2 Significant Accounting Policies: Goodwill and Intangible Assets (Policies)	12 Months Ended
Jun. 30, 2013
Policies
Goodwill and Intangible Assets	*Goodwill and intangible assets* Goodwill was the result of the acquisition of LRT and 35% of Hebei Aoxing in 2008. Goodwill represents the cost of the acquired business in excess of the fair value of identifiable tangible and intangible net assets purchased. For the year ended June 30, 2013, the Company engaged an independent valuation expert to assist in determining the fair value of the net assets of its Hebei reporting unit, which includes identifiable intangible assets, property and equipment and goodwill. The Company evaluates its goodwill according to the provisions of Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and other,” to determine if the current value of goodwill has been impaired. The acquisition of LRT has been completely integrated into the Hebei Aoxing reporting unit. Goodwill of the Hebei Aoxing reporting unit is tested for impairment each year during the 4th quarter and is also tested at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. 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. During the year ended June 30, 2013, it was determined some drug permits and licenses will not provide future benefits to the Company. Accordingly, an impairment provision of $616,947 was provided by the Company. The Company engaged a third party valuation firm to review the Company’s Hebei reporting unit for impairment as of June 30, 2013. The test involved the assessment of the fair market value of the Company’s tangible and intangible assets, using a form of the income approach known as the excess earnings method, and concluded that a discount rate of 14% is considered appropriate for valuing the Company. The market and cost approaches were not applied due to the lack of information deemed to be reliably indicative of value using either approach. The result of the assessment of the Company’s tangible and intangible assets indicated that its carrying value exceeded the fair value. The Company provided a forecasted discounted cash flows analysis for the reporting unit based on discrete five-year financial forecasts developed by management for planning purposes. Cash flows beyond the fifth year discrete forecasts were estimated using a market earning growth rate of 9.9% up to the thirty year and a 3% terminal value growth calculation afterward, which incorporated historical and forecasted financial trends for the reporting unit and considered long-term earnings growth rates expected for the pharmaceutical industry in China. Based upon the valuation report prepared by an independent valuation expert, it is concluded that the carrying value exceeded the fair value of the goodwill as of June 30, 2013. The Company recorded an impairment of $7,055,364 for the year ended June 30, 2013. The remaining goodwill balance as of June 30, 2013 is nil.

2 Significant Accounting Policies: Goodwill and Intangible Assets (Policies)

12 Months Ended

Jun. 30, 2013

Goodwill and intangible assets

Goodwill was the result of the acquisition of LRT and 35% of Hebei Aoxing in 2008. Goodwill represents the cost of the acquired business in excess of the fair value of identifiable tangible and intangible net assets purchased. For the year ended June 30, 2013, the Company engaged an independent valuation expert to assist in determining the fair value of the net assets of its Hebei reporting unit, which includes identifiable intangible assets, property and equipment and goodwill.

The Company evaluates its goodwill according to the provisions of Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and other,” to determine if the current value of goodwill has been impaired. The acquisition of LRT has been completely integrated into the Hebei Aoxing reporting unit. Goodwill of the Hebei Aoxing reporting unit is tested for impairment each year during the 4th quarter and is also tested at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.

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. During the year ended June 30, 2013, it was determined some drug permits and licenses will not provide future benefits to the Company. Accordingly, an impairment provision of $616,947 was provided by the Company.

The Company engaged a third party valuation firm to review the Company’s Hebei reporting unit for impairment as of June 30, 2013. The test involved the assessment of the fair market value of the Company’s tangible and intangible assets, using a form of the income approach known as the excess earnings method, and concluded that a discount rate of 14% is considered appropriate for valuing the Company. The market and cost approaches were not applied due to the lack of information deemed to be reliably indicative of value using either approach. The result of the assessment of the Company’s tangible and intangible assets indicated that its carrying value exceeded the fair value.

The Company provided a forecasted discounted cash flows analysis for the reporting unit based on discrete five-year financial forecasts developed by management for planning purposes. Cash flows beyond the fifth year discrete forecasts were estimated using a market earning growth rate of 9.9% up to the thirty year and a 3% terminal value growth calculation afterward, which incorporated historical and forecasted financial trends for the reporting unit and considered long-term earnings growth rates expected for the pharmaceutical industry in China.

Based upon the valuation report prepared by an independent valuation expert, it is concluded that the carrying value exceeded the fair value of the goodwill as of June 30, 2013. The Company recorded an

impairment of $7,055,364 for the year ended June 30, 2013. The remaining goodwill balance as of June 30, 2013 is nil.