate to severe pain; and (2) a trial of 120 patients with cancer pain for the indication of chronic moderate to severe pain. The study was conducted at 9 metropolitan hospitals in China. The primary endpoints used to evaluate the efficacy were the sum of pain score differences, measured by Pain Intensity Difference (PID). The Company submitted the New Drug Application (NDA) for the final production clearance to the CFDA and received its final approval. The CFDA reviewed the Company’s GMP facilities for the production of Tilidine in early 2015, and we received production licenses in June 2015. We expect to start production in the last quarter of2015. Tilidine is designated as a Class III New Medicine with at least three-year market exclusivity protection.

Research and Development

We have an in-house state-of-art facility which allows our multi-discipline team to conduct pharmaceutical research and development. Our research and development (“R&D”) team consists of chemists, biologists, pharmacologists and other technical experts. The team works on multiple projects, ranging from early stage discovery to advanced clinical studies. Our team is capable of performing chemical synthesis, analytic analysis, pharmacology, toxicology as well as other technical tasks related to pharmaceutical industry. During our fiscal 2015, we invested $337,067 in R&D efforts. Our R&D expenditures during fiscal 2014 and 2013 were $569,699 and $1,480,217, respectively. In addition, we rely on arrangements with universities, our collaborators, contract research organizations and clinical research sites for a significant portion of our product development efforts.

Our R&D team is working on the following products pipeline:

Oxycodone & Acetaminophen Tablets and Capsules (waiting for production licenses). Oxycodone & Acetaminophen Tablets and Capsules are compound tablets and compound capsules consisting of Oxycodone HCL and Acetaminophen which is used to treat acute and chronic pain. Oxycodone and Acetaminophen are categorized as class II psychotropic drugs which are not subject to the rules of the Single Convention on Narcotic Drugs. Oxycodone & Acetaminophen Tablets and Capsules are currently being imported from Mallinckrodt into China. Aoxing will be the first Chinese company to produce this generic product.

We obtained clinical trial approval of this product in September 2012. This product only requires trial on bioequivalence and needs 24 cases for each trial; no phase II trial or phase III trial is required. We have completed the clinical trials and the trials results has been submitted to the CFDA. The Company had also submitted the New Drug Application (NDA) for the final production clearance to the CFDA and is currently waiting for final approval.

Buprenorphine/ Naloxone (started submission of the registration data). In November 2007, the CFDA granted Hebei Aoxing and its partner, the National Institute of Drug Dependence at Beijing University, an important research and development license for Buprenorphine/Naloxone sublingual combo tablet to treat opioid dependence. This project has been a joint effort of scientists from our Company and Beijing University since April 2005. This new combo therapy is expressly designed to combine the proven effectiveness and tolerability of buprenorphine with a lower potential for misuse, underlining our commitment to this therapy area. There is much peer-reviewed evidence of superior efficacy and safety profile for this therapy.

In August 2010, the CFDA granted the Company authority to initiate the registration clinical trial of Buprenorphine/Naloxone sublingual tablets for opioid addiction treatment. The approval enabled Aoxing Pharma to move forward to the final development stage with this therapy, which is novel in China as it is not yet available to patients. The registration trial is being administered by the National Institute on Drug Dependence of China at Beijing University, the co-development partner of Aoxing Pharma. The patient enrollment takes place in at least three Compulsory Drug Dependence Treatment Centers. Kunming General Hospital of the Chengdu Military Region collaborated in the clinical trial as leader unit, and Shanghai Mental Health Center and Guangzhou psychiatric hospital as member units since April, 2004. The phase I and phase II clinical trial have been completed. (This project doesn't require a phase III clinical trial).

In July of 2015, we announced positive results of Buprenorphine/Naloxone sublingual tablets as a treatment for opioid dependence. This was a registration clinical study evaluating the safety and efficacy of the sublingual tablets in order to gain the final production and marketing clearance by the China Food and Drug Administration (CFDA). In this multi-center, placebo-controlled, double-blinded, randomized, and paralleled study, 300 patients with opioid dependence were enrolled in 12-week therapy. The primary endpoints of this study were to evaluate the safety and effectiveness of the sublingual tablets for the opioid dependence patients, by measuring the rate of outpatient service; the secondary endpoints of the study included the negative rate of urine morphine test, among other issues.

Our Buprenorphine/Naloxone sublingual tablets program could be the first such therapy in the Chinese market in treating opioid dependence patients. The drug demonstrated statistical significance in the measurements designed in the trial. We are working on the final preparation toward the submission of the registration data package, and look forward to the final clearance by the China CFDA.

Based on Chinese government data, drug abuse and addiction has become a serious social problem and the situation has been getting worse over the last two decades. As of December 2014 there were 2.95 million registered drug addicts in China, which is 0.5 million more than in 2013. We believe the real population of drug addicts is estimated to be about 10 times of the registered number in the country. The Chinese government has taken comprehensive measures to address this problem, including centralized compulsory treatment camp, community clinics, psychological consulting and pharmacological therapies. We believe Buprenorphine/Naloxone sublingual tablets will be a major product in Chinese market in treating opioid dependence patients.

Tilidine / Naloxone (under clinical trial) Tilidine / Naloxone Capsules are compound capsules consisting of Tilidine HCL and Naloxone, which is used to treat acute and chronic pain. The mixture of naloxone is claimed to lower the abuse liability of the opioid analgesic. This will be the next generation of our Tilidine product line, and it is currently under Phase 2 clinical trial.

Employees

The Company currently has approximately 339 employees. There are 77 employees in administrative and management, 13 employees in R&D, 20 employees in quality assurance and quality control, 165 employees in production, and 64 employees in sales and marketing.

We consider our employee relations to be good.

Item 1A Risk Factors

Our business, financial condition, operating results and prospects are subject to the following risks. Additional risks and uncertainties not presently foreseeable to us may also impair our business operations. If any of the following risks actually occurs, our business, financial condition or operating results could be materially adversely affected. In such case, the trading price of our common stock could decline, and our stockholders may lose all or part of their investment in the shares of our common stock. You should carefully consider the risks described below before buying our common stock.

Our independent accountants have included an explanatory paragraph in their audit report raising substantial doubt as to the Company’s ability to continue as a going concern, due to the Company’s history of losses, negative cash flow from operations, and its working capital deficiency.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company had an accumulated deficit $58.4 million as of June 30, 2015. At June 30, 2015 we had a $20.1 million working capital deficiency. These matters raise substantial doubt about the Company’s ability to continue as a going concern. That doubt is expressed in the audit report of our independent auditor for the year ended June 30, 2015. If our Company is unable to continue as a going concern, investors in the Company will incur a loss.

Our sales revenue remains small and mainly derives from a single product. A disruption in, or a compromise of, our manufacturing or sales operations, or distribution channels related to that product could materially and adversely affect our financial condition and results of operations.

Sales for the year ended June 30, 2015 mainly derived from a few products approved by the CFDA. In particular, over 95% of our revenue came from sales of Zhongtongan. We expect these products will continue to account for a majority of our sales in the next one or two years until our new products are approved, launched and become accepted by the market. Because of our dependence on a few products, any disruption in, or compromise of, our manufacturing operations, sales operations or distribution channels, relating to any of these products could result in our failure to meet shipping and delivery deadlines or meet quality standards, which in turn could result in the cancellation of purchase orders, refusal to accept deliveries or a reduction in purchase prices, any of which could have a material adverse effect on our financial condition and results of operations.

We pledged the registered trademarks and renewal certificates relating to our principal product, Zhontongan, to secure a loan of $5,058,086 that is due on October 25, 2015. In each of the past three fiscal years, sales of Zhongtongan represented over 90% of our annual sales revenue. We are planning to raise additional capital or seek external financing to replace this loan. If we are unable to satisfy the secured debt, the creditor, Shijiazhuang Construction Investment Group, will be entitled to foreclose on that collateral. If, in that event, we lose our ability to use those trademarks and certificates in connection with the sale of Zhongtongan, our sales revenue will be drastically reduced.

We lack sufficient capital to fully carry out our business plan.

In order to make our operations cost-efficient, it is necessary that we expand our operations. At the present time, however, our capital resources are sparse. We are exploring various alternatives to improve our financial position and secure other sources of financing. Such possibilities include a new credit facility, new equity raise, new arrangements to license intellectual property, the sales of selected property rights. If we are unable to secure the necessary capital, we may be unable to achieve the size of operations necessary for profitable operations.

Intense competition from existing and new companies may adversely affect our revenues and profitability.

We compete with other companies, many of whom are developing, or can be expected to develop, products similar to ours. Some of our competitors are more established than we are, have greater brand recognition of products that compete with ours, have more financial, technical, marketing and other resources than we presently possess and a larger customer base. These competitors may be able to respond more quickly to new or changing opportunities and customer requirements and may be able to undertake more extensive promotional activities, offer more attractive terms to customers or adopt more aggressive pricing policies. Our commercial opportunity will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects, are less expensive or have more attractive product characteristics than our current products or products that we may develop in the future. We cannot assure you that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not harm our business.

Most of our pipeline products contain narcotic ingredients. As a result of reports of misuse or abuse of prescription narcotics, the sale of such drugs may be subject to new regulation, which may prove difficult or expensive to comply with, and we and other pharmaceutical companies may face lawsuits.

Most of our core pipeline products contain narcotic ingredients. Misuse or abuse of such drugs can lead to physical or other harm. For example, recently, reportedly widespread misuse or abuse of OxyContin®, a product of Purdue Pharma L.P., or Purdue, containing the narcotic oxycodone, resulted in the strengthening of warnings on its labeling. In addition, Purdue, the manufacturer of OxyContin®, faces or did face numerous lawsuits, including class action lawsuits, related to OxyContin® misuse or abuse. We may be subject to litigation similar to the OxyContin® suits related to our generic version of oxycodone or any other narcotic containing product that we market.

The CFDA and Department of Health may impose new regulations concerning the research and development, manufacture, storage, transportation and sale of prescription narcotics. Such regulations may include new labeling requirements, the development and implementation of formal risk minimization action plans, restrictions on prescription and sale of these products. The Chinese government and its agencies could require companies to formulate risk evaluation and mitigation strategies to ensure a drug’s benefits outweigh its risks. In addition, the government and its agencies have authority to regulate distribution and may modify their regulations with respect to prescription narcotics in an attempt to curb abuse. In either case, any such new regulations or requirements may be difficult and expensive for us to comply with, may delay our introduction of new products, may adversely affect our net sales and may have a material adverse effect on our business, results of operations and financial condition.

We depend on our key management personnel and the loss of their services could adversely affect our business.

Our success depends in part on our continued ability to attract, retain and motivate highly qualified management. We place substantial reliance upon the efforts and abilities of our executive officers. The loss of services of any of these individuals or one or more other members of our senior management could delay or prevent the successful execution of our business objectives and could have a material adverse effect on our operations.

Replacing key employees may be difficult and costly and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop and commercialize products successfully. We do not maintain “key person” insurance policies on the lives of these individuals or the lives of any of our other employees. The Company has entered into employment agreements with these individuals. We will need to hire additional personnel as we expand our commercial activities. We may not be able to attract or retain qualified management on acceptable terms in the future due to the intense competition for qualified personnel in our industry. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will impede these objectives.

We cannot assure you that we will be able to complete acquisitions or successfully integrate new businesses into our own.

We intend to pursue opportunities to grow our business by acquiring businesses, products and technologies that are complementary or related to our existing product lines. Successful completion of an acquisition depends on a number of factors that are not entirely within our control, including our ability to negotiate acceptable terms, conclude satisfactory agreements and obtain all necessary regulatory approvals. We may not be able to locate suitable acquisition candidates at prices that we consider appropriate. If we do identify an appropriate acquisition candidate, we may face competition from other companies interested in acquiring the target company that has greater financial and other resources than we have. Acquisitions of businesses, products, technologies or other material operations may require debt financing or additional equity financing, resulting in leverage or dilution of ownership.

Even if we complete one or more strategic transactions, we may be unable to integrate or coordinate successfully the personnel and operations of a business. Integration of acquired business operations could disrupt our business by diverting management away from day-to-day operations. The difficulties of integration may be increased by the necessity of coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. We also may not be able to maintain key employees or customers of an acquired business or realize cost efficiencies or synergies or other benefits we anticipated when selecting our acquisition candidates. In addition, we may incur non-recurring severance expenses, restructuring charges and change of control payments and may need to record write-downs from future impairments of intangible assets, which could reduce our future reported earnings. At times, acquisition candidates may have liabilities or adverse operating issues that we fail to discover through due diligence prior to the acquisition.

In addition to the above, acquisitions in China, including of state owned businesses, will be required to comply with laws of the PRC, to the extent applicable. There can be no assurance that any proposed acquisition will be able to comply with PRC requirements, rules and/or regulations, or that we will successfully obtain governmental approvals to the extent required, which may be necessary to consummate such acquisitions.

If we fail to manage our growth and current operations, we may not achieve future growth or our expected revenues.

In order to maximize potential growth in our current and potential markets, we believe that we must expand our manufacturing and marketing operations. To this end, we are and expect to continue to substantially increase our employee headcount, which will place a significant strain on our management and on our operational, accounting, and information systems. Our need to manage our operations and growth effectively requires us to continue to expend funds to improve our financial controls, operating procedures, management information systems, reporting systems and procedures to manage our increased operations. If we are unable to implement improvements to our management information and control systems successfully in an efficient or timely manner, or if we encounter deficiencies in our existing systems and controls, then management may receive inadequate information to manage our day-to-day operations. We will also need to effectively train, motivate and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

We may be unable to secure the government licenses that are necessary for us to engage in the sale of analgesic pharmaceuticals.

The manufacture and marketing of narcotic drugs is highly regulated in China. Prior to marketing any of our products, we are required to satisfy several government protocols, and receive several licenses from the national and local governments. Obtaining these licenses can be expensive and it is usually time consuming. If we are unable to obtain the necessary licenses when we need to have them, our business plan will be delayed. If the delays prevent us from generating positive cash flow or introducing a significant number of products, our business may fail.

We may have difficulty defending our intellectual property rights from infringement which may undermine our competitive position.

We have been designing and developing new technology. We rely on a combination of patents, trade secret laws, and restrictions on disclosure to protect our intellectual property rights. Unauthorized use of our technology could damage our ability to compete effectively. We regard our service marks, trademarks, trade secrets, patents and similar intellectual property as critical to our success. We rely on trademark, patent and trade secret law, as well as confidentiality agreements to protect our proprietary rights. Certain of our products have received trademark and patent protection in China. No assurance can be given that such patents and licenses will not be challenged, invalidated, infringed or circumvented, or that such intellectual property rights will provide a competitive advantage to us. Our trade secrets may otherwise become known or be independently discovered by our competitors. Policing the unauthorized use of proprietary technology can be difficult and expensive. Also, litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. The outcome of such potential litigation may not be in our favor and any success in litigation may not be able to adequately protect our rights. Such litigation may be costly and divert management attention away from our business. An adverse determination in any such litigation would impair our intellectual property rights and may harm our business, prospects and reputation. Enforcement of judgments in China is uncertain and even if we are successful in such litigation it may not provide us with an effective remedy. In addition, we have no insurance coverage against litigation costs and would have to bear all costs arising from such litigation to the extent we are unable to recover them from other parties. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. In addition, there can be no assurance that we will be able to obtain licenses from third-parties that we may need to conduct our business or that such licenses can be obtained at a reasonable cost.

In addition, third parties may file infringement claims against us asserting that we are infringing on their patents or trademarks. In the event that such claims are filed, regardless of the merit of such a claim, we may incur substantial costs and diversion of management as a result of our involvement in such proceedings.

We are dependent on third parties to supply all raw materials used in our products and to provide services for certain core aspects of our business. Any interruption or failure by these suppliers, distributors and collaboration partners to meet their obligations pursuant to various agreements with us could have a material adverse effect on our business, results of operations and financial condition.

We rely on third parties to supply all raw materials used in our products. In addition, we rely on third party suppliers, distributors and collaboration partners to provide services for certain core aspects of our business, including manufacturing, warehousing, distribution, customer service support, medical affairs services, clinical studies, sales and other technical and financial services. All third party suppliers and contractors are subject to the CFDA, and government agency requirements. Our business and financial viability are dependent on the regulatory compliance of these third parties, and on the strength, validity and terms of our various contracts with these third party manufacturers, distributors and collaboration partners. Any interruption or failure by these suppliers, distributors and collaboration partners to meet their obligations pursuant to various agreements with us could have a material adverse effect on our business, financial condition and results of operations.

The government limits the availability of the active ingredients used in many of our current products and products in development and, as a result, our procurement quota may not be sufficient to meet commercial demand or complete clinical trials.

The Chinese government and CFDA regulate the access to supplies of the chemical compounds in some of our current products and products in development, including oxycodone, codeine, buprenorphine, Tilidine. Consequently, their manufacture, shipment, storage, sale and use are subject to a high degree of regulation.

Furthermore, the government limits the availability of the active ingredients used in many of our current products and products in development and, as a result, our procurement quota of these active ingredients may not be sufficient to meet commercial demand or complete clinical trials. We must annually apply to the government agencies for procurement quota in order to obtain these substances. Any delay or refusal by the agencies in establishing our procurement quota for controlled substances could delay or stop our clinical trials, product launches or could cause trade inventory disruptions for those products that have already been launched, which could have a material adverse effect on our business, financial position and results of operations.

Timing and results of clinical trials to demonstrate the safety and efficacy of products as well as the CFDA’s approval of products are uncertain.

Before obtaining regulatory approvals for the sale of our products, we must demonstrate through preclinical studies and clinical trials that the product is safe and effective for each intended use. Preclinical and clinical studies may fail to demonstrate the safety and effectiveness of a product. A failure to demonstrate safety and efficacy would result in our failure to obtain regulatory approvals.

The rate of patient enrollment sometimes delays completion of clinical studies. There is substantial competition to enroll patients in clinical studies, and such competition has delayed clinical development of our products in the past. Delays in planned patient enrollment can result in increased development costs and delays in regulatory approval. In addition, we rely on collaboration partners that may control or make changes in trial protocol and design enhancements that may also delay clinical trials. We cannot assure you that we will not experience delays or undesired results in these or any other of our clinical trials.

We cannot assure you that the CFDA or other regulatory agencies will approve any products developed by us, on a timely basis, if at all, or, if granted, that such approval will not subject the marketing of our products to certain limits on indicated use. Any limitation on use imposed by the CFDA or delay in or failure to obtain CFDA approvals of products developed by us would adversely affect the marketing of these products and our ability to generate product revenue, as well as adversely affect the price of our common stock.

Before obtaining regulatory approvals for certain generic products, we must conduct limited clinical or other trials to show comparability to the branded products. A failure to obtain satisfactory results in these trials would prevent us from obtaining required regulatory approvals.

We do not have product liability insurance and we could be exposed to substantial liability.

We face an inherent business risk of exposure to product liability claims in the event that the use of our products is alleged to have resulted in adverse side effects. Adverse side effects, marketing or manufacturing problems pertaining to any of our products could result in:

•

decreased demand for our products;

•

adverse publicity resulting in injury to our reputation;

•

product liability claims and significant litigation costs;

•

substantial monetary awards to or costly settlements with consumers;

•

product recalls;

•

loss of revenues; or

•

the inability to commercialize future products.

These risks will exist for those products in clinical development and with respect to those products that have received regulatory approval for commercial sale or any product we may acquire. To date, we have not experienced any product liability claims. However, that does not mean that we will not have any such claims with respect to our products in the future. We do not carry product liability insurance. The lack of product liability insurance exposes us to risks associated with potential product liability claims, which can be significant.

The pharmaceutical industry is heavily regulated, which creates uncertainty about our ability to bring new products to market and imposes substantial compliance costs on our business.

The CFDA, as well as Department of Health, imposes substantial requirements on the development, manufacture, labeling, sale, distribution, marketing, advertising, promotion and introduction of therapeutic narcotic pharmaceutical products through lengthy and detailed laboratory and clinical testing and other costly and time-consuming procedures. The submission of a drug application alone does not guarantee that the CFDA will grant approval to market the product. Satisfaction of CFDA requirements typically takes a number of years, varies substantially based upon the type, complexity and novelty of the pharmaceutical product and is subject to uncertainty. The drug approval process varies in time, could take several years from the date of application. The timing for the approval process is difficult to estimate and can vary significantly.

The current CFDA standards of approving pharmaceutical products are more stringent than those that were applied in the past. These standards were not applied to many established products currently on the market, including certain narcotics products. We cannot assure you that the CFDA or other regulatory agencies will approve any products developed by us, on a timely basis, if at all, or, if granted, that approval will not entail limiting the indicated uses for which we may market the product, which could limit the potential market for any of these products.

The State Food and Drug Administration of China requires pharmaceutical manufacturers to obtain Good Manufacturing Practices, or GMP, certifications. We have received our certifications. However, should we fail to receive or maintain the GMP certifications in the future, we would no longer be able to manufacture pharmaceuticals in China, and our businesses would be materially and adversely affected. Moreover, the laws and regulations regarding acquisitions in the pharmaceutical industry in China may change, which could significantly impact our ability to grow through acquisitions.

Certain political and economic considerations relating to China could adversely affect our company.

China is transitioning from a planned economy to a market economy. While the PRC government has pursued economic reforms since its adoption of the open-door policy in 1978, a large portion of the Chinese economy is still operating under five-year plans and annual state plans. Through these plans and other economic measures, such as control on foreign exchange, taxation and restrictions on foreign participation in the domestic market of various industries, the PRC government exerts considerable direct and indirect influence on the economy. Many of the economic reforms carried out by the PRC government are unprecedented or experimental, and are expected to be refined and improved. Other political, economic and social factors can also lead to further readjustment of such reforms. This refining and readjustment process may not necessarily have a positive effect on our operations or future business development. Our operating results may be adversely affected by changes in China’s economic and social conditions as well as by changes in the policies of the PRC government, such as changes in laws and regulations, or the official interpretation thereof, which may be introduced to control inflation, changes in the interest rate or method of taxation, and the imposition of additional restrictions on currency conversion.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

Our operations in the PRC are subject to the laws and regulations of the PRC and any changes in the laws or policies of the PRC may have a material impact on our operations and financial performance.

As our drug products businesses are carried out in the PRC, we are subject to and have to operate within the framework of the PRC legal system. Any changes in the laws or policies of the PRC or the implementation thereof, for example in areas such as foreign exchange controls, tariffs, trade barriers, taxes, export license requirements and environmental protection, may have a material impact on our operations and financial performance.

The corporate affairs of our companies in the PRC are governed by their articles of association and the corporate and foreign investment laws and regulations of the PRC. The principles of the PRC laws relating to matters such as the fiduciary duties of directors and other corporate governance matters and foreign investment laws in the PRC are relatively new. Hence, the enforcement of investors' or shareholders' rights under the articles of association of a PRC company and the interpretation of the relevant laws relating to corporate governance matters remain largely untested in the PRC.

Our operations are carried out through our subsidiaries which are located in the PRC. As such, the laws of the PRC govern our businesses and operations. The PRC legal system is a codified system of written laws, regulations, circulars, administrative directives and internal guidelines. The PRC government is still in the process of developing its legal system to encourage foreign investment and to align itself with global practices and standards. As the PRC economy is undergoing development at a faster rate than the changes to its legal system, some degree of uncertainty exists in connection with whether and how existing laws and regulations apply to certain events and circumstances. Some of the laws and regulations and the interpretation, implementation and enforcement of such laws and regulations are also at an experimental stage and are subject to policy changes. Hence, precedents on the interpretation, implementation and enforcement of certain PRC laws are limited and court decisions in the PRC do not have binding effect on lower courts. Accordingly, the outcome of dispute resolutions and litigation may not be as consistent or predictable as in other more developed jurisdictions and it may be difficult to obtain swift and equitable enforcement of the laws in the PRC, or to obtain enforcement of a judgment by a court or another jurisdiction.

There is no assurance that these PRC authorities will not issue further directives, regulations, clarifications or implementation rules requiring us to obtain further approvals in relation to our public listing in the U.S.

Restrictions under PRC law on our PRC subsidiaries’ ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to our shareholders, and otherwise fund and conduct our business.

All of our sales are earned by our PRC subsidiaries. However, PRC regulations restrict the ability of our PRC subsidiaries to make dividends and other payments to their offshore parent company. PRC legal restrictions permit payments of dividends by our PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries are also required under PRC laws and regulations to allocate at least 10% of their annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of our registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances, or cash dividends. Any limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Furthermore, our PRC subsidiaries, which are foreign investment entities (“FIEs”), are subject to the PRC rules and regulations on currency conversion. In the PRC, the State Administration of Foreign Exchange (“SAFE”) regulates the conversion of the RMB into foreign currencies. Currently, foreign investment enterprises (including wholly foreign-owned enterprises) are required to apply to the SAFE for “Foreign Exchange Registration Certificates for FIEs”. With such registration certification (which have to be renewed annually), FIEs are allowed to open foreign currency accounts including the “current account” and “capital account”. Currently, transactions within the scope of the "current account" (for example, remittance of foreign currencies for payment of dividends) can be effected without requiring the approval of the SAFE. However, conversion of currency in the “capital account” (for example, for capital items such as direct investments, loans and securities) still requires the approval of the SAFE.

We may never pay any dividends to our stockholders.

We have not paid any cash dividends on shares of our common stock. We currently intend to retain all available funds and future earnings, if any, to support our operations and finance the growth and development of our business. Our board of directors does not intend to distribute dividends in the foreseeable future. The declaration, payment and amount of future dividends, if any, will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

The Chinese government does not permit our auditor, or any other independent registered public accounting firm operating in China, to be inspected by the Public Company Accounting Oversight Board, so investors will be deprived of the benefits of such inspection.

The independent registered public accounting firm that issues the audit reports included in our annual reports filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or PCAOB, is required by the laws of the United States to undergo regular inspections by PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditor is located in China, a jurisdiction where PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditor, like other independent registered public accounting firms operating in China, is currently not inspected by PCAOB. Inspections of other firms that PCAOB has conducted outside of China have, at times, identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of PCAOB to conduct inspections of independent registered public accounting firms operating in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures. As a result, investors will be deprived of the benefits of PCAOB inspections.

A material failure of internal control over financial reporting could materially impact the Company’s financial results.

In designing and evaluating its internal control over financial reporting, management recognizes that any internal control or procedure, no matter how well designed and operated, can provide only reasonable assurance of achieving desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management believes that the Company’s internal control over financial reporting currently provides reasonable assurance of achieving their control objectives. However, no system of internal controls can be designed to provide absolute assurance of effectiveness. See ITEM 9A “Controls and Procedures” later in this Report. A material failure of internal control over financial reporting could materially impact the Company’s reported financial results and the market price of its stock could significantly decline. Additionally, adverse publicity related to a material failure of internal control over financial reporting could have a negative effect on the Company’s reputation and business.

The value of our securities will be affected by the foreign exchange rate between U.S. dollars and Renminbi.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and Renminbi, and between those currencies and other currencies in which our sales may be denominated. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operational needs and should the Renminbi appreciate against the U.S. dollar at that time, our financial position, the business of the company, and the price of our common stock may be harmed. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.

AOB has significant influence over the outcome of matters submitted to shareholders for approval.

Currently, American Oriental Bioengineering, Inc. (“AOB”) owns approximately 24% of our outstanding common stock. As a result, AOB can exercise significant influence over all matters requiring shareholder approval, including the appointment of our directors and the approval of significant corporate transactions. AOB’s ownership and control may also have the effect of delaying or preventing a future change in control, impeding merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company’s facilities are located in Xinle City, Shijiazhuang, Hebei province, about 143 miles from Beijing. We have land use rights that are granted and allocated to us by the People’s Republic of China (“PRC”) government to the land on which our manufacturing facilities are located. According to Chinese law, the government owns all the land in China, and companies or individuals are authorized to use the land only through land use rights granted or allocated by, or leased from, the PRC government.

The headquarters of Hebei Aoxing currently cover 29.6 acres of the 49.4 acres leased by Hebei Aoxing. The land lease will expire in 2053. On that land, the Company has located a building complex that offers an aggregate of 32,268 m2 in floor space (approximately 347,330 square feet). The complex includes office facilities, research facilities, 13,000 square meters (approximately 139,931 square feet) of factory space, and a five story residential facility for employees.

The Company’s technology center is the 4,600 square meters (approximately 49,514 square feet) Aoxing Special Medicine Research Center. The Research Center is equipped with advanced pharmaceutical research facilities, including troche testing equipment, capsule testing equipment, injection testing equipment, composition testing equipment, chemical analysis equipment, and Chinese traditional medicine extraction testing equipment. The Center is equipped to conduct the research and pilot experimental production of new medicines. The central laboratory of the Research Center includes a precision instrument room, normal instrument room, heating chamber laboratory, chemical reagent room, bacteria inspection room, culture room, specimen room, and observation room. The facility is capable of conducting the entire quality-control supervision and inspection process of raw material, supplementary materials, crude and finished product. The employee training center located in the Research Center has advanced teaching facilities, and is capable of long-distance training and education. The Company has also established close relationships with the National Institute on Drug Dependence of Beijing University.

The Company’s factories are equipped with capsule filling machinery manufactured by the Bosch Group of Germany and automatic box filling equipment manufactured by the Uhlmann Company in Germany. The annual production capacity of the first stage analgesic project can reach 140 million capsules, 160 million pieces of troche, 100 million pieces of injectibles, 100 million pieces of oral liquid and 100 million bags of palletized granules. The supporting facilities, such as the extraction workshop, engine house, thermal workshop, storehouse, office building, and employee housing, have all been completed.

The executive and production facilities of Hebei Aoxing are located at No. 1 Industry District, Xinle City, Hebei Province, China 050700. Aoxing Pharma maintains its U.S. office at 444 Washington Blvd, Suite 3338, Jersey City, NJ 07310.

Item 3. Legal Proceedings

At present, the Company is not engaged in or the subject of any material legal proceedings.

Item 4. Mine Safety Disclosures

Not Applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

The Company’s common stock is listed for trading on the NYSE MKT under the symbol “AXN”. Set forth below are the high and low close prices for each quarter in our past two fiscal years.

Quarter Ending	High		Low

September 30, 2013	$	0.33	$	0.21
December 31, 2013	$	0.35	$	0.22
March 31, 2014	$	0.61	$	0.23
June 30, 2014	$	0.54	$	0.26

September 30, 2014	$	0.21	$	0.19
December 31, 2014	$	0.33	$	0.30
March 31, 2015	$	1.73	$	1.58
June 30, 2015	$	1.85	$	1.75

Holders

Our shareholders list contained the names of 417 registered stockholders of record of the Company’s common stock as of October 8, 2015.

Dividends

The Company has never paid or declared any cash dividends on its Common Stock and does not foresee doing so in the foreseeable future. The Company intends to retain any future earnings for the operation and expansion of the business in the foreseeable future. Any decision as to future payment of dividends will depend on the available earnings, the capital requirements of the Company, its general financial condition and other factors deemed pertinent by the Board of Directors.

Issuer Purchases of Equity Securities

The Company did not make any stock repurchases during the quarter ended June 30, 2015.

Recent Sales of Unregistered Securities

The Company did not complete any unregistered sale of equity securities during the quarter ended June 30, 2015.

Securities Authorized for Issuance Under Equity Compensation Plans

The information set forth in the table below regarding equity compensation plans (which include individual compensation arrangements) was determined as of June 30, 2015.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders.		300,000	$	0.33		1,700,000	(1)

Equity compensation plans not approved by security holders		-		-		-
Total		300,000	$	0.33		1,700,000

_________________________

(1)

In 2006 the Board of Directors adopted the 2006 Stock and Stock Option Plan. The Plan authorizes the Board to issue up to 500,000 shares. The shares may be awarded to employees or directors of Aoxing Pharmaceutical Company or its subsidiaries as well as to consultants to those entities. The shares may be awarded as outright grants or in the form of options, restricted stock or performance shares. On June 28, 2011, the Company’s shareholders voted to increase the number of shares issuable to 2,000,000 shares.

Item 6. Selected Financial Data

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our combined and consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. The discussion in this section contains forward-looking statements that involve risks and uncertainties. As a result of various factors, including those set forth under “Risk Factors” and elsewhere in this report, our actual future results may be materially different from what we expect.

Results of Operations-Comparison of the years ended June 30, 2015 and 2014

Revenue

Revenue for the year ended June 30, 2015 was $25,481,199, representing a 100.0% increase from the revenue of $12,739,371 for the year ended June 30, 2014. The increase in revenue was primarily attributable to the changes in our marketing program. The Company’s previous sales process began with the sales manager who shipped the product to a third-party sales agent. The sales agent then sold the product to the customer. With the current sales process, the Company has gradually terminated the sales agent contracts and now sells the product directly to the customer. The sales price to direct customers is higher than the price to sales agencies, which has led to an increase in the average price of our products.

The following table shows the dollar volume of sales of our primary product lines in each of the past two fiscal years:

	Fiscal 2015		Fiscal 2014
Herbal Therapeutics:
Zhongtongan		24,325,980		11,779,303
XiaoPiLing		116,011		79,835
Other		1,039,208		880,233

Total	$	25,481,199	$	12,739,371

Cost of Goods Sold; Gross Profit

Our cost of goods sold decreased by 17.9% from fiscal 2014 to fiscal 2015, with the result that our gross margin increased from 45.6% in fiscal 2014 to 77.7% in fiscal 2015. The decrease in the cost of sales was due to a sharp decrease in the market prices of raw materials during fiscal 2015. As a result of a good harvest during fiscal 2015, the average price of raw materials fell by 56% as compared with last year. The Company's increase in sales also improved our production efficiency, which led to a decrease in average production cost per unit.

As a result of the decrease in the cost of raw materials and the change in our sales channels, gross profit of $19,792,336 during the year ended June 30, 2015 was 240% higher than the prior year. Gross margin was 77.7% during the year ended June 30, 2015 compared to 45.6% in prior year. The increase in gross margin was primarily due to the dramatic drop in raw material costs, but was also attributable to improved production efficiency as a result of the increase in sales during the year. We expect gross margin will remain stable in the following quarters due to the reduction in the cost of raw materials and our manufacturing efficiency enhancements.

Research & Development Expenses

Research and development (“R&D”) expenses were $337,067 for the year ended on June 30, 2015, representing a 40.8% decrease from the $569,699 expended in fiscal 2014. Our R&D expenses may fluctuate significantly from period to period, reflecting the progress and timing of our various drug development projects. As available cash diminished early in the fiscal year, the Company reduced its R&D expenses. We expect some new product approvals, but we continue to build our pipeline; so R&D expenses will continue to fluctuate.

General and Administrative Expenses

Our general and administrative expenses consist primarily of employee compensation and benefits payable to general management, finance and administrative staff, professional and legal fees, and bad debt expenses. In the year ended June 30, 2015, our general and administrative expenses were $2,753,535, a decrease of 23.8% compared to the $3,613,657 incurred during the previous year. The decrease in general and administrative expenses in fiscal 2015 was primary due to:

-	bad debt expenses of $896,441 recorded during fiscal 2014;

-	a reversal of $204,597 in previously recorded bad debt as a result of collection efforts during the first quarter of fiscal 2015.

Selling Expense

Selling expense for the year ended June 30, 2015 was $7,457,758, which was 71.4% higher than the selling expense of $4,350,442 for the year ended June 30, 2014. The increase is in line with the increase in revenue for the year.

Depreciation and amortization

Depreciation and amortization expense decreased 32.7% from $990,128 in fiscal 2014 to $666,293in fiscal 2015. The expense decreased because several automobiles were fully depreciated in fiscal 2015 and there was no material purchase or disposal of equipment during fiscal 2015.

Income/(Loss) from Operations

We have improved the size and efficiency of our operations, which resulted in operating profit of $8,695,657 for the year ended June 30, 2015 compared with a loss from operations of $3,334,879 for the year ended June 30, 2014. The operating profit was mainly due to the changing of distribution channels from using distributors to direct sales.

Other income (expense)

Other income/(expense) comprises:

·	Net interest expense was $5,768,094 for fiscal 2015, an increase of 11.0% compared to interest expense of $5,194,786 incurred in fiscal 2014. The increase in interest expense is mainly due to the increase in average interest rate. The short-term loan of $4.1 million that the Company obtained in November 2014 from TianJin Heng Xing Mirco Finance Bureau carried an interest rate of 20.04%.

·	During the year ended June 30, 2015, we recorded an equity in loss of joint venture of $93,352, which represented our 51% (50% control right) beneficial interest in the loss incurred in that period by our joint venture with Johnson Matthey Plc. The equity in loss of joint venture was $104,715 during fiscal 2014. The losses related to the joint venture with Johnson Mathey Plc will continue at least until the joint venture commences revenue-producing operations.

These non-operating expenses were partially offset by the government subsidies that we recorded as non-operating income. During the year ended June 30, 2015, the Company’s subsidiary in China, Hebei Aoxing, received local government subsidies totaling $279,893. These government subsidies were given to the Company with no restrictions and are for operating purposes. We recorded the subsidies and grants as other income. No such income incurred in fiscal 2014.

Income taxes

Hebei Aoxing recorded no income tax for fiscal 2014 due to net loss for the year and accumulated tax loss brought forward from prior years.

The Company recognized income tax benefits of $2,704,369 during fiscal 2015. The Company’s loss carry forwards for the past 5 years provided a significant amount of the deferred tax assets. The realization of tax loss carry forwards are now deemed to be probable due to the realization of net income during fiscal 2015. The Company, therefore, determined it was appropriate to recognize the deferred tax assets during fiscal 2015.

Net income/(loss)

The Company realized net income of $5,818,473 for the fiscal year ended June 30, 2015. However, because the Company owns only 95% of Hebei Aoxing, 5% of that company’s net income was attributed to the minority interest. Therefore the net income for the fiscal year attributable to the shareholders of Aoxing Pharmaceutical was $5,494,713. In comparison, during the fiscal year ended June 30, 2014, the Company’s net loss was $8,634,380 and, after deducting loss attributable to the 5% minority interest in Hebei Aoxing, net loss attributable to shareholders of Aoxing Pharmaceutical was $8,215,683.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis.

Our cash balance as of June 30, 2015 was $5,371,545, compared to $2,329,660 as of June 30, 2014. The increase occurred because of cash provided by operations as well as from the sale of common stock, offset by capital expenditures during the year.

Operations during the year ended June 30, 2015 generated $3,025,739 in cash, as compared to $7,729,977 used in cash for the year ended June 30, 2014. The primary reason for the cash generated from operating activities was the increase in revenue and gross margin discussed above, offset by the changes in operating assets and liabilities during the year.

Our investing activities in fiscal 2015 consisted of $2,705,298 in cash used to purchase additional property and equipment.

Our financing activities provided $2,672,884 in cash during the year ended June 30, 2015, which included $2,423,503 cash from sale of common stock.

The income that we incurred during fiscal 2015, coupled with the sale of common stock to employees and issuance of common stock in satisfaction of debt, caused our working capital deficit to improve during fiscal 2015. Our working capital deficit on June 30, 2015 was $20,143,629, which was $3,150,559 less than the working capital deficit of $23,294,188 on June 30, 2014. The primary reason for our working capital deficit is the fact that there are $28.8 million short-term debts owed to banks, related and unrelated parties. In accordance with banking customs in China, our bank loans have, throughout our history, been written on a short-term basis. Our business has survived through the years because our banks have proven willing to renew or replace our short-term debt. That willingness continues since the end of the 2015 fiscal year, as we obtained a loan from the Postal Savings Bank of China in July 2015.

As a result of several debts refinancing during fiscal 2015, our debt service obligations on June 30, 2015 were as following:

Contractual Obligations	Total		Less than 1 Year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		After 5 Years
Banks	$	16,316,408	$	16,316,408		-		-		-		-		-
Affiliates		13,951		5,793	$	8,158		-		-		-		-
Short term borrowings		12,484,356		12,484,356		-		-		-		-		-
Other Lenders		1,361,199		-		1,361,199		-		-		-		-
TOTAL	$	30,175,914	$	28,806,557	$	1,369,357		-		-		-		-

For the next 12 months, management anticipates the Company will generate cash from operations, because of increased product sales and efforts to preserve cash such as suspending non-essential research and development projects. Additionally, management does not expect any large capital expenditure projects in the next 12 months. As a result, the Company will be able to operate at much lower cash burn rates, without any major impact on its operations.

In July 2015, the Company obtained a short term loan of $4.4 million from Postal Savings Bank of China. The Company further extended the existing loan of $3.1 million with Shijiazhuang Construction Investment Group to September 2015. In September 2015, the Company extended the short term loan from Hebei Henghui Investment Management Co., Ltd. to October 17, 2015. Then on September 30, 2015 the Company completed a registered direct sale of its securities to a U.S. institutional investor, in which 2,352,941 shares of common stock and 1,764,706 common stock purchase warrants (the "Public Warrants") were sold. The aggregate purchase price for the securities was $3,000,000. The Company is planning to further raise additional capital or seek external financing to replace the short-term debts owed to banks, related and unrelated parties.

The Company anticipates continued local governmental support. It may also take additional loans from related parties, if necessary. Furthermore, the Company will continue to seek financing to fund expansion of our operations, extend our reach to broader markets, or to acquire additional entities. We may rely on bank borrowing as well as capital raises. We are actively exploring various proposals and alternatives in order to secure sources of financing and improve our financial position. We are also exploring potential strategic partnerships, which could provide a capital infusion to the Company.

We have incurred recurring operating losses and had an accumulated deficit of $58.4 million as of June 30, 2015. In addition, we had negative working capital of $20.1 million as of June 30, 2015. Our history of operating losses and lack of binding financing commitments raise substantial doubt as to our ability to continue as a going concern. Despite the large accumulated deficit, we have generated net profit and operating cash flow during the fiscal year. Our management anticipates sufficient cash flows to fund our operations for the next twelve months by increasing revenues of our core product sales and continued support from our lenders. If future sales do not meet our forecasts, we may be required to fund operations by raising additional capital or seek external financing. As such, our ability to achieve our business plan is primarily dependent upon our ability to achieve our planned level of operations and/or obtain sufficient additional capital at acceptable costs. With respect to these objectives, we cannot provide any assurance that we will succeed. If events or circumstances occur such that we are unable to or do not meet our operating plan as expected and/or do not secure additional financing, we may be required to significantly curtail or cease operations.

Application of Critical Accounting Policies

In preparing our financial statements, we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for fiscal 2015, there were three estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results. These were:

·	The determination, described in Note 2 to our Consolidated Financial Statements, to record an allowance for doubtful accounts in the amount of $1,364,330. The determination was based on our review of the credit history of the relevant customers and the results of our collection efforts.

·	The determination, described in Note 2 to our Consolidated Financial Statements, to record an allowance for obsolete inventory in the amount of $633,948. The determination was based on stating at the lower of cost and net realizable value.

·	Our determination, described in Note 16 to the financial statements, to eliminate the previously recorded allowance for our deferred tax assets, and to record a deferred tax asset of $2,711,610. The determination to record the asset was based on our expectation that the it is more likely than not that we will realize sufficient income within the requisite time period to utilize the deferred asset.

We made no material changes to our critical accounting policies in connection with the preparation of financial statements for fiscal 2015.

Impact of Accounting Pronouncements

New accounting rules and disclosure requirements can significantly impact the comparability of our financial statements. There are no recent accounting pronouncements that have had a material effect on our financial statements. Please refer to Note 2 of our consolidated financial statements included in Item 8 of this Form 10-K.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

Item 8. Financial Statements and Supplementary Data

Index to the Consolidated Financial Statements

Page

F-1	Report of Independent Registered Public Accounting Firm

F-2	Consolidated Balance Sheets as of June 30, 2015 and 2014

F-3	Consolidated Statements of Operations and Other Comprehensive Income/(Loss) for the Fiscal Years Ended June 30, 2015 and 2014

F-4	Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended June 30, 2015 and 2014

F-5	Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2015 and 2014

F-6 to F-21	Notes to Consolidated Financial Statements.

REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

Board of Directors

Aoxing Pharmaceutical Co., Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Aoxing Pharmaceutical Co., Inc. and Subsidiaries as of June 30, 2015 and 2014 and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Aoxing Pharmaceutical Co., Inc. and Subsidiaries at June 30, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company accumulated a large deficit and a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

/s/ BDO China Shu Lun Pan Certified Public Accountants LLP

Shanghai, People’s Republic of China

October 13, 2015

F - 1

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30,		June 30,
	2015		2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,371,545	$	2,329,660
Accounts receivable, net of allowance for doubtful accounts of $1,364,330 and $1,562,109, respectively		5,854,055		3,890,550
Inventories, net		3,240,026		2,195,274
Prepaid expenses and other current assets		6,630,407		2,505,129
TOTAL CURRENT ASSETS		21,096,033		10,920,613

LONG-TERM ASSETS:
Property and equipment, net of accumulated depreciation		28,651,717		26,418,842
Deferred income tax		2,711,610		-
Other intangible assets, net		484,857		546,114
Investment in joint venture		96,475		189,185
TOTAL LONG-TERM ASSETS		31,944,659		27,154,141
TOTAL ASSETS	$	53,040,692	$	38,074,754

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Short-term borrowings	$	12,484,356	$	11,398,464
Accounts payable		3,625,139		3,883,198
Notes payable		1,631,641		-
Loan payable – bank		16,316,408		3,247,966
Current portion of loan payable - related parties		5,793		1,084,248
Current portion of long-term bank loan		-		10,166,133
Accrued expenses and other current liabilities		7,176,325		4,434,790
TOTAL CURRENT LIABILITIES		41,239,662		34,214,799

LONG-TERM LIABILITIES:
Loan payable - related parties		8,158		6,146,803
- others		1,361,199		1,354,810
Deferred income		368,751		367,020

TOTAL LONG-TERM LIABILITIES		1,738,108			7,868,633

Common stock, par value $0.001, 100,000,000 shares authorized, 69,839,259 and 49,874,822 shares issued and outstanding on June 30, 2015 and June 30, 2014		69,839			49,875
Additional paid in capital		66,457,250			58,315,446
Accumulated deficit		(58,354,968	)		(63,849,681	)
Accumulated other comprehensive income		3,066,026			2,979,235
TOTAL SHAREHOLDERS' EQUITY OF THE COMPANY		11,238,147			(2,505,125	)

NONCONTROLLING INTEREST IN SUBSIDIARIES		(1,175,225	)		(1,503,553	)
TOTAL EQUITY		10,062,922			(4,008,678	)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	53,040,692		$	39,732,880

See accompanying notes to the consolidated financial statements

F - 2

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

	For the year ended June 30
	2015			2014

SALES	$	25,481,199		$	12,739,371
COST OF SALES		5,688,863			6,925,697
GROSS PROFIT		19,792,336			5,813,674
OPERATING EXPENSES:
Research and development		337,067			569,699
General and administrative		2,753,535			3,613,657
Selling expenses		7,457,758			4,350,442
Depreciation and amortization		548,319			614,755
TOTAL OPERATING EXPENSES		11,096,679			9,148,553
INCOME/(LOSS) FROM OPERATIONS		8,695,657			(3,334,879	)
OTHER INCOME (EXPENSE):
Interest expense, net of interest income		(5,768,094	)		(5,194,786	)
Equity in loss of joint venture, net		(93,352	)		(104,715	)
Subsidy income		279,893			-
TOTAL OTHER EXPENSE		(5,581,553	)		(5,299,501	)
INCOME/(LOSS) BEFORE INCOME TAXES		3,114,104			(8,634,380	)
Income taxes/(benefits)		(2,704,369)			-
NET INCOME/(LOSS)		5,818,473			(8,634,380	)

Net income/(loss) attributable to non-controlling interest in subsidiaries		323,760			(418,697	)
NET INCOME/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY		5,494,713			(8,215,683	)

OTHER COMPREHENSIVE INCOME :
Foreign currency translation adjustment		91,359			28,055

COMPREHENSIVE INCOME/(LOSS)		5,586,072			(8,187,628	)
Other comprehensive loss income attributable to non-controlling interest		4,568			1,403

COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO THE COMPANY	$	5,581,504		$	(8,189,031	)
BASIC AND DILUTED INCOME/(LOSS) PER COMMON SHARE	$	0.09		$	(0.16	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		63,107,104			49,856,247

See accompanying notes to the consolidated financial statements

F - 3

CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

	COMMON STOCK				PREFERRED STOCK				ADDITIONAL PAID-IN CAPITAL		(ACCUMULATED DEFICIT )			ACCUMULATED OTHER COMPREHENSIVE INCOME		TOTAL STOCKOLDERS' EQUITY			NON CONTROLLING INTEREST			TOTAL EQUITY
	SHARES		VALUE		SHARES		VALUE
Balance - June 30, 2013		49,814,822	$	49,815		-		-	$	58,296,906	$	(55,633,998	)	$	2,956,846	$	5,669,569		$	(1,086,035	)	$	4,583,534
Common stock issued for services		60,000		60						18,540							18,600						18,600
Translation adjustments															22,389		22,389			1,179			23,568
Net loss												(8,215,683	)				(8,215,683	)		(418,697	)		(8,634,380	)
Balance - June 30, 2014		49,874,822	$	49,875		-		-	$	58,315,446		(63,849,681	)		2,979,235		(2,505,125	)		(1,503,553	)		(4,008,678	)
Common stock issued for services		360,000		360						81,490							81,850						81,850
Common stock issued for debt conversion		12,863,690		12,864						5,562,544							5,575,408						5, 575,408
Common stock issued		6,740,747		6,740						2,406,948							2,413,688						2,413,688
Amortization for stock options										22,822							22,822						22,822
Amortization for management equity compensation										68,000							68,000						68,000
Translation adjustments															86,791		86,791			4,568			91,359
Net income												5,494,713					5,494,713			323,760			5,818,473
Balance - June 30, 2015		69,839,259	$	69,839		-		-	$	66,457,250		(58,354,968	)		3,066,026		11,238,147			(1,175,225	)		10,062,922

See accompanying notes to the consolidated financial statements

F - 4

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended June 30
OPERATING ACTIVITIES:	2015			2014

Net income/(loss)	$	5,494,713		$	(8,215,683	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		666,293			990,128
Deferred income tax		(2,704,369	)		-
Inventory markdown		(7,861	)		-
Provision for doubtful accounts		(204,597	)		896,441
Common stock issued		169,822			18,600
Equity in loss of joint venture, net		93,352			104,715
Net loss attributable to non-controlling interests		323,760			(418,697	)
Changes in operating assets and liabilities:
Accounts receivable		(1,735,368	)		(1,932,061	)
Inventories		(1,023,777	)		440,379
Prepaid expenses and other current assets		(4,102,425	)		(73,425	)
Accounts payable		1,351,651			454,767
Accrued expenses and other current liabilities		4,704,545			4,859
NET CASH GENERATED FROM (USED IN) OPERATING ACTIVITIES		3,025,739			(7,729,977	)

INVESTING ACTIVITIES:
Acquisition of property and equipment		(2,705,298	)		(268,922	)
NET CASH USED IN INVESTING ACTIVITIES		(2,705,298	)		(268,922	)

FINANCING ACTIVITIES:
Proceeds from bank loans		13,018,270		3,247,966
Payment of bank loans		-		(8,537,332		)
Short-term borrowings		1,029,387		8,083,766
Repayment of other borrowings		(10,186,796	)	(37,606		)
Loans from/(to) related party		(3,611,480	)	3,556,288
Sale of common stock		2,423,503		-
NET CASH PROVIDED BY FINANCING ACTIVITIES		2,672,884			6,313,082

EFFECT OF EXCHANGE RATE ON CASH		48,560			7,654

(DECREASE)/ INCREASE IN CASH		3,041,885			(1,678,163	)
CASH – BEGINNING OF PERIOD-		2,329,660			4,007,823
CASH – END OF PERIOD	$	5,371,545		$	2,329,660

Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,113,976		$	4,598,172
Cash paid for income taxes	$	-		$	-

See accompanying notes to the consolidated financial statements

F - 5

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

1 BUSINESS DESCRIPTION

Aoxing Pharmaceutical Co., Inc. (“the Company” or “Aoxing Pharma”) is a specialty pharmaceutical company specializing in research, development, manufacturing and distribution of a variety of narcotic, pain-management, and addiction treatment pharmaceutical products.

As of June 30, 2015, the Company had one operating subsidiary: Hebei Aoxing Pharmaceutical Co., Inc. (“Hebei”), which is organized under the laws of the People’s Republic of China (“PRC”). As of June 30, 2015, the Company owned 95% of the issued and outstanding common stock of Hebei.

Since 2002, Hebei has been engaged in developing narcotic, pain management, and addiction treatment pharmaceutical products, building its facilities and obtaining the requisite licenses from the Chinese Government. Headquartered in Shijiazhuang City, the pharmaceutical capital of China, outside of Beijing, Hebei now has China's largest and the most advanced manufacturing facility for highly regulated narcotic medicines, addressing a very under-served and fast-growing market in China. Its facility is one of the few GMP facilities licensed for manufacturing narcotics medicines. The Company is working closely with the Chinese government and CFDA to assure the strictly regulated availability to medical professionals throughout China of its narcotic drugs and pain medicines.

In April, 2008, Hebei completed the acquisition of 100% of the registered capital of Lerentang (“LRT”). LRT was engaged in the manufacture and distribution of Chinese traditional medicines focusing on pain management related therapeutics within China. By 2011 the manufacturing operations of LRT had been completely integrated into Hebei. Currently over 90% of the Company’s revenues derive from one herbal extraction, obtained from the acquisition of LRT, which is used to alleviate oral/dental and bone pain.

Investment in Joint Venture (“JV”)

On April 26, 2010, Aoxing Pharma and Johnson Matthey Plc (‘JM”) entered into an agreement to establish a joint venture focused on research, development, manufacturing and marketing of active pharmaceutical ingredients for narcotics and neurological drugs for the China market. The joint venture represents a significant new opportunity for both companies to expand their business in the rapidly growing pharmaceutical market in China. Under the terms of the agreement, Macfarlan Smith Ltd, a wholly owned subsidiary of Johnson Matthey Plc, headquartered in the United Kingdom, will contribute technology expertise and capital to the joint venture. Hebei will contribute capital, fixed assets and related active pharmaceutical ingredients manufacturing licenses. The joint venture company is called Hebei Aoxing API Pharmaceutical Company, Ltd. (“API”). Hebei Aoxing has a 51% stake in API, while Macfarlan Smith (Hong Kong) Ltd (a wholly owned subsidiary of JM) holds 49%. Each company has equal representation on the board of directors that will oversee a management team responsible for corporate strategies and operations. The new joint venture is located on the Hebei campus in Xinle City, 200 kilometers southwest of Beijing. On March 10, 2010, the joint venture obtained a business license from the City Industry & Commercial Administrative Bureau. The Company accounts for its investment in the Joint Venture under the equity method of accounting.

2 SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company’s functional currency is the Chinese Renminbi (RMB); however, the accompanying consolidated financial statements have been translated and presented in United States Dollars (USD).

F - 6

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

Use of estimates in the preparation of financial statements

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates reflected in the consolidated financial statements include, but are not limited to, the recoverability of the carrying amount and estimated useful lives of long-lived assets, allowance for accounts receivable, realizable values for inventories, valuation allowance of deferred tax assets, impairment assessment of goodwill, and share-based compensation expenses. Management makes these estimates using the best information available at the time the estimates are made; however, actual results when ultimately realized could differ significantly from those estimates.

Cash and cash equivalents

The Company maintains cash and cash equivalents with financial institutions in the PRC which are not insured or otherwise protected. Should any of these institutions holding the Company’s cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

Accounts receivables represent customer accounts receivables. The allowance for doubtful accounts is based on a combination of current sales, historical charge-offs and specific accounts identified as high risk. Uncollectible accounts receivable are charged against the allowance for doubtful accounts when all reasonable efforts to collect the amounts due have been exhausted. Such allowances, if any, would be recorded in the period the impairment is identified. The balances of allowance for doubtful accounts are $1,364,330 and $1,562,109 at June 30, 2015 and 2014 respectively. The Company recorded bad debt written back of $204,597 for the year ended June 30, 2015 and bad debt expense of $896,441 for the year ended June 30, 2014, respectively.

Inventories, net

Inventories are stated at the lower of cost, determined using the weighted average cost method, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. The Company charged $108,601 against allowance for obsolete inventory during the year ended June 30, 2015. The Company wrote-off $83,454 of obsolete inventory during the years ended June 30, 2014. For the years ended June 30, 2015 and 2014, the Company’s allowance for obsolete inventory is $633,948 and $471,487, respectively.

Advances to Suppliers

The Company makes advances to certain vendors for purchase of its material and equipment. The advances to suppliers are interest free.

F - 7

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

Property and equipment

Property and equipment are recorded at cost. Depreciation is provided in amounts sufficient to amortize the cost of the related assets over their useful lives using the straight line method for financial reporting purposes.

Construction in progress is stated at cost, which includes the cost of construction, acquisition of plant and equipment and other direct costs attributable to the construction. Construction in progress is not depreciated until such time as the assets are completed and put into operational use. No capitalized interest is incurred during the period of construction.

All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specified period of time. Thus, all of the Company’s land purchases in the PRC are considered to be leasehold land and are stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreements on a straight-line basis, which is 50 years and they will expire in 2053.

Maintenance, repairs and minor renewals are charged to expense when incurred. Replacements and major renewals are capitalized.

Estimated useful lives are as follows:

Right to use land	50 years
Building and building improvements	35 years
Machinery and equipment	10 years
Furniture and office equipment	5 years
Automobiles	8 years

Intangible assets

Definite lived intangible assets include drug permits recorded at cost less accumulated amortization and any recognized impairment loss. The drug permits were acquired in 2008 when the Company purchased LRT and are amortized over their estimated useful life of 15 years on a straight-line basis. An intangible asset that is subject to amortization shall be reviewed for impairment in accordance with the Impairment or Disposal of Long-Lived Assets ASC 360-10. In accordance with Accounting Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, the Company performs an intangible asset impairment test for its definite-lived intangibles whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The intangible assets balance as of June 30, 2015 and June 30, 2014 are $484,857 and $546,114 respectively.

Revenue Recognition

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers. The agreements with customers do not contain any rights of return other than for goods that fail to meet the specifications provided by the customer or other quality problems. The Company has not experienced any significant returns from customers and accordingly, in management’s opinion, no reserve for returns is provided.

F - 8

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

The Company derives revenues from the sale of pharmaceutical products. The Company recognizes its revenues net of value-added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

The Company recognizes revenue from the sale of products upon customers’ receipt of the shipment at the customers’ facility or upon when the transfer of title and risk of loss has transferred to the customer. The Company has distributor arrangements with certain parties for sale of its pharmaceutical products. The distributor agreements do not provide chargeback, price protection, or stock rotation rights.

Research and Development

Research and development is charged to expense as incurred.

Share-Based Compensation

Share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

Impairment of long lived assets

In accordance with the provisions of ASC Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets,” all long-lived assets such as property, plant and equipment, land use rights and intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For assets that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.

Income taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

F - 9

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

Non-controlling interest

Non-controlling interests in our subsidiaries are recorded in accordance with the provisions of ASC Topic 810, “Consolidation”, and are reported as a component of our equity, separate from the parent’s equity. Purchase or sale of equity interests that do not result in a change of control are accounted for as equity transactions. Results of operations attributable to the non-controlling interests are included in our consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, If any, will be reported at fair value with any gain or loss recognized in earnings.

Under ASC 810-10-45-21, losses attributable to the parent and the non-controlling interest in a subsidiary may exceed their interests in the subsidiary’s equity. The excess, and any further losses attributable to the parent and the non-controlling interest, shall be attributed to those interests. That is, the non-controlling interest shall continue to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance

Currency translation

Since the Company operates primarily in the PRC, the Company’s functional currency is the Chinese Yuan (”RMB”). Revenue and expense accounts are translated at the average rates during the period, and balance sheet items are translated at year-end rates. Translation adjustments arising from the use of differing exchange rates from period to period are included as a separate component of shareholders’ equity. Gains and losses from foreign currency transactions are recognized in current operations.

	2015		2014
Year ended RMB: US$ exchange rate		6.1288		6.1577
Average yearly RMB: US$ exchange rate		6.1452		6.1467

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

Fair value of financial instruments

The Company has adopted ASC Topic 820, ”Fair Value Measurement and Disclosure”, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

F - 10

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The carrying amount of cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other current assets, accounts payable and accrued expenses are reasonable estimates of their fair value because of the short term nature of these items.

As of June 30, 2015, the Company does not have any assets or liabilities that are measured on a recurring basis at fair value. The Company’s short-term borrowings, loans payable, related party notes payable and unrelated party notes payable that are considered Level 2 financial instruments measured at fair value on a non-recurring basis as of June 30, 2015.

As of June 30, 2015, the Company does not have any level 3 financial instruments. The Company uses the discounted cash flow approach when determining fair values of its non-recurring fair value measurements when required. We determine the fair value of our goodwill for purposes of comparing to the carrying value on at least an annual basis. Our goodwill would be adjusted to fair value if it is deemed to be impaired. Certain unobservable units for these assets are offered quotes, lack of marketability, long-term revenue growth rates and discounts rates. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. In general, a change in the long-term growth rate of our Hebei Aoxing business unit could negatively affect the fair value of our goodwill.

Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income or loss, as presented in the accompanying statement of changes in shareholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit

Earnings per share

Basic earnings per common share are computed on the basis of the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed on the basis of the weighted average number of common shares and dilutive securities (such as warrants and convertible preferred stock) outstanding. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation.

Statement of cash flows

In accordance with the provisions of Accounting Standards Codification on “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Segment reporting

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the year ended June 30, 2015, ASC 280 has an immaterial effect on the Company’s financial statements, as the Company consists of one reportable business segment. All revenue is from customers in the PRC. The majority of the Company’s assets are located in the PRC.

F - 11

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory: Simplifying the Measurement of Inventory”, that requires inventory not measured using either the last in, first out (LIFO) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The new standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and will be applied prospectively. Early adoption is permitted. The Company is evaluating the impact that this standard will have on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, "Interest -Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts, instead of being presented asan asset. ASU 2015-03 is effective for the Company on January 1, 2016. Once adopted, entities are required to apply the new guidance retrospectively to all prior periods presented. The retrospective application represents a change in accounting principle. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the effect that ASU 2015-03 will have on its consolidated financial statements and related disclosures

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. For all entities, the ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently assessing the potential impact, if any, the adoption of ASU 2014-15 may have on its consolidated financial statements.

In June 2014, FASB issued ASU No. 2014-12, “Compensation - Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.

Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on its results of operations, cash flows or financial condition.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” which provides comprehensive guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets. The core principle of the guidance provides that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, using either a full retrospective or modified retrospective method of adoption. The Company is currently evaluating the transition method it will adopt and the impact of the adoption of ASU 2014-09 on its consolidated financial statements.

F - 12

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

3 GOING CONCERN

Currently and historically, the Company has managed to operate its business with negative net working capital. The Company’s negative working capital is primarily due to our accumulated deficit, which we funded by an increase in short-term bank loans, and the sale of common stock of the Company.

The Company is able to operate with a negative net working capital because of loans from unrelated and related parties. The Company believes operating cash flows staying positive in the near-term, continued support from related parties, and the ability to continue to roll over short-term debt, taken together, provide adequate resources to fund ongoing operations in the foreseeable future. The Company is also planning to seek equity financing to replace both short-term and long-term debts. The Company believes that the increased market demand for its main product in the near term and sales from several new products in future years will produce substantial positive cash flow. If the Company’s short-term cash flows decrease significantly and the Company is unable to pay its short-term liabilities, the Company’s business, financial condition and results of operations could be materially affected.

We had an accumulated deficit of $58.4 million as of June 30, 2015. In addition, we had negative working capital of $20.1 million as of June 30, 2015. Our history of operating losses and lack of binding financing commitments raise substantial doubt as to our ability to continue as a going concern. Despite the large accumulated deficit, we have generated net profit and positive operating cash flow during the fiscal year 2015. Our management anticipates sufficient cash flows to fund our operations for the next twelve months by increasing revenues of our core product sales. Similarly, continued support from our lenders to rollover debt when due will be helpful to cash flow as well. However, if future sales do not meet our forecasts, we might need to fund operations by raising additional capital or seeking other external financing. As such, our ability to achieve our business plan is primarily dependent upon our ability to achieve our planned level of operations and/or obtain sufficient additional capital at an acceptable cost. With respect to these objectives, we cannot provide any assurance of success, as events or circumstances may occur which will prevent us from meeting our operating plan. We might be required to significantly curtail or cease operations if we could not secure additional financing.

Management of the Company believes that the Company's large negative working capital will improve gradually during fiscal year 2016. Management expects the improvement to come from improved operating results, by extending short term into longer term loans, and by selling equity and converting debt to equity. Management anticipates that these improvements will enable the Company to reduce current high interest expenses and fund on-going operations.

The management of the Company has taken a number of actions and will continue to address this situation in order to restore the Company to a sound financial position with an appropriate business strategy going forward. During the fiscal year 2015, the Company completed the sale of 6,740,747 shares of its common stock to investors, each of whom is either an officer, an employee or a consultant. The average purchase price for the shares was $0.36 per share. The Company also completed the sale of 12,863,690 shares of its common stock to creditors in satisfaction of $5.6 million in debt. The shares were valued at the average price of $0.43 per share. Most recently, the Company completed a registered direct sale of securities to a U.S. institutional investor for $3.0 million.

Revenue for the year ended June 30, 2015 was significantly higher than revenue during the prior year, an improvement that was primarily attributable to the changes in our marketing program. Management believes the net profit and positive operating cash flows generated in this year will continue in the coming years due to the increased market demand for its main product. Management also believes that the Company will have continued support from related parties, and will have the ability to continue to roll over short-term debt. Lastly, the Company also started the process of securing additional funds through long term debt financing.

F - 13

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

4 INVENTORIES, NET

Inventories consist of the following:

	June 30,
	2015		2014
Work in process	$	383,950	$	642,842
Raw materials		676,590		669,880
Finished goods		2,179,486		882,552
	$	3,240,026	$	2,195,274

The allowance for obsolete inventory as of June 30, 2015 and 2014 was $465,828 and $471,487, respectively.

5 PROPERTY AND EQUIPMENT, NET

Property, plant and equipment, net, consisted of the following:

	June 30,
	2015		2014
Right to use land	$	8,160,781	$	8,122,480
Building and building improvements		19,388,880		19,297,882
Machinery and equipment		6,882,678		3,926,297
Furniture and office equipment		650,851		621,988
Automobiles		126,120		567,297
Construction in progress		460,113		266,260
		35,669,423		32,802,204
Accumulated depreciation and amortization		7,017,706		6,383,362
	$	28,651,717	$	26,418,842

Depreciation expense for the years ended June 30, 2015 and 2014 were $634,344 and $951,726, respectively.

F - 14

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

6 EQUITY-METHOD INVESTMENT IN JOINT VENTURE

The Company accounts for its investment in API (see Note 1) under the equity method of accounting.

Summarized unaudited financial information for our investment in API, assuming a 100% ownership interest, is as follows:

	June 30,
	2015			2014
Current assets	$	11,767		$	23,144
Noncurrent assets		758,649			795,273
Current liabilities		640,416			506,354
Noncurrent liabilities		-			-
Equity		130,000			312,063
Revenues
General and administrative expenses		(183,044	)		(205,323	)
Net loss	$	(183,044	)	$	(205,323	)

The Company recorded a loss on investment of $93,352 and $104,715 for the years ended June 30, 2015 and 2014 respectively for its 51% (50% control right) share of API.

7 SHORT-TERM BORROWING

Short-term borrowing consists of the following:

	June 30,
	2015			2014
Shijiazhuang Finance Bureau (a)		$	81,582		$	81,199
Shijiazhuang Construction Investment Group Co., Ltd (b)			5,058,086			3,247,966
Hebei Chuangyu Investment Group Co., Ltd (c)			-			1,948,780
Hebei Hengrui Sunshine Pharmacy Co., Ltd (d)			-			3,247,966
Mr. Liu Shujun (e)			-			260,519
Mr. Li Hui (f)			2,304			538,208
Shijiazhuang Red Property Management Co., Ltd (g)			-			2,073,826
Hebei Henghui Investment Management Co., Ltd (h)			3,263,282			-
TianJin Heng Xing Mirco Finance Bureau (i)			4,079,102			-
Total		$	12,484,356		$	11,398,464

(a) A non-interest bearing note payable to Shijiazhuang Finance Bureau, an agency of a local government, due on demand.

(b) A one-year loan from Shijiazhuang Construction Investment Group, disbursed through China Construction Bank. The notes bear an annual interest rate of 12%. $1,957,969 was due on October 25, 2015 and $3,100,117 was due on July 12, 2015 and extended to October 27, 2015. On October 9, 2015, another extension agreement was signed. $1,957,969 was extended to April 24, 2016 and $3,100,117 was extended to April 26, 2016. The notes are secured by certain registered trademarks and renewal certificates relating to Aoxing’s Zhongtongan capsule.

(c) A four months term loan from Hebei Chuangyu Investment Group Co., Ltd. The note bears an annual interest rate of 15% and was due on November 22, 2014.

F - 15

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

(d) A one-year term loan from Hebei Hengrui Sunshine Pharmacy Co., Ltd. The note bears an annual interest rate of 15% and was due on April 17, 2015.

(e) A one-year term loan from Mr. Liu Shujun. The note bears an annual interest rate of 15% and was due on May 21, 2015.

(f) On December 21, 2012, the Company obtained RMB2,000,000 (approximately $324,797) term loan from Mr. Li Hui. The note bears an annual interest rate of 27.6% and was due on December 31, 2014. On March 1, 2013, the Company further obtained RMB1,314,120 (approximately $213,411) term loan from Mr. Li Hui. The note bears an annual interest rate of 20% and was due on February 28, 2015. The balance of $2,304 as at June 30, 2015 represents unpaid portion of interests.

(g) A one-year term loan from Shijiazhuang Red Property Management Co., Ltd. The note bears an annual interest rate of 15% and was due on April 17, 2015.

(h) A six-month term loan from Hebei Henghui Investment Management Co., Ltd. The note bears an annual interest rate of 10% and was due on September 17, 2015. The loan was subsequently extended to October 17, 2015. On September 30, 2015, the Company repaid $656,250 of the loan and the remainder of the loan was extended to April 16, 2016.

(i) A two-month term loan from TianJin Heng Xing Mirco finance Bureau. The note bears an annual interest rate of 20.04%, due on January 21, 2015 and was extended to March 17, 2016.

8 LOAN PAYABLE – BANK

Loan payable – bank consist of the following loans collateralized by assets of the company:

	June 30,
	2015		2014
Bank Note in the amount of 30 million RMB with Shijiazhuang Huirong Rural Cooperative Bank bearing an annual interest rate of 10% made on September 23, 2014. The note matured on November 22, 2014 and was extended to March 16, 2016	$	4,894,922	$	-
Bank Note in the amount of 30 million RMB with Postal Savings Bank bearing an annual interest rate of 7.8%, made on July 22, 2014 for one year maturing on July 21, 2015		4,894,922		-
Bank Note in the amount of 20 million RMB with China Merchant Bank bearing an annual floating rate of 7.0%, initially made on December 27, 2013, renewed on January 13, 2015 for one year maturing on January 12, 2016		3,263,282		3,247,966
Bank Note in the amount of 20 million RMB with China Everbright Bank bearing 7.84% interest per annum, made on January 16, 2015 for one year maturing on January 15, 2016		3,263,282		-
	$	16,316,408	$	3,247,966

F - 16

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

9 LOAN PAYABLE – OTHER

Loan payable – other consist of loans from unrelated third-parties, bearing interest at an average rate of 17.9% and 17.57% as of June 30, 2015 and 2014, respectively. Loans will mature as following:

	June 30,
	2015		2014
Within one year	$	-	$	-
1 – 2 years		-		-
2 – 3 years		-		1,354,810
3 – 4 years		1,361,199
Total		1,361,199		1,354,810
Less current portion		-		-
	$	1,361,199	$	1,354,810

10 LOAN PAYABLE – RELATED PARTIES

Loan payable – related parties consists of loans from shareholders, officers, and other related parties, bearing interest at an average rate of 10.0% and 13.94% per annum as of June 30, 2015 and 2014, respectively. Loans will mature as follows:

	June 30,
	2015			2014
Within one year	$	5,793		$	1,084,248
1 – 2 years		8,158			-
2 – 3 years					6,146,803
Total		13,951			7,231,051
Less current portion		(5,793	)		(1,084,248	)
	$	8,158		$	6,146,803

11 DEFERRED INCOME

The balance of deferred income represents government grants related to the Company's construction in progress ("CIP"). It will be recognized as subsidy income on a systematic basis (straight-line method) over the useful life of the fixed asset transferred from CIP which is a project to reform and improve the production line of the Zhongtongan. As of June 30, 2015, the CIP was transferred to building and building improvements and will be depreciated over 35 years. See Note 5.

12 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and taxes consist of the following:

	June 30,
	2015		2014
Accrued salaries and benefits	$	1,616,963	$	817,306
Accrued interest		2,073,073		1,294,934
Accrued taxes		1,281,704		418,485
Deposit payable		572,105		605,130
Due to employee		46,967		46,746
Advance from customers		291,005		733,144
Other accounts payable		241,512		286,376
Other accrued expenses and current liabilities		1,052,996		232,669
	$	7,176,325	$	4,434,790

F - 17

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

14 STOCK OPTIONS

On January 1, 2015, the Company issued a total of 300,000 common stock purchase options to management. This stock compensation grant was valued at $74,691 and the Company recorded $22,822 stock option compensation expense for the year ended June 30, 2015. Options issued during the year ended June 30, 2015 will vest in equal proportions on January 1, 2016, January 1, 2017 and January 1, 2018.

The unrecognized compensation expense for the Company as of June 30, 2014 and 2015 were nil and $51,869 respectively.

The Company calculated the estimated fair value of the options of the grant date using the Black-Scholes Option Pricing Model with the following assumptions:

	For the year ended June 30, 2015
Estimated dividends	None
Expected volatility		101.63	%
Risk-free interest rate		1.65	%
Expected term (years)		5

The model requires the input of subjective assumptions including the expected stock price volatility and the expected dividend yield. The Company uses historical experience of employee turnover and future expectation to estimate forfeiture rate. For expected volatilities, the Company has made reference to historical volatilities of the Company’s stock. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury Bills yield in effect at the time of grant.

A summary of option activity as of June 30, 2015 and 2014, and changes during the years then ended is as followings:

						Weighted-avg.		Aggregate
				Weighted-avg.		remaining		intrinsic
	Shares			Exercise Price		Term (yr.)		Value
On June 30, 2013		132,000		$	2.00	1.1		$	0
Granted:		-		$	-	-			-
Exercised:		-			-	-			-
Forfeited:		-		-		-		-
On June 30, 2014		132,000		$	2.00	0.1		$	0
Granted:		300,000		$	0.33		5.0	-
Exercised:		-		-		-		-
Forfeited:		(132,000	)	-		-		-
On June 30, 2015		300,000		$	0.33		4.5	$	426,000

F - 18

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

15 ISSUANCE OF COMMON STOCK

On October 21, 2013, the Company issued 60,000 shares of common stock to three independent directors for services rendered. Total value of the compensation is approximately $19,200 based on closing average price of $0.32 during the period of service.

On September 5, 2014, the Company issued 11,862,278 shares of common stock in satisfaction of $4.6 million in debt. The shares were valued at $0.39 per share, which exceeded the six month average share price as well as the market price at time of issuance. Paid in capital was increased by $4,614,426 as a result of the exchange.

On December 23, 2014 the Company sold to 22 of its employees a total of 4,527,832 shares of common stock for a total of $1,177,236 or $0.26 per share, which exceeded the market price on October 4, 2014, when the contract of sale was made.

On February 3, 2015, the Company issued 300,000 shares of common stock to management at $0.33 per share based on share price at grant date. The shares are equally vested on January 1, 2016, January 1, 2017 and January 1, 2018. The Company recorded $30,250 stock compensation expense for the year ended June 30, 2015 and the unrecognized compensation expense was $68,750.

On February 3, 2015, the Company issued 40,000 shares of common stock to independent directors at $0.39 per shares for services rendered by them.

On February 3, 2015, the Company issued 1,704,915 shares of its common stock to six investors, each of whom is either an employee or a consultant to the Company. The average purchase price for the shares was $0.32 per share.

On March 12, 2015, the Company issued 480,000 shares of its common stock to a creditor at $0.50 per share to offset a loan payable.

On April 8 2015, the company sold 508,000 shares of common stock to officers and employees of the Company at a price of $1.36 per share, which exceeded the market price at time of issuance.

On April 8 2015, the Company also issued 521,412 shares of common stock at a price of $1.36 per share to a creditor in satisfaction of $709,120 debt.

On June 19, 2015, the Company issued 20,000 shares of common stock to management for services rendered.

F - 19

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

16 TAXES

The Company’s Chinese subsidiaries are governed by the Income Tax Law of the People’s Republic of China concerning private-run enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

The reconciliation of income tax at the U.S. statutory rate to the Company’s effective tax rate is as follows:

	Year Ended June 30,
	2015		2014

Tax at U.S. Statutory rate	$	1,089,936	$	(3,022,033	)
Tax rate difference between China and U.S.		(1,046,086)		3,765,170
Change in Valuation Allowance		(1,031,621)		(2,416,252)
Net operating loss expired		955,983		1,666,605
Stock and option compensation		31,788		6,510
Impairment loss on goodwill		-
Effective tax rate	$	-	$	-

The provisions of income taxes (credit) are summarized as follows:

	Year Ended June 30,
	2015			2014

Current	$			$	-
Deferred - U.S.		(229,859	)		(176,469	)
Deferred – China		(1,442,889)			(1,532,812	)
Valuation allowance - U.S.		229,859			176,469
Valuation allowance – China		(1,261,480	)		1,532,812
Total	$	(2,704,369	)	$	-

The tax effects of temporary differences that give rise to the Company’s net deferred tax asset as of June 30, 2015 and 2014 are as follows:

	Year Ended June 30,
	2015			2014

Net operating loss carryforward - China	$	1,342,696		$	3,106,728
Net operating loss carryforward - US		1,935,121			1,705,262
Allowance for doubtful accounts		823,190			(792,888	)
Others		808,334			(790,452	)
		4,909,341			3,228,650
Less: valuation allowance- U.S.		(1,935,121	)		(1,705,262	)
valuation allowance- China.		(262,610	)		(1,523,388	)
Deferred tax assets	$	2,711,610		$	-

As of June 30, 2015, the Company has recognized deferred tax assets of $2,711,610. The Company’s loss carry forwards for the past 5 years produced a significant amount of the deferred tax assets and the realization of tax loss carry forwards are deemed to be probable. Therefore, the Company determined it was appropriate under US GAAP to recognize the deferred tax assets during the Fiscal 2015.

For the year ended June 30, 2015 and 2014, the Company did not have any interest and penalties associated with tax positions. As of June 30, 2015 and 2014, the Company did not have any significant unrecognized uncertain tax positions.

F - 20

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2015

17 CONCENTRATIONS

Sales to two major customers were 7% and 5% of total sales for the year ended June 30, 2015. Sales to two major customers were 7% and 4% of total sales for the year ended June 30, 2014.

Sales of one major product represented approximately 95% and 92% of total sales for the year ended June 30, 2015 and 2014, respectively.

Two major customers accounted for 0.1% and 4% of outstanding accounts receivable as of June 30, 2015. Two major customers accounted for nil and 1% of outstanding accounts receivable as of June 30, 2014.

18 SUBSEQUENT EVENTS

On July 23, 2015, the Company entered into a loan agreement with Postal Savings Bank of China and obtained a loan of RMB27 million (approximately $4.4 million) with a term of five months maturing on December 22, 2015. This loan bears an annual interest rate of 7.8%.

On July 10, 2015 and on October 9, 2015, the Company obtained extensions of the short term borrowing from Shijiazhuang Construction Investment Group. $3,100,117 was due on July 12, 2015 and was extended to October 27, 2015 and then further extended to April 26, 2016. $1,957,969 was due on October 25, 2015 and was extended to April 24, 2016. The loans bear an annual interest rate of 12%.

On September 17, 2015, the Company extended the six-month term loan of $3,263,282 from Hebei Henghui Investment Management Co., Ltd. to October 17, 2015. On September 30, 2015, the Company repaid $656,250 of the loan and the remainder of the loan was extended to April 16, 2016. The loan was originally due on September 17, 2015 and bears an annual interest rate of 10%.

On September 30, 2015 the Company sold 2,352,941 shares of common stock and 1,764,706 common stock purchase warrants (the "Public Warrants") pursuant to a Securities Purchase Agreement dated as of September 24, 2015. The purchaser was an institutional investor. The aggregate purchase price for the securities was $3,000,000. From the proceeds of the offering, the Company paid a fee of $180,000 to the placement agent for the offering. Aoxing Pharmaceutical Company, Inc. has also issued to the placement agent and its affiliates warrants to purchase 141,176 shares of common stock. Each Public Warrant will permit the holder to purchase one share of common stock from the Company for a price of $1.74 per share. The Public Warrants will be exercisable from March 30, 2016 until March 30, 2021. The warrants issued to the placement agent and its affiliates are substantially identical to the Public Warrants, except that the termination date is September 24, 2020. Cashless exercise of either warrant is permitted only if there is no effective registration statement permitting resale of the common shares underlying the warrants.

In accordance with ASC 855 “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, we have evaluated all events or transactions that occurred after June 30, 2015up through the date we issued the consolidated financial statements and has determined that there was no other material event that occurred after the date of the balance sheets included in this report.

F - 21

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to provide reasonable assurance that information required by Aoxing Pharma in the reports that it files with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time limits specified in the Commission’s rules. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to insure that information Aoxing Pharma is required to disclose in the reports it files with the Commission is accumulated and communicated to our Certifying Officers as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, such controls and procedures were effective.

Changes in Internal Controls.

There have been no changes in our internal control over financial reporting during the fourth quarter of fiscal 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. We have assessed the effectiveness of those internal controls as of June 30, 2015, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Integrated Framework (1992) as a basis for our assessment.

A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we did not identify material weakness in our internal control over financial reporting. Accordingly, management’s assessment is that the Company’s internal controls over financial reporting were effective as of June 30, 2015.

Because we are a smaller reporting company, this Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item10. Directors, Executive Officers, and Corporate Governance.

The following individuals are the members of Aoxing Pharma’s Board of Directors and/or its executive officers.

Name	Age	Position	Member of the Board Since
Zhenjiang Yue	56	Chairman of the Board, Chief Executive Officer	2006

Min Jun	56	Director	2008

Guozhu Xu	69	Director	2008

Yang Li	35	Director	2012

Hui Shao	47	Director	2015

Wilfred Chow	49	Chief Financial Officer	--

Guirong Zhou	61	President of Research & Development	--

___________________________

Board of Directors

Our Board oversees our business affairs and monitors the performance of our management. Each director and executive officer holds office until his successor is duly elected and qualified, he resigns or he is removed in the manner provided by our Bylaws. All officers are appointed and serve at the discretion of the Board. All of our officers devote their full-time attention to our business.

Biographical Information of Directors and Executive Officers

Biographical information with respect to the Company’s current executive officers and directors is provided below.

Zhenjiang Yue. In 2000, after securing the approval of the Hebei Provincial Government, Mr. Yue established the Hebei Aoxing Group. Since 2000, Mr. Yue has been employed as the President and General Manager of Hebei Aoxing Pharmaceutical Co. Ltd. Prior to organizing Hebei Aoxing, Mr. Yue was engaged in senior management of a number of private enterprises, including a carpet factory, a precast metal factory, the Hebei Brewery Plant, and China Aoxing Food & Brewery Co. Ltd (all in the PRC). Mr. Yue’s day to day leadership, as Chief Executive Officer of the Company, provides him with intimate knowledge of our operations.

Jun Min was one of the founders of American Oriental Bioengineering Company, which is the largest shareholder of Aoxing. Mr. Min has served as Vice President and a member of Board of Directors of AOB since 2002. Mr. Min has over 20 years of experience in operations management, and has an extensive knowledge of the consumer and pharmaceutical products industries in China. Mr. Min earned a Bachelor’s Degree with a concentration in Business Management from the Harbin Broadcast & Television University in 1986, and an Executive Master’s in Business Administration degree from Preston University in 2005. Mr. Min brings his extensive experience in operations management in China to the Board and the Company.

Dr. Guozhu Xu has, since 1990, been employed as Director of the China National Drug Dependence Institute at Beijing University, with responsibility for clinical management. Until recently, Dr. Xu served as a Committee Member of the Center for Drug Evaluation at the China State Food and Drug Administration (“CFDA”). In that role, Dr. Xu was the primary investigator for over seventy clinical programs in pain management, representing over 80% of new pain management drugs approved by the CFDA. Dr. Xu is an associate director of China Drug Abuse Prevention magazine and has published over 100 articles regarding drug research and development. Dr Xu received his medical degree from Beijing Medical University in 1970. Dr. Xu brings his technical, industry and operational expertise to the Board.

Yang Li, Mr. Yang Li is a member of the institute of chartered accountants of Canada and a member of the institute of chartered accountants of Ireland. She previously worked for PricewaterhouseCoopers LLP, one of the big four accounting firm. She leaded audit team to provide audit services for many U.S. and Canadian public company. After her return to China, she has assisted a well-known company successfully listed in the U.S. stock exchange market. She also led a team that provided audit and tax services to many state-owned enterprises. Ms. Yang received her master’s degree in accounting from University College Dublin of the National University of Ireland. Ms. Li brings to the Board a thorough understanding of U.S. accounting principles and practices, and the knowledge of business gained from her experience as an auditor.

Dr. Hui Shao has been appointed to the board on January 1, 2015. Dr. Shao served as Vice President of Finance and CFO of Aoxing Pharma from 2007 to 2010. Dr. Shao is currently CFO of Yisheng Biopharma, a private equity backed pharmaceutical company focused on vaccines with operations in China. Prior to his employment by Aoxing Pharma, Dr. Shao was a Senior Analyst at Mehta Partners and Kamunting Street Capital Management in New York, where he was responsible for a healthcare investment portfolio of over $100 million across North American and European companies. Dr. Shao was a Principal Scientist, leading metabolic disease and oncology projects at Roche Pharmaceuticals, before he started his career on Wall Street. Dr. Shao was an independent director of Tongli Pharma from 2008 to 2011. Dr. Shao received his Ph.D degree in bioorganic chemistry at University of California, San Diego, and MBA degree in finance and accounting at Stern Business School of New York University.

Wilfred Chow was appointed Chief Financial Officer on January 1, 2015. Mr. Wilfred Chow joined Aoxing Pharma from Okeanos Capital Investment, a consulting firm focused on media and pharmaceutical. As managing director at Okeanos, Mr. Chow led corporate finance teams responsible for capital raises and M&A transactions. He led and completed two acquisitions and raised multiple rounds of capital from private equity funds for his clients. From 2010 to 2012, Mr. Chow was CFO of Tiger Media, Inc. (NYSE MKT: IDI), where he executed improvements in the company's financial visibility and transparency to build long term shareholder value. Prior to IDI, Mr. Chow spent over 15 years working as SVP and CFO for venture-backed private and NYSE listed companies. Earlier in his career, Mr. Chow held a variety of position at PriceWaterhouseCoopers and Deloitte in both New York and Hong Kong. Mr. Chow earned a BS in Economics from Hong Kong University and a MBA from Leicester University.

Guirong Zhou was appointed President of Research and Development in July 2012. Prior to that, she was deputy director in our R&D department. Ms. Zhou joined the company in 2011 from Shijiazhuang Pharmaceutical Company, where she worked there since 1985 and held various senior positions especially in R&D Ms. Zhou has been involved in the registration of many new drug certificates and product licenses, including tablet, injection, transfusion, soft capsule, drop pills, lyophilized powder, quick release preparation and control release preparation. Among all the achievements, Ms. Zhou was the project leader in bringing Pentoxifylline Sustained Release Tablets and Acemetacine capsule to market and they are leading products in China. Ms. Zhou is an academic advisor in pharmaceutical engineering at Tianjin University and Hebei University of Science and Technology.

There are no material proceedings to which any director, executive officer or affiliate of the Company, any owner of record or beneficial owner of more than five percent of any class of voting securities of the Company, or any associate of any such director, executive officer, affiliate or security holder is a party adverse to the Company or has a material interest adverse to the Company. There are no family relationships between any of the Company’s executive officers or directors and there are no arrangements or understandings between a director and any other person pursuant to which such person was elected as director.

No director or officer of the Company has, during the last 10 years, been subject to or involved in any legal proceedings described under Item 401(f) of Regulation S-K, been convicted of any criminal proceeding (excluding traffic violations or similar misdemeanors), or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, United States federal or state securities laws or finding any violations with respect to such laws.

There were no material changes to the procedures by which shareholders may recommend nominees to the Board since the Company’s last disclosure of such policies.

Board Committees

Our Board has three committees: Audit Committee, Compensation Committee, and the Nominating and Governance Committee. The membership and responsibilities of these current committees are summarized below.

Below are the current committee memberships and other information about the Board committees. The membership of each of the standing committees of the Board is comprised solely of independent directors, as described below.

Name	Board of Directors	Audit Committee	Compensation Committee	Nominating and Corporate Governance Committee
Zhenjiang Yue	**
Jun Min	*
Yang Li (1)	*	**	*	*
Guozhu Xu	*	*	**	**
Hui Shao (2)	*	*	*	*
Zhimin Li (3)	*		*	*
Meetings in fiscal 2015	10	4	1	1

*	Denotes membership
**	Denotes chairmanship
(1)	Audit Committee financial expert
(2)	Hui Shao was appointed to the Board of Directors in January 2015.
(3)	Zhimin Li was appointed to the Board of Directors in July 2014 and resigned in December 2014.

Audit Committee

Yang Li currently serves as Chairman of the Audit Committee. The Board has determined that Yang Li is an audit committee financial expert as defined by Item 407(d)(5) of Regulation S-K under the Securities Act and is “independent” as defined under applicable rules and regulations. Guozhu Xu and Hui Shao are the other members of the Audit Committee. The Board has determined that each of the members of the Audit Committee satisfies the independence requirements of the NYSE MKT.

The purposes of the Audit Committee are to assist the Board in its general oversight of Aoxing’s financial reporting, internal controls and audit functions. As described in the Audit Committee Charter, the Audit Committee’s primary responsibilities are to oversee on behalf of the Board:

·	the Company’s accounting financial reporting processes and the integrity of its financial statements;

·	the audits of the Company’s financial statements and the appointment, compensation, qualification, independence and performance of the Company’s independent auditors;

·	the Company’s compliance with legal and regulatory requirement; and

·	the performance of the Company’s internal audit function and internal control over financial reporting.

Compensation Committee

Guozhu Xu serves as Chairman of the Compensation Committee. Yang Li and Hui Shao are the other members of this Committee. The Board has determined that each of the members of the Compensation Committee satisfies the independence requirements of the NYSE MKT. The purpose of the Compensation Committee is to assist the Board in determining the compensation of the Chief Executive Officer and make recommendations to the Board with respect to the compensation of the Chief Financial Officer, other executive officers of the Company and the independent directors. In furtherance of this purpose, the Compensation Committee has the following authority and responsibilities:

·	annually review the Company’s corporate goals and objectives relevant to the CEO’s compensation;

·	evaluate the CEO’s performance in light of such goals and objectives; and, either as a Compensation Committee or, together with the other independent directors (as directed by the Board), determine and approve the CEO’s compensation level based on this evaluation; annually review and make recommendations to the Board with respect to non-CEO executive officer and independent director compensation to assist the Board in making the final determination as to non-CEO executive officer and independent director compensation;

·	establish measurements that will ensure that the Company’s compensation program is effective in attracting and retaining key employees, reinforce business strategies and objectives for enhanced stockholder value, and administer the compensation program in a fair and equitable manner consistent with established policies and guidelines;

·	make recommendations to the Board with respect to the Company’s incentive-compensation plans and equity-based plans that are subject to the Board’s approval;

·	make recommendations to the Board regarding approval, disapproval, modification, or termination of existing or proposed employee benefit plans; approve any stock option award or any other type of award as may be required for complying with any tax, securities, or other regulatory requirement, or otherwise determined to be appropriate or desirable by the Compensation Committee or Board;

·	review and assess the adequacy of this charter annually; review and approve the compensation disclosure and analysis prepared by the Company’s management, as required to be included in the Company’s proxy statement or annual report on Form 10-K filed with the SEC;

·	produce a Compensation Committee report on executive officer compensation as required by the SEC to be included in the Company’s proxy statement or annual report on Form 10-K filed with the SEC.

The CEO of the Company may not be present during voting or deliberations of the Compensation Committee with respect to his compensation. Moreover, the Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. The Compensation Committee also annually reviews its own performance. The Committee may retain and receive advice, in its sole discretion, from compensation consultants. The Compensation Committee does not currently employ compensation consultants in determining or recommending the amount or form of executive and director compensation. None of the members of our Compensation Committee is one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee.

Nominating and Corporate Governance Committee

Guozhu Xu serves as Chairman of the Compensation Committee. Yang Li and Hui Shao are the other members of this Committee. The Nominating and Corporate Governance Committee has the following responsibilities as set forth in its charter:

·	to review and recommend to the Board with regard to policies for the composition of the Board;

·	to review any director nominee candidates recommended by any director or executive officer of the Company, or by any shareholder if submitted properly;

·	to identify, interview and evaluate director nominee candidates and have sole authority to retain and terminate any search firm to be used to assist the Committee in identifying director candidates and approve the search firm’s fees and other retention terms;

·	to recommend to the Board the slate of director nominees to be presented by the Board;

·	to recommend director nominees to fill vacancies on the Board, and the members of each Board committee;

·	to lead the annual review of Board performance and effectiveness and make recommendations to the Board as appropriate; and to review and recommend corporate governance policies and principles for the Company, including those relating to the structure and operations of the Board and its committees.

Code of Ethics

The Company has adopted a Code of Ethics that applies to its executive officers and directors. A copy of the Code of Ethics was filed as Exhibit 14 to the Current Report on Form 8-K filed on November 30, 2009.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than 10% of a registered class of our equity securities within the specified time periods to file certain reports of ownership and changes in ownership with the SEC.

Based solely upon a review the Forms 3 and Forms 4 furnished to the Company pursuant to Rule 16a-3 under the Exchange Act during the Company’s most recent fiscal year, it is the Company’s understanding that all such required filings have been made on a timely basis, except that Zhenjiang Yue was late in filing one Form 4.

Item 11. Executive Compensation

The following table sets forth all compensation paid by Aoxing Pharma and its subsidiaries to Zhenjiang Yue for services as Chief Executive Officer during the years ended June 30, 2015, 2014 and 2013 and to Wilfred Chow for services as Chief Financial Officer during the year ended June 30, 2015. There were no other executive officers whose total salary and bonus for the fiscal year ended June 30, 2015 exceeded $100,000.

Summary Compensation Table

	Year	Salary			Bonus		Stock Award		Option Award		Other Compensation		Total
Zhenjiang Yue	2015	$	162,729	(1)		-		-		-		-	$	162,729
	2014	$	162,689	(2)		-		-		-		-	$	162,689
	2013	$	159,200	(3)		-		-		-		-	$	159,200

Wilfred Chow

2015

125,000

(4)

30,250

(5)

22,822

(6)

178,072

___________________________

(1)	The dollar equivalent of 1,000,000 RMB, based on the exchange rate of 6.1452 RMB per dollar

(2)	The dollar equivalent of 1,000,000 RMB, based on the exchange rate of 6.1467 RMB per dollar

(3)	The dollar equivalent of 1,000,000 RMB, based on the exchange rate of 6.2814 RMB per dollar

(4)	Wilfred Chow was first employed on January 1, 2015

(5)	300,000 stock award at$0.33 per share vesting over 3 years

(6)	(6) 300,000 stock option award at $0.33 exercise price vesting over 3 years

Employment Contracts, Termination of Employment and Change-in-Control Arrangements

The Company has employment agreements with the following named executive officer. The following is a description of that agreement.

Executive Employment Agreement dated as of January 13, 2010 with Zhenjiang Yue. This agreement provides that Mr. Yue will serve as the Company’s Chief Executive Officer. The Company agreed to pay Mr. Yue an annual salary of 1 million Chinese Yuan (approximately US$158,000). The Company may also pay him a cash bonus, within the discretion of the Board. In addition, subject to the approval of the Board, Mr. Yue is eligible to receive equity based award in the form of restricted common stock, stock option or other securities by the Company from time to time. The term of the agreement ended on January 13, 2014, but it renewed for consecutive one year terms unless affirmatively terminated by either party. The Company can terminate the agreement at any time without cause, but will be liable for six months’ severance pay. The agreement contains a covenant of non-competition by Mr. Yue for one year after termination, unless he is terminated without cause or he terminates for good reason.

Executive Employment Agreement dated as of January 1, 2015 with Wilfred Chow. This agreement provides that Mr. Chow will serve as the Company’s Chief Financial Officer. The Company agreed to pay Mr. Chow an annual salary of US$250,000. The Company also grant Mr. Chow 300,000 restricted shares vesting over 3 years and 300,000 stock options at exercise price of $0.33 vesting over 3 years. The term of the agreement ends on December 31, 2017. The Company can terminate the agreement at any time without cause, but will be liable for six months’ severance pay. The agreement contains a covenant of non-competition by Mr. Chow during the employment period.

Equity Grants in Fiscal 2015

The following tables set forth certain information regarding the stock options and restricted shares acquired by the Company’s Executive Officer and Financial Officer during the year ended June 30, 2015 and those options held by them on June 30, 2015.

Option Grants in the Last Fiscal Year

	Number of securities underlying Unexercised options (#) exercisable		Number of Securities Underlying Unexercised Options (#) unexercisable	Option Exercise Price ($)	Option Expiration Date

Zhenjiang Yue		-	-	-	-

Wilfred Chow		-	300,000	0.33	December 31, 2019

Restricted shares Grants in the Last Fiscal Year

	Number of restricted shares vested		Number of Restricted shares unvested	Grant date share price ($)	Vesting period

Zhenjiang Yue		-	-	-	-
Wilfred Chow		-	300,000	0.33	January 1, 2016 – January 1, 2018

Compensation of Directors

The members of the Board receive remuneration in cash and/or restricted shares of the common stock for the period of their duties as shown below:

·	No compensation for Zhenjiang Yue or Jun Min

·	RMB 4,000 per month and 20,000 shares of common stock annually for Yang Li

·	RMB 5,000 per month and 20,000 shares of common stock annually for Hui Shao

·	RMB 4,000 per month and 20,000 shares of common stock annually for Guozhu Xu

The following table sets forth all compensation paid or to be paid by the Company, as well as certain other compensation paid or accrued, for each of the directors for the fiscal year ended June 30, 2015. The Board members have the option of receiving fees earned in cash or restricted stock.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		All Other Compensation ($)		Total ($)
Zhenjiang Yue		-		-		-		-
Jun Min		-		-		-		-
Yang Li		7,811		7,800		-		15,611
Hui Shao		9,764		7,800		-		17,564
Guozhu Xu		7,811		7,800		-		15,611

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Set forth below is information regarding the beneficial ownership of our common stock, by:

·	each person known to us that beneficially owns more than 5% of our outstanding shares of common stock;

·	each of our directors;

·	each of our named executive officers; and

·	all of our current directors and executive officers as a group.

There are 72,172,200 shares of our common stock issued and outstanding. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed below have sole voting power and investment power with respect to their shares, subject to community property laws where applicable.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership(1)			Percent of Class

Zhenjiang Yue		12,161,375	(2)		16.9	%
Wilfred Chow		1,212,500			1.7	%
Jun Min		0	(3)		*
Yang Li		40,000			**
Guozhu Xu		120,000			*
Hui Shao		25,000			*
Zhimin Li		0			--

All directors and officers as a group (7 persons)		13,558,588			18.8	%

American Oriental Bioengineering, Inc.		16,789,203	(4)		24	%

___________________

*Less than 1%

(1)	For purposes of determining the amount of securities beneficially owned, share amounts include all Common stock owned outright plus all shares of common stock issuable upon conversion of convertible notes, or the exercise of options or warrants currently exercisable, or exercisable within 60 days of the record date. The Percent of Class is based on the number of shares of the Company’s common stock outstanding as of the record date. Shares of common stock issuable upon conversion of convertible notes, or the exercise of options or warrants currently exercisable, or exercisable within 60 days of the record date, are deemed outstanding for the purpose of computing the percentage ownership of the person holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other owners. The address of all persons named in this table is: c/o Aoxing Pharmaceutical Company, Inc., 444 Washington Blvd, Suite 3338, Jersey City, NJ 07302.
(2)	Includes (i) 10,661,375 shares of common stock held by Mr. Yue and (ii) 1,500,000 shares of common stock held of record by Mr. Yue’s spouse, Cuiying Hao.
(3)	Does not include 16,789,203 shares owned of record by American Oriental Bioengineering, Inc., of which Mr. Min is Vice President and a member of the Board of Directors.
(4)	Represents shares of common stock held by American Oriental Bioengineering, Inc. The address for AOB is 1 Liangshuihe First Ave, Beijing E-Town Economic and Technology Development Area, E-Town, Beijing, 100176, People’s Republic of China.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

During the 2015 fiscal year, we were not involved in any related party transactions subject to Item 404 of Regulation S-K. Pursuant to Board policies, our executive officers and directors, and principal shareholders, including their immediate family members and affiliates, are not permitted to enter into a related party transaction without the prior consent of the Board. Any request for such related party transaction with an executive officer, director, principal stockholder, or any of such persons’ immediate family members or affiliates, in which the amount involved exceeds $120,000 must first be presented to the Audit Committee and the Board for review, consideration and approval. All of our directors, executive officers and employees are required to report to the Board any such related party transaction. In approving or rejecting the proposed agreement, the Board will consider the relevant facts and circumstances available and deemed relevant to the Board which will approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as the Board determines in the good faith exercise of its discretion.

Director Independence

Our Board is subject to the independence requirements of the NYSE MKT LLC. Pursuant to the requirements, the Nominating and Corporate Governance Committee of the Board reviews director independence. During this review, the Committee considers transactions and relationships between each director or any member of his immediate family and Aoxing and its affiliates, including those transactions that are contemplated under Item 404(a) of Regulation S-K. The purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director is independent. Based on this review, the Committee has determined that all but two of our directors are “independent” as defined by the listing standards of the NYSE MKT LLC Company Guide. Mr. Zhenjiang Yue, who also serves as our Chief Executive Officer, and Mr. Jun Min, who is an officer of a 10% shareholder, are not considered independent, respectively, and neither Mr. Yue nor Mr. Jun serves on the Audit, Nominating, or Compensation Committees. The Committee has also determined that the members of the Audit Committee are also “independent” for purposes of Section 10A-3 of the Exchange Act and Section 803 of the NYSE MKT LLC Company Guide. The Committee based these determinations primarily on a review of the responses of the directors and executive officers to questions regarding employment and transaction history, affiliations and family and other relationships and on discussions with the directors. None of our directors engages in any transaction, relationship, or arrangement contemplated under Item 404(a) of Regulation S-K.

Item 14. Principal Accountant Fees and Services

Our current principal independent auditor is BDO China Shu Lun Pan Certified Accountants LLP, which we initially engaged on April 29, 2013.

The following table presents fees for professional services rendered by BDO China Shu Lun Pan Certified Accountants LLP with respect to the year ended June 30, 2015 and 2014.

Services Performed	2015		2014
Audit Fees (1)	$	148,000,	$	155,789
Audit-Related Fees (2)	$	-	$	-
Tax Fees (3)	$	-	$	-
All Other Fees (4)	$	-	$	-

Total Fees	$	148,000	$	155,789

(1)

Audit fees represent fees billed for professional services provided in connection with the audit of the Company’s annual financial statements and reviews of its quarterly financial statements. All work on the engagements to audit the Company’s financial statements for the years ended June 30, 2015 and 2014 was performed by full-time permanent employees of BDO China Shu Lun Pan Certified Accountants LLP.

(2)	Audit-related fees represent fees billed primarily for assurance and related services not reported under Audit fees.

(3)	Tax fees principally represent fees billed for tax preparation, tax advice and tax planning services.

(4)	All other fees principally would include fees billed for products and services provided by the accountant, other than the services reported under the three captions above.

Our Audit Committee has the sole authority to pre-approve all audit and non-audit services provided by our independent auditors. The Audit Committee on an annual basis reviews audit and non-audit services performed by the independent auditors. All audit and non-audit services are pre-approved by the Audit Committee, which considers, among other things, the possible effect of the performance of such services on the auditors’ independence. As permitted under the Sarbanes-Oxley Act of 2002, the Audit Committee may delegate pre-approval authority to one or more of its members. Any service pre-approved by a delegate must be reported to the Audit Committee at the next scheduled quarterly meeting. The Audit Committee considered whether the provision of the auditors’ services, other than for the annual audit and quarterly reviews, is compatible with its independence and concluded that it is compatible. In 2015 and 2014, all such services were pre-approved by the Audit Committee.

Item 15. Exhibit List and Financial Statement Schedules

(a) Financial Statements

Report of Independent Registered Accounting Firm

Balance Sheets – June 30, 2015 and 2014

Consolidated Statements of Operations – Years Ended June 30, 2015 and 2014

Consolidated Statement of Changes in Stockholders’ Equity - Years Ended June 30, 2015 and 2014

Consolidated Statements of Cash Flows - Years ended June 30, 2015 and 2014

Notes to Consolidated Financial Statements

(b) Exhibit List

3-a(1)	Certificate of Incorporation, as amended through December 29, 2005 – filed as an exhibit to the Annual Report on Form 10-KSB for the year ended June 30, 2006 and incorporated herein by reference.

3-a(2)	Certificate of Amendment of the Certificate of Incorporation effective on July 6, 2010 – filed as an Exhibit to the Current Report on Form 8-K filed on July 13, 2006 and incorporated herein by reference.

3-a(3)	Certificate of Amendment of the Certificate of Incorporation effective on January 6, 2010 – filed as an exhibit to the Current Report on Form 8-K filed on January 7, 2010 and incorporated herein by reference.

3-a(4)	Articles of Amendment of the Certificate of Incorporation effective on March 19, 2010 – filed as an Exhibit to the Current Report on Form 8-K filed on March 29, 2010 and incorporated herein by reference.

3-b	Amended and Restated Bylaws - filed as an exhibit to the Current Report on Form 8-K filed on November 16, 2009 and incorporated herein by reference.

4-a	Form of Common Stock Purchase Warrant issued on September 30, 2015 - filed as an exhibit to the Current Report on Form 8-K filed on September 30, 2015 and incorporated herein by reference.

10.1	Joint Strategic Alliance and Securities Purchase Agreement dated April 15, 2008 between China Aoxing Pharmaceutical Company, Inc. and American Oriental Bioengineering, Inc. - filed as an exhibit to the Company’s Current Report on Form 8-K dated April 15, 2008 and incorporated by reference herein.

14	Code of Ethics of China Aoxing Pharmaceutical Company, Inc. - filed as an Exhibit to the Current Report on Form 8-K filed on November 30, 2009 and incorporated herein by reference.

21.1	List of Subsidiaries *

23	Consent of BDO China Shu Lun Pan Certified Public Accountants. *

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32.1	Certificate of Chief Executive Officer pursuant to 18 U.S.C.ss.1350.*

32.2	Certificate of Chief Financial Officer pursuant to 18 U.S.C.ss.1350.*

101 INS	XBRL Instance Document*

101 SCH	XBRL Schema Document*

101 CAL	XBRL Calculation Linkbase Document*

101 DEF	XBRL Definition Linkbase Document*

101 LAB	XBRL Labels Linkbase Document*

101 PRE	XBRL Presentation Linkbase Document*

* The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

*	Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Aoxing Pharmaceutical Company, Inc.

Date: October 13, 2015	By: /s/ Zhenjiang Yue
	Zhenjiang Yue, Chief Executive Officer
	(Principal Executive Officer)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Report has been signed below on October 9, 2015 by the following persons on behalf of the Registrant and in the capacities indicated.

/s/ Zhenjiang Yue		Date: October 13, 2015
Zhenjiang Yue, Director,
Chief Executive Officer

/s/ Wilfred Chow		Date: October 13, 2015
Wilfred Chow, Chief Financial Officer
(Principal Accounting and Financial Officer)

/s/Yang Li		Date: October 13, 2015
Yang Li, Director

/s/ Jun Min		Date: October 13, 2015
Jun Min, Director

/s/ Guozhu Xu		Date: October 13, 2015
Guozhu Xu, Director

/s/ Hui Shao		Date: October 13, 2015
Hui Shao, Director

Exhibit 21.1

List of Subsidiaries

The Company has the following subsidiaries:

	·	Ostar Pharmaceutical, Inc., a Delaware corporation

	·	Hebei Aoxing Pharmaceutical Co., Inc., a PRC company

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Director and Stockholders

Aoxing Pharmaceutical Company, Inc.

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-205148) and in the Registration Statement on Form S-8 (No. 333-177641) of Aoxing Pharmaceutical Company, Inc. of our report dated October 9, 2015, relating to the consolidated financial statements of Aoxing Pharmaceutical Company, Inc. which appear in this Annual Report on Form 10-K.

/s/ BDO China Shu Lun Pan Certified Public Accountants

BDO China Shu Lun Pan Certified Public Accountants

Shanghai, People’s Republic of China

October 13, 2015

Exhibit 31.1

CERTIFICATION

I, Zhenjiang Yue, certify that:

1. I have reviewed this Form 10-K of Aoxing Pharmaceutical Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 13, 2015

	/s/ Zhenjiang Yue
	Zhenjiang Yue, Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Wilfred Chow, certify that:

1. I have reviewed this Form 10-K of Aoxing Pharmaceutical Company, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 13, 2015

	/s/ Wilfred Chow
	Wilfred Chow, Chief Financial Officer
	(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. §1350

Pursuant to 18 U.S.C. §1350 and in connection with the Annual Report on Form 10-K of Aoxing Pharmaceutical Company, Inc.; (the “Company”) for the fiscal year ended June 30, 2015 (the “Report”), I, Zhenjiang Yue, Chief Executive Officer of the Company, hereby certify that to the best of my knowledge and belief:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for said period.

	/s/ Zhenjiang Yue
	Zhenjiang Yue, Chief Executive Officer

Date: October 13, 2015

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request

Exhibit 32.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. §1350

Pursuant to 18 U.S.C. §1350 and in connection with the Annual Report on Form 10-K of Aoxing Pharmaceutical Company, Inc. (the “Company”) for the fiscal year ended June 30, 2015 (the “Report”), I, Wilfred Chow, Chief Financial Officer of the Company, hereby certify that to the best of my knowledge and belief:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for said period.

	/s/ Wilfred Chow
	Wilfred Chow, Chief Financial Officer

Date: October 13, 2015

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request

Aoxing Pharmaceutical Company New (delisted) (AMEX:AXN)
Graphique Historique de l'Action
De Oct 2024 à Nov 2024

Plus de graphiques de la Bourse Aoxing Pharmaceutical Company New (delisted)

Aoxing Pharmaceutical Company New (delisted) (AMEX:AXN)
Graphique Historique de l'Action
De Nov 2023 à Nov 2024

Donnée du Marché

Actualité

Outils

Donnée du Marché

Discover

Hot Features

Follow Feed

Flux des Options

Moniteur

AXN Aoxing Pharmaceutical Company New (delisted)

Actualités Aoxing Pharmaceutical Company, Inc.

Dernières Valeurs Consultées

Société

Entreprise

Popular

Obtenir l'application

Donnée du Marché

Actualité

Outils

Donnée du Marché

Discover

Hot Features

Follow Feed

Flux des Options

Moniteur

AXN Aoxing Pharmaceutical Company New (delisted)

Actualités Aoxing Pharmaceutical Company, Inc.

Dernières Valeurs Consultées

Société

Entreprise

Popular

Obtenir l'application

BLACK FRIDAY

Jusqu'à 65% de réduction sur Intégral

Cours Euronext Niveau 1 et carnet d'ordres