10-Q

United States

Securities and Exchange Commission

Washington, D. C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended March 31, 2015

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

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: (646) 367-1747

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. YesX  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   X    No ____

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   X

APPLICABLE ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:

As of May 15, 2015, the number of shares outstanding of the Registrant’s common stock was 69,819,259 with $.001 par value.

AOXING PHARMACEUTICALCOMPANY, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE FISCAL QUARTER ENDED MARCH 31, 2015

TABLE OF CONTENTS

		Page No
Part I	Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheet – March 31, 2015 (unaudited) and June 30, 2014	1
	Consolidated Statements of Operations and Other Comprehensive Income (Loss) – for the Three and Nine Months Ended March 31, 2015 and 2014 (Unaudited)	2
	Consolidated Statements of Cash Flows – for the Nine Months Ended March 31, 2015 and 2014 (Unaudited)	3
	Notes to Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3	Quantitative and Qualitative Disclosures about Market Risk	16
Item 4.	Controls and Procedures	16
Part II	Other Information
Item 1	Legal Proceedings	17
Item 1A	Risk Factors	17
Item 2	Unregistered Sale of Securities and Use of Proceeds	17
Item 3	Defaults Upon Senior Securities	17
Item 4	Mine Safety Disclosures	17
Item 5	Other Information	18
Item 6	Exhibits	18
Signatures		19

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			June 30,
	2015			2014
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,786,830		$	2,329,660
Accounts receivable, net of allowance for doubtful accounts of $1,046,176 and $1,562,109, respectively		6,895,330			3,890,550
Inventories, net		1,971,502			2,195,274
Prepaid expenses and other current assets		3,193,917			2,505,128
TOTAL CURRENT ASSETS		16,847,579			10,920,612
LONG-TERM ASSETS:
Property and equipment, net of accumulated depreciation		28,778,791			26,418,842
Intangible assets, net		500,546			546,115
Investment in joint venture		122,073			189,185
TOTAL LONG-TERM ASSETS		29,401,410			27,154,142
TOTAL ASSETS	$	46,248,989		$	38,074,754
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	9,379,188		$	11,398,464
Accounts payable		2,501,309			3,883,198
Loan payable – bank		16,307,627			3,247,966
Current portion of loan payable - related parties		1,310,403			1,084,248
Current portion of loan payable – other		-			10,166,133
Accrued expenses and other current liabilities		6,883,268			4,434,790
TOTAL CURRENT LIABILITIES		36,381,795			34,214,799
LONG-TERM LIABILITIES:
Loan payable - related parties		4,044,986			6,146,803
Loan payable - others		1,360,466			1,354,810
Deferred income		368,552			367,020
TOTAL LONG-TERM LIABILITIES		5,774,004			7,868,633
Common stock, par value $0.001, 100,000,000 shares authorized, 68,789,847 and 49,874,822 shares issued and outstanding on March 31, 2015 and on June 30, 2014 respectively		68,790			49,875
Additional paid in capital		64,918,628			58,315,446
Accumulated deficit		(62,512,407	)		(63,849,681	) )
Accumulated other comprehensive income		3,027,005			2,979,235
TOTAL SHAREHOLDERS' EQUITY OF THE COMPANY		5,502,016			(2,505,125	)
NONCONTROLLING INTEREST IN SUBSIDIARIES		(1,408,826	)		(1,503,553	) )
TOTAL EQUITY		4,093,190			(4,008,678	)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	46,248,989		$	38,074,754

See accompanying notes to the consolidated financial statements

1

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
	For the three months ended						For the nine months ended
	March 31,						March 31,
	2015			2014			2015			2014
SALES	$	6,590,736		$	2,445,793		$	17,586,519		$	9,489,708
COST OF SALES		1,078,200			1,425,630			4,090,586			5,464,000
GROSS PROFIT		5,512,536			1,020,163			13,495,933			4,025,708
OPERATING EXPENSES:
Research and development expense		73,970			222,654			277,117			491,370
General and administrative expenses		662,065			798,674			1,994,560			2,246,628
Selling expenses		2,548,848			559,226			5,527,281			3,436,015
Depreciation and amortization		135,973			157,483			416,049			477,493
TOTAL OPERATING EXPENSES		3,420,856			1,738,037			8,215,007			6,651,506
PROFIT/(LOSS) FROM OPERATIONS		2,091,680			(717,874	)		5,280,926			(2,625,798	)
OTHER INCOME (EXPENSE):
Interest expense, net of interest income		(1,246,920	)		(1,195,471	)		(4,068,200	)		(3,524,563	)
Equity in loss of joint venture, net		(19,688	)		(49	)		(67,677	)		(31,476	)
Subsidy income		4,866			-			284,439			-
TOTAL OTHER EXPENSE		(1,261,742	)		(1,195,520	)		(3,851,438	)		(3,556,039	)
PROFIT (LOSS) BEFORE INCOME TAXES		829,938			(1,913,394	)		1,429,488			(6,181,837	)
Income tax expense (credit)		-			-	)		-			-
NET PROFIT/ (LOSS)		829,938			(1,913,394	)		1,429,488			(6,181,837	)
Net Profit /(loss) attributed to non-controlling interest in subsidiaries		51,962			(91,257	)		92,213			(298,997	)
PROFIT (LOSS) ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY		777,976			(1,822,137	)		1,337,275			(5,882,840	)
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment		14,766			(4,340	)		50,284			28,055
COMPREHENSIVE PROFIT (LOSS)		792,742			(1,826,477	)		1,387,559			(5,854,785	)
Other comprehensive income (loss) attributable to non-controlling interest		738			(217	)		2,514			1,403
COMPREHENSIVE PROFIT/ (LOSS) ATTRIBUTABLE TO THE COMPANY	$	792,004		$	(1,826,260	)	$	1,385,045		$	(5,856,188	)
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE	$	0.01		$	(0.04	)	$	0.02		$	(0.12	))
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		67,638,657			49,850,077			60,907,137			49,850,077

See accompanying notes to the consolidated financial statements

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AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	For the nine months ended
	March 31,
	2015		2014
OPERATING ACTIVITIES:
Net income/ (loss)	$	1,337,275	$	(5,882,840	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		813,636		744,152
Inventory markdown		(7,852)		-
Bad debts (written back)/written off		(296,168)		126,595
Common stock issued for services		30,150		13,800
Equity in loss of joint venture, net		67,677		31,476
Net profit/(loss) attributable to non-controlling interests		92,213		(298,997	)
Changes in operating assets and liabilities:
Accounts receivable		(2,512,353)		(1,421,042	)
Inventories		240,017		733,887
Prepaid expenses and other current assets		(846,157)		(908,822	)
Accounts payable		3,811,731		349,946
Accrued expenses and other current liabilities		2,417,693		(659,116	)
NET CASH GENERATED FROM (USED IN) OPERATING ACTIVITIES		5,147,862		(7,170,961	)
INVESTING ACTIVITIES:
Acquisition of property and equipment		(3,008,154)		(172,530	)
NET CASH USED IN INVESTING ACTIVITIES		(3,008,154)		(172,530	)
FINANCING ACTIVITIES:
Proceeds from bank loans		13,002,908		13,062,804
Payment of bank loans		-		(10,196,154)
Short-term borrowings, net of repayment		(2,060,018)		1,954,534
Proceed/（Payment） of other borrowings		(10,174,775)		1,486,963
Sale of common stock		1,395,758		-
Repayment of loans to related party		(1,895,196)		(588,773	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		268,677		5,719,374
EFFECT OF EXCHANGE RATE ON CASH		48,785		6,833
INCREASE/ (DECREASE) IN CASH		2,457,170		(1,617,283)
CASH – BEGINNING OF PERIOD		2,329,660		4,007,823
CASH – END OF PERIOD	$	4,786,830	$	2,390,540
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,566,158	$	3,093,765
Cash paid for income taxes	$	-	$	-

See accompanying notes to the consolidated financial statements

3

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

 1                     BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The consolidated balance sheet as of June 30, 2014 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year 2014. These interim financial statements should be read in conjunction with that report.

2                      BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

Aoxing Pharmaceutical Co., Inc. (“the Company” or “AoxingPharma”) 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 March 31, 2015, the Company had one operating subsidiary: HebeiAoxing Pharmaceutical Co., Inc. (“Hebei”), which is organized under the laws of the People’s Republic of China (“PRC”) and 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 SFDA 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. The manufacturing operations of LRT had been completely integrated into Hebei.

Investment in Joint Venture (“JV”)

On April 26, 2010, AoxingPharma 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 JV represents a significant 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 JV. Hebei will contribute capital, fixed assets and related active pharmaceutical ingredients manufacturing licenses. The JVcompany is called HebeiAoxing API Pharmaceutical Company, Ltd. (“API”). HebeiAoxing 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 JV is located on the Hebei campus in Xinle City, 200 kilometers southwest of Beijing. The Company accounts for its investment in the JV under the equity method of accounting.

4

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, purchase price allocation of its acquisitions 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.

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.

Fair value measurement

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.

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 and classified within Level 1 of the fair value Hierarchy.

As of March 31, 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 March 31, 2015.

5

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 has been adjusted to fair value as it is deemed to be impaired.

Recent accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 will eliminate transaction-specific and industry-specific revenue recognition guidance under current US GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company is currently assessing the impact the adoption of ASU 2014-09 and the effect of the standard on our ongoing financial reporting.

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-12 (“ASU 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.” ASU 2014-12 requires 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. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. Entities may apply the amendments in this Update 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 evaluating the impact of adopting this Update on its financial statements.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Currently, there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term “substantial doubt”, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for the first annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of adopting this update on its financial statements.

6

In January 2015, the FASB issued Accounting Standards Update No. 2015-01, “Income Statement-Extraordinary and Unusual Items (Subtopic 225-20)”, which simplifies income statement presentation by eliminating the concept of an extraordinary item. As a result, entities will no longer segregate an extraordinary item from the results of ordinary operations; separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; and disclose income taxes and earnings per share data applicable to an extraordinary item. The guidance is effective for the Company beginning the first quarter of fiscal 2017 with early adoption permitted. The adoption of this guidance is not expected to have a significant impact on our consolidated financial position, results of operations, or cash flows.

3                      GOING CONCERN

As of March 31, 2015, the Company’s current liabilities exceeded its current assets by $19,534,216. The Company had cash and cash equivalents of $4,786,830 as of March 31, 2015. The Company’s ability to continue as a going concern is dependent on many events outside of its direct control, including, among other things, the ability to obtain future funding. The Company’s inability to generate cash flows to meet its obligations due to the uncertainty of achieving operating profitability on an annual basis and raising required funding on reasonable terms, among other factors, raises substantial doubt as to the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management of the Company believes that the Company's large negative working capital will improve gradually during fiscal year 2015. 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 first quarter of 2015, the Company completed the sale of 1,704,915 shares of its common stock to six investors, each of whom is either an employee or a consultant. The average purchase price for the shares was $0.32 per share. The Company also completed the sale of 480,000 shares of its common stock to a creditor at $0.5 per share to offset the loan payable.

Revenue for the period ended March 31, 2015 was significantly higher than revenue during the prior year, an improvement that 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 average price of our products.  Management believes the net profit and positive operating cash flows generated in these quarters 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.

7

4                      INVENTORIES, NET

Inventories consist of the following:

	March 31,			June 30,
	2015			2014
Work in process		$	826,747		$	1,006,295
Raw materials			310,383			669,880
Finished goods			1,299,949			992,554
Inventory markdown			465,577			473,455
		$	1,971,502		$	2,195,274

        The provisions for obsolete inventory as of March 31, 2015 and June 30, 2014 were $465,577 and $473,455, respectively.

5                      EQUITY-METHOD INVESTMENT IN JOINT VENTURE

        The Company accounts for its investment in API (see Note 2), under the equity method of accounting.

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

	For Nine Months			For the Year
	Ended			Ended
	March 31, 2015			June 30, 2014
Current assets	$	10,161		$	23,144
Noncurrent assets		770,579			795,273
Current liabilities		600,516		$	506,354
Noncurrent liabilities		--			--
Equity		180,225		$	312,063
Revenue		--			--
General and administrative expenses		(132,701	)	$	(205,323	)
Net loss	$	(132,701	)	$	(205,323	)

6.                     SHORT-TERM BORROWING

Short-term borrowing consists of the following:

	For Nine Months		For the Year
	Ended		Ended
	March 31, 2015		June 30, 2014
Shijiazhuang Finance Bureau  (a)	$	81,538	$	81,199
Shijiazhuang Construction Investment Group Co. Ltd   (b)		5,218,441		3,247,966
TianJin Heng Xing Mirco finance Bureau   (c)		4,076,906		-
Hebei Chuangyu Investment Group Co., Ltd		-	$	1,948,780
Hebei Hengrui Sunshine Pharmacy Co., Ltd		-		3,247,966
Mr. Liu Shujun		-	$	260,519
Mr. Li Hui		2,303		538,208
Shijiazhuang Red Property Management Co., Ltd		-		2,073,826
Total	$	9,379,188	$	11,398,464

8

a)   A non – interest bearing note payable to Shijiazhuang 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 note bears an annual interest rate of 15% and was due on August 3, 2013 and further extended to July 12, 2015. The note was secured by certain registered trademarks and renewal certificates relating to Aoxing’s Zhongtongan capsule.

c)   A one year term loan from TianJin Heng Xing Mirco Finance Bureau. The note bears an annual interest rate of 20.04% and is due on March 17, 2016.

7                      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

        Accrued expenses and taxes consist of the following:

	March 31,		June 30,
	2015		2014
Accrued salaries and benefits	$	722,425	$	817,306
Accrued interest		1,530,754		1,294,934
Accrued taxes		1,139,878		418,485
Deposit payable		575,928		605,130
Due to employees		46,942		46,746
Advance from customers		284,327		733,144
Other accounts payable		1,807,018		286,376
Other accrued expenses and current liabilities		775,996		232,669
	$	6,883,268	$	4,434,790

8                      LOAN PAYABLE – BANK

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

	March 31,		June 30,
		2015		2014
Bank Note in the amount of 20 million RMB with China Merchant Bank bearing an annual floating rate of 7.8%, initially made on December 27, 2013 for one year maturing on 26 December 2014.	$	--	$	3,247,966
Bank Note in the amount of 30 million RMB with Postal Savings Bank bearing an 7.8% interest per annum, made on July 22, 2014 for one year maturing on July 21, 2015		4,892,288		--
Bank Note in the amount of 20 million RMB with China Merchants Bank bearing an 7% interest per annum, made on Jan 05, 2015 for one year maturing on Jan 04, 2016		3,261,525
Bank Note in the amount of 30 million RMB with China HuiRong Co., Ltd bearing an 10.0% interest per annum, initially made on March 17, 2015 for one year maturing on 16 March, 2016	$	4,892,289	$	--
Bank Note in the amount of 20 million RMB with China Everbright Bank bearing an 7.84% interest per annum, made on Jan 16, 2015 for one year maturing on Jan 15, 2016		3,261,525
	$	16,307,627	$	3,247,966

9

9                      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 17.76% and 13.94% per annum as of March 31, 2015 and June 30, 2014 respectively. Loans will mature as follows:

	March 31,			June 30,
	2014			2013
Within one year	$	1,310,403		$	1,084,248
1 – 2 years		-			-
2 – 3 years		4,044,986			6,146,803
Total		5,355,389			7,231,051
Less current portion		(1,310,403	)		(1,084,248	)
Loan payable-related parties, non-current	$	4,044,986		$	6,146,803

10                    LOAN PAYABLE – OTHER

Loan payable – other consist of loans from unrelated third-parties, bearing interest at an average rate of 17.90% and 17.57% per annum as of March 31, 2015 and June 30, 2014 respectively. Loans will mature as following:

	March 31,		June 30,
	2015		2014
Within one year	$	-	$	-
1 – 2 years		1,360,466
2 – 3 years		-		1,354,810
Total		1,360,466		1,354,810
Less current portion		-		-
Loan payable-other, non-current		1,360,466,	$	1,354,810

11                    ISSUANCE OF COMMON STOCK

On August 28, 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 November 5, 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 340,000 shares of common stock to independent directors for services rendered by them.

On January 29, 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 5, 2015, the Company issued 480,000 shares of its common stock to a creditor at $0.5 per share to offset a loan payable.

10

12                    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:

	For nine months ended March 31,
	2015			2014
Tax at U.S. Statutory rate	$	500,320		$	(2,163,643	)
Tax rate difference between China and U.S.		(2,655,633	)		634,777
Change in Valuation Allowance		2,155,314			1,528,866
Effective tax rate	$	-		$	-

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

	For nine months ended March 31,
	2015			2014
Current	$	-		$	-
Deferred - U.S.		(38,113	)		(68,510	)
Deferred - China		(2,617,521	)		(1,460,356	)
Valuation allowance - U.S.		38,113			68,510
Valuation allowance - China.		2,117,201			1,460,356
Total	$	-		$	-

The deferred tax assets are substantially related to loss carry forwards for the past 5 years under Chinese tax law. The Company determined a full valuation allowance was necessary as of March 31, 2015 and June 30, 2014.

13                   CONCENTRATIONS

Sales to two major customers were 6.19% and 5.56% of total sales for the three months ended March 31, 2015.  Sales to two major customers accounted for 6% and 6% of total sales for the three months ended March 31, 2014. As of March 31, 2015, the two major customers accounted for 3% and 0% of Company’s accounts receivable balance. As of June 30, 2014, the two major customers accounted for nil and 1% of Company’s accounts receivable balance.

Sales of two major products represented approximately 96% and 1% of total sales for the three months ended March 31, 2015. Sales of two major products represented approximately 91% and 3% of total sales for the three months ended March 31, 2014. 

14                   SUBSEQUENT EVENTS

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.

Paid in capital was increased by $1,400,000 as a result of the issuance of the above common stock.

11

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (including the section regarding Management’s Discussion and Analysis) 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 is based on management’s exercise of business judgment and assumptions made by and information currently available to management. 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. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize. You should read the following discussion and analysis in conjunction with our unaudited financial statements contained in this report, as well as the audited financial statements, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014. 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 occurring after the date hereof or to reflect the occurrence of any unanticipated events.

Outline of Our Business

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 July 6, 2006, the Company changed its name to “China Aoxing Pharmaceutical Company, Inc.” to better reflect the nature of its business.  On May 1, 2008 the Company completed the acquisition of an additional 35% interest in Hebei Aoxing from its Chairman and Chief Executive Officer, Mr. Zhenjiang Yue.

On April 16, 2008, Hebei Aoxing completed the acquisition of 100% of the registered capital of ShijiazhuangLerentang 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 RMB 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 (SFDA) for its pre-treatment, extraction, tincture, and pill workshops.  The certification marked the completion of the integration of LRT into Hebei Aoxing.

On April 14, 2010, AoxingPharma’s common stock began trading on the NYSE MKT, a subsidiary of NYSE Euronext, under the ticker symbol "AXN." In anticipation of the listing, on March 29, 2010  the Company changed the name of the corporation to "Aoxing Pharmaceutical Company, Inc.," to better reflect its global brand extension, and  effected a one-for-two reverse split of its common stock.

On April 26, 2010, AoxingPharma 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 new joint venture is located on the Hebei Aoxing campus in Xinle City, 200 kilometers southwest of Beijing.  Approximately $1 million of capital resources had been invested in the joint venture as of March 31, 2015.

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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 China SFDA, there are only 13 pharmaceutical companies designated by the China SFDA 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, Oxycodone, Tilidine, Codeine Phosphate, Pholcodine, 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 (buprenorphine18 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 diarrhoea (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.

13

Results of Operation

Revenues for the three months ended March 31, 2015 were $6,590,736, representing a 170% increase over the revenues of $2,445,793 realized during the three months ended March 31, 2014. Revenues for the nine months ended March 31, 2015 were $17,586,519, representing a 85% increase over the revenues of $9,489,708 realized during the nine months ended March 31, 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 average price of our products.

Cost of sales was $1,078,200 for the three months ended March 31, 2015, which was 24% lower than the $1,425,630 incurred during the three months ended March 31, 2014. Cost of sales was $4,090,586 for the nine months ended March 31, 2015, which was 25% lower than 5,464,000 in costs incurred during the nine months ended March 31, 2014.  A good harvest in 2014 led to a sharp decrease in the market prices of raw materials, which led to decrease in the cost of sales.

As a result of the decrease in cost of raw materials and the change in our sales channels, gross profit of $5,512,536 and $13,495,933 during the three and nine months ended March 31, 2015 was 440% and 235% higher than the same periods a year earlier. Gross margins were 83.6% and 76.7% during the three and nine month periods ended March 31, 2015 compared to 41.6% and 42.4% in the same periods of last 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 and development (“R&D”) expenses were $73,970 during the three months ended March 31, 2015, representing a 67% decrease from $222,654 incurred during the three months ended March 31, 2014. R&D expenses often fluctuate significantly from one period to another, reflecting the progress and timing of our various development projects.

General and administrative expenses were $662,065 in the three months ended March 31, 2015, representing a 17% decrease from $798,674 incurred during the three months ended March 31, 2014. General and administrative expenses were $1,994,560 in the nine months ended March 31, 2015, 11% lower than the $2,246,628 incurred during the nine months ended March 31, 2014. The decrease during the nine month period was primarily due to the reversal of $520,725 in previously recorded bad debt as a result of collection efforts during the first quarter of fiscal 2015.

Selling expenses were $2,548,848 in the three months ended March 31, 2015, representing a 356% increase from $559,226 incurred during the three months ended March 31, 2014. The increase is in line with increase in revenue for the period. Selling expenses in the amount of $5,527,281 incurred during the nine months ended March 31, 2015 were 61% higher than the $3,436,015 incurred during the nine months ended March 31, 2014.

We have improved the size and efficiency of our operations, which resulted in operating profit of $2,091,680 for the three months ended March 31, 2015 compared with an operating loss of $717,874 for the three months ended March 31, 2014. Operating profit was $5,280,925 for the nine months ended March 31, 2015, compared with the loss from operations of $2,625,798 for the nine months ended March 31, 2014. The operating profit was mainly due to the changing of distribution channels from using distributors to direct sales.

Net interest expense was $1,246,920 and $4,068,200 for the three and nine  months periods ended March 31, 2015, an increase of 4.3% and 15% from net interest expense of $1,195,471 and $3,524,563 for the three and nine months period ended March 31, 2014. The increase is mainly due to the short-term loan of $4.1 million that the Company obtained from TianJin Heng Xing Mirco Finance Bureau, which carries an interest rate of 20.04%.

Equity in loss of joint venture was $19,688 and $67,677 for the three and nine months periods ended March 31, 2015, compared to the $49 and $31,476 losses incurred during the comparable periods of fiscal 2014. The losses related to the JV with Johnson MatheyPlc are expected to continue, as the JV has not commenced operations.

14

The Company realized a net profit of $ 829,938 for the three months ended March 31, 2015 and $1,429,488 for the nine months ended March 31, 2015. The achievement of net profit in this quarter was due to the increase in revenue and gross profit as a result of the change in our distribution channels.  We expect revenue and gross profit will further improve in the coming years.

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 March 31, 2015 was $4,786,830, compared to $2,329,540 as of June 30, 2014. We improved our cash position by generating $5.1 million in operating cash flow and $0.3 million from financing activities, which was partially offset by $3.0 million that we invested in property and equipment to expand our factory.

Operations during the nine month period ended March 31, 2015 generated $5,147,862 cash, as compared to the use of $7,170,961 cash in operations during the nine month period ended March 31, 2014.  The primary reason for the increase in cash from operations was operating income during this period and the $3.8 million increase in accounts payable.

Our investing activities during the nine month period ended March 31, 2015 consisted of $3,008,154 cash used to purchase additional property and equipment.

Our financing activities generated $268,677 in net cash, which included $1,395,758 cash from sale of common stock, offset by $1,127,081 net cash used in repayment of loans.

Our working capital deficit on March 31, 2015 was $19,534,216, which was a $3,759,971 improvement on our working capital deficit of $23,294,187 on June 30, 2014. The improvement in working capital was due to the operating cash flow generated by the Company, sale of common stock to employees, and issuance of common stock in satisfaction of debt.

After  refinancing a number of our loans during the nine months period ended March 31, 2015, our debt service obligations on March 31, 2015 were as following:

			Less than							After 5
Contractual Obligations	Total		1 Year		1-2 Years		2-3 Years	3-4 Years	4-5 Years	Years
Banks	$	16,307,627	$	16,307,627	-		-	-	-	-
Affiliates		5,355,389		1,310,403	$		4,044,986	-	-	-
Short-term borrowings		9,379,188		9,379,188				-	-	-
Others		1,360,466				1,360,466		-	-	-
TOTAL	$	32,402,670	$	26,997,218	$	1,360,466	4,044,986	-	-	-

For the next 12 months, management anticipates cash from operations will increase, because of increased product sales during the period and future 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.

The Company has sought financing to fund expansion of our operations and extend our reach to a broader market. We may rely on bank borrowing as well as capital raises.  We are proactively exploring for various proposals and alternatives in order to secure sources of financing and improve our financial position. In addition,  we are also exploring potential strategic partnerships which could provide a capital infusion to the Company.

We have incurred operating losses in the past and had an accumulated deficit of $62.5 million as of March 31, 2015. In addition, we had negative working capital of $19.5 million as of March 31, 2015.  Our history of operating losses and lack of binding financing commitments raised substantial doubt of our ability to continue as an ongoing concern. Despite the large accumulated deficit, we have generated net profit and positive 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 and profit margins 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.

15

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 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”).We carried out an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2015.  The term “disclosure controls and procedures” means controls and other procedures that are designed to insure that information required to be disclosed by us in the reports that we file with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time limits specified in the Commission’s rules. That evaluation revealed the following material weakness in our internal control over financial reporting: the Company is relatively inexperienced with certain complexities within US GAAP and SEC reporting causing a material weakness in internal controls, Based on the results of these self-assessments, our principal executive officer and principal financial officer concluded that AoxingPharma’s system of disclosure controls and procedures was not effective as of March 31, 2015 for the purposes described in this paragraph.

We plan for the above to be remediated, which will provide for much greater credibility and consistency in the financial statements. To remediate the weakness, the Company plans to continue to train our internal accountants in US GAAP and SEC reporting. And on  December 19, 2014 the Company's Board of Directors appointed Wilfred Chow, who is experienced with US reporting, to serve as the Company's Chief Financial Officer, effective on January 1, 2015.  Guoan Zhang, who had been serving as Interim CFO, remains with the Company as Senior Vice President for Finance.

Changes in Internal Control over Financial Reporting.

We expanded our financial management by engaging Wilfred Chow as Chief Financial Officer, effective on January 1, 2015, while retaining our prior CFO is the role of Senior Vice President for Finance. This expansion of our financial management staff should lead to an improvement in our internal control over financial reporting. Otherwise, there was no change in internal controls over financial reporting during our most recently completed fiscal quarter that has materially affected or is reasonably likely to materially affect Aoxing Pharmaceutical’s internal control over financial reporting.

16

PART II - OTHER INFORMATION

Item 1.     Legal Proceedings.

None

Item 1A.   Risk Factors.

There have been no material changes from the risk factors included in the Annual Report on Form 10-K for the year ended June 30, 2014.

Item 2.     Unregistered Sale of Securities and Use of Proceeds

(a)   Unregistered sales of equity securities

On February 9, 2015 the Company sold a total of 1,704,915 shares of common stock to six investors, each of whom is either an employee or a consultant to the Company. The purchase price was $545,573 or $0.33 per share, which was the market price when the contract of sale was made.  The sales were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, because the shares were offered privately to the employees and consultants of the Company. The sales were also exempt from registration pursuant to Regulation S, since the purchasers were non-U.S. persons and resale restrictions were imposed.

On March 5, 2015 the Company issued 480,000 shares of common stock to a creditor of the Company. The purchase price, which was an offset to the Company's debt, was $240,000 or $0.50 per share, which was the market price when the contract of sale was made.  The sales were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, because the shares were offered privately to a single sophisticated individual who was purchasing for investment. The sales were also exempt from registration pursuant to Regulation S, since the purchaser was a non-U.S. persons and resale restrictions were imposed.

(c)   Purchases of equity securities

The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the third quarter of fiscal 2015.

Item 3.     Defaults Upon Senior Securities

None

Item 4.     Mine Safety Disclosures

None

17

Item 5.     Other Information

None

Item 6.    Exhibits

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the SOX of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the SOX 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.

18

SIGNATURES

Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the undersigned thereunto duly authorized.

	AOXING PHARMACEUTICAL COMPANY, INC.
Date: May15, 2015	By: /s/ Zhenjiang Yue
	Zhenjiang Yue, Chief Executive Officer
	(Principal Executive Officer)
Date: May15, 2015	By: /s/ Wilfred Chow
	Wilfred Chow, Chief Financial Officer
	(Principal Accounting and Financial Officer)

19

EX-31.1

Exhibit 31.1

Certification

I, Zhenjiang Yue, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 officers 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 controls 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 controls over financial reporting, or caused such internal controls 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 controls 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 officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the 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 controls 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 controls over financial reporting.

Date: May 15, 2015	/s/ Zhenjiang Yue
	Zhenjiang Yue, Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

 Exhibit 31.2

Certification

I, Wilfred Chow, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 officers 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 controls 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 controls over financial reporting, or caused such internal controls 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 controls 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 officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of the 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 controls 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 controls over financial reporting.

Date: May 15, 2015	/s/ Wilfred Chow
	Wilfred Chow, Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

OF

CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. §1350

In connection with the Quarterly Report on Form 10-Qof Aoxing Pharmaceutical Company, Inc. (the “Company”) for the fiscal period ended March 31, 2015 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Zhenjiang Yue, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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.

May 15, 2015	/s/ Zhenjiang Yue
	Zhenjiang Yue, Chief Executive Officer

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

EX-32.2

Exhibit 32.2

CERTIFICATION

OF

CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. §1350

In connection with the Quarterly Report on Form 10-Qof Aoxing Pharmaceutical Company, Inc. (the “Company”) for the fiscal period ended March 31, 2015 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wilfred Chow, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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.

May 15, 2015	/s/ Wilfred Chow
	Wilfred Chow, Chief Financial Officer

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

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6. Short-term Borrowing: Schedule of Short-term Debt (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Short-term borrowings	$ 9,379,188	$ 11,398,464
Shijiazhuang Finance Bureau
Short-term borrowings	81,538	81,199
Shijiazhuang Construction Investment Group Co. Ltd
Short-term borrowings	5,218,441	3,247,966
TianJin Heng Xing Mirco finance Bureau
Short-term borrowings	4,076,906
Hebei Chuangyu Investment Group Co., Ltd
Short-term borrowings		1,948,780
Hebei Hengrui Sunshine Pharmacy Co., Ltd
Short-term borrowings		3,247,966
Mr. Liu Shujun
Short-term borrowings		260,519
Mr. Li Hui
Short-term borrowings	2,303	538,208
Shijiazhuang Red Property Management Co., Ltd
Short-term borrowings		$ 2,073,826

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12 Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Deferred Federal Income Tax Expense (Benefit)	$ (38,113)	$ (68,510)
Deferred Foreign Income Tax Expense (Benefit)	(2,617,521)	(1,460,356)
Deferred Taxes, Business Combination, Valuation Allowance, Available to Reduce Income Tax Expense	38,113	68,510
Deferred Taxes Business Combination Valuation Allowance Available To Reduce Income Tax Expense China	$ 2,117,201	$ 1,460,356

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11 Issuance of Common Stock (Details) (USD $)	9 Months Ended
	Mar. 31, 2015
Details
Issuance of common stock in satisfaction of debt	11,862,278
Paid In Capital Increased	$ 4,614,426
Common Stock shares sold to employees	4,527,832
Proceeds from Common Stock shares sold to employees	$ 1,177,236

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12 Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Components of Income Tax Expense (Benefit)

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

	For nine months ended March 31,
	2015		2014
Current	$	-	$	-
Deferred - U.S.		(38,113)		(68,510 )
Deferred - China		(2,617,521)		(1,460,356 )
Valuation allowance - U.S.		38,113		68,510
Valuation allowance - China.		2,117,201		1,460,356
Total	$	-	$	-

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4 Inventories, Net: Schedule of Inventory, Current (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Inventory, Current

Inventories consist of the following:

	March 31,		June 30,
	2015		2014
Work in process	$	826,747	$	1,006,295
Raw materials		310,383		669,880
Finished goods		1,299,949		992,554
Inventory markdown		465,577		473,455
	$	1,971,502	$	2,195,274

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9 Loan Payable - Related Parties (Details)	Mar. 31, 2015	Jun. 30, 2014
Details
Accounts Payable Related Parties Interest Bearing Interest Rate	17.76%	13.94%

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4 Inventories, Net (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Inventory Valuation Reserves	$ 465,577	$ 473,455

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12 Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $)	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount	$ 500,320	$ (2,163,643)
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Amount	(2,655,633)	634,777
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount	$ 2,155,314	$ 1,528,866

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4 Inventories, Net

9 Months Ended

Mar. 31, 2015

Notes

4 Inventories, Net

4                  INVENTORIES, NET

Inventories consist of the following:

	March 31,		June 30,
	2015		2014
Work in process	$	826,747	$	1,006,295
Raw materials		310,383		669,880
Finished goods		1,299,949		992,554
Inventory markdown		465,577		473,455
	$	1,971,502	$	2,195,274

The provisions for obsolete inventory as of March 31, 2015 and June 30, 2014 were $465,577 and $473,455, respectively.

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9 Loan Payable - Related Parties: Schedule of Related Party Transactions (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Due to Related Parties	$ 5,355,389	$ 7,231,051
Current portion of loan payable - related parties	(1,310,403)	(1,084,248)
Loan payable - related parties	4,044,986	6,146,803
Within One Year
Due to Related Parties	1,310,403	1,084,248
2-3 Years
Due to Related Parties	$ 4,044,986	$ 6,146,803

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8 Loan Payable - Bank: Schedule of Long-term Debt Instruments (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Long-term Debt Instruments

	March 31,		June 30,
	2015			2014
Bank Note in the amount of 20 million RMB with China Merchant Bank bearing an annual floating rate of 7.8%, initially made on December 27, 2013 for one year maturing on 26 December 2014.	$	--		$	3,247,966
Bank Note in the amount of 30 million RMB with Postal Savings Bank bearing an 7.8% interest per annum, made on July 22, 2014 for one year maturing on July 21, 2015		4,892,288			--
Bank Note in the amount of 20 million RMB with China Merchants Bank bearing an 7% interest per annum, made on Jan 05, 2015 for one year maturing on Jan 04, 2016		3,261,525
Bank Note in the amount of 30 million RMB with China HuiRong Co., Ltd bearing an 10.0% interest per annum, initially made on March 17, 2015 for one year maturing on 16 March, 2016	$	4,892,289		$	--
Bank Note in the amount of 20 million RMB with China Everbright Bank bearing an 7.84% interest per annum, made on Jan 16, 2015 for one year maturing on Jan 15, 2016		3,261,525
	$	16,307,627		$	3,247,966

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7 Accrued Expenses and Other Current Liabilities: Schedule of Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Accounts Payable and Accrued Liabilities

	March 31,		June 30,
	2015			2014
Accrued salaries and benefits	$	722,425		$	817,306
Accrued interest		1,530,754			1,294,934
Accrued taxes		1,139,878			418,485
Deposit payable		575,928			605,130
Due to employees		46,942			46,746
Advance from customers		284,327			733,144
Other accounts payable		1,807,018			286,376
Other accrued expenses and current liabilities		775,996			232,669
	$	6,883,268		$	4,434,790

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10 Loan Payable - Other (Details)	Mar. 31, 2015	Jun. 30, 2014
Details
Accounts Payable, Interest-bearing, Interest Rate	17.90%	17.57%

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9 Loan Payable - Related Parties: Schedule of Related Party Transactions (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Related Party Transactions

	March 31,		June 30,
	2014		2013
Within one year		$            1,310,403		$       1,084,248
1 – 2 years		-		-
2 – 3 years		4,044,986		6,146,803
Total		5,355,389		7,231,051
Less current portion		(1,310,403)		(1,084,248)
Loan payable-related parties, non-current		$             4,044,986		$       6,146,803

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10 Loan Payable - Other: Schedule of Debt - Other (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Debt - Other

	March 31,	June 30,
Within one year	2015	2014
1 – 2 years	1,360,466
2 – 3 years	-	1,354,810
Total	1,360,466	1,354,810
Less current portion	-	-
Loan payable-other, non-current	1,360,466,	$   1,354,810

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3 Going Concern

9 Months Ended

Mar. 31, 2015

Notes

3 Going Concern

3               GOING CONCERN

As of March 31, 2015, the Company’s current liabilities exceeded its current assets by $19,534,216. The Company had cash and cash equivalents of $4,786,830 as of March 31, 2015. The Company’s ability to continue as a going concern is dependent on many events outside of its direct control, including, among other things, the ability to obtain future funding. The Company’s inability to generate cash flows to meet its obligations due to the uncertainty of achieving operating profitability on an annual basis and raising required funding on reasonable terms, among other factors, raises substantial doubt as to the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management of the Company believes that the Company's large negative working capital will improve gradually during fiscal year 2015. 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 first quarter of 2015, the Company completed the sale of 1,704,915 shares of its common stock to six investors, each of whom is either an employee or a consultant. The average purchase price for the shares was $0.32 per share. The Company also completed the sale of 480,000 shares of its common stock to a creditor at $0.5 per share to offset the loan payable.

Revenue for the period ended March 31, 2015 was significantly higher than revenue during the prior year, an improvement that 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 average price of our products.  Management believes the net profit and positive operating cash flows generated in these quarters 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.  

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12 Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Effective Income Tax Rate Reconciliation

	For nine months ended March 31,
	2015		2014
Tax at U.S. Statutory rate	$	500,320	$	(2,163,643)
Tax rate difference between China and U.S.		(2,655,633)		634,777
Change in Valuation Allowance		2,155,314		1,528,866
Effective tax rate	$	-	$	-

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7 Accrued Expenses and Other Current Liabilities: Schedule of Accounts Payable and Accrued Liabilities (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Accrued Salaries, Current	$ 722,425	$ 817,306
Accrued interest	1,530,754	1,294,934
Accrued Income Taxes, Current	1,139,878	418,485
Deposit Liability, Current	575,928	605,130
Other Employee Related Liabilities, Current	46,942	46,746
Customer Advances, Current	284,327	733,144
Accounts Payable, Other, Current	1,807,018	286,376
Other Accrued Liabilities, Current	775,996	232,669
Accrued expenses and other current liabilities	$ 6,883,268	$ 4,434,790

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CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2015	Jun. 30, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 4,786,830	$ 2,329,660
Accounts receivable, net of allowance for doubtful accounts of $1,046,176 and $1,562,109, respectively	6,895,330	3,890,550
Inventories, net	1,971,502	2,195,274
Prepaid expenses and other current assets	3,193,917	2,505,128
TOTAL CURRENT ASSETS	16,847,579	10,920,612
LONG-TERM ASSETS:
Property and equipment, net of accumulated depreciation	28,778,791	26,418,842
Intangible assets, net	500,546	546,115
Investment in joint venture	122,073	189,185
TOTAL LONG-TERM ASSETS	29,401,410	27,154,142
TOTAL ASSETS	46,248,989	38,074,754
CURRENT LIABILITIES:
Short-term borrowings	9,379,188	11,398,464
Accounts payable	2,501,309	3,883,198
Loan payable - bank	16,307,627	3,247,966
Current portion of loan payable - related parties	1,310,403	1,084,248
Current portion of loan payable - other		10,166,133
Accrued expenses and other current liabilities	6,883,268	4,434,790
TOTAL CURRENT LIABILITIES	36,381,795	34,214,799
LONG-TERM LIABILITIES:
Loan payable - related parties	4,044,986	6,146,803
Loan payable - others	1,360,466	1,354,810
Deferred income	368,552	367,020
TOTAL LONG-TERM LIABILITIES	5,774,004	7,868,633
Stockholder's Equity
Common stock, par value $0.001, 100,000,000 shares authorized, 68,789,847 and 49,874,822 shares issued and outstanding on March 31, 2015 and on June 30, 2014 respectively	68,790	49,875
Additional paid in capital	64,918,628	58,315,446
Accumulated deficit	(62,512,407)	(63,849,681)
Accumulated other comprehensive income	3,027,005	2,979,235
TOTAL SHAREHOLDERS' EQUITY OF THE COMPANY	5,502,016	(2,505,125)
NONCONTROLLING INTEREST IN SUBSIDIARIES	(1,408,826)	(1,503,553)
TOTAL EQUITY	4,093,190	(4,008,678)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 46,248,989	$ 38,074,754

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10 Loan Payable - Other: Schedule of Debt - Other (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Other Loans Payable	$ 1,360,466	$ 1,354,810
Loan payable - others	1,360,466	1,354,810
1-2 Years
Other Loans Payable	1,360,466
2-3 Years
Other Loans Payable		$ 1,354,810

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1 Basis of Presentation

9 Months Ended

Mar. 31, 2015

Notes

1 Basis of Presentation

 1             BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The consolidated balance sheet as of June 30, 2014 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year 2014. These interim financial statements should be read in conjunction with that report.

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3 Going Concern (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2013
Details
Working Capital Deficit	$ 19,534,216
Cash and cash equivalents	$ 4,786,830	$ 2,329,660	$ 2,390,540	$ 4,007,823

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2 Business Description and Significant Accounting Policies: Impairment of Long Lived Assets (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Impairment of Long Lived Assets

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.

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4 Inventories, Net: Schedule of Inventory, Current (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Details
Inventory, Work in Process, Gross	$ 826,747	$ 1,006,295
Inventory, Raw Materials, Gross	310,383	669,880
Inventory, Finished Goods, Gross	1,299,949	992,554
Inventory Adjustments	465,577	473,455
Inventories, net	$ 1,971,502	$ 2,195,274

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2 Business Description and Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Recent Accounting Pronouncements

Recent accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 will eliminate transaction-specific and industry-specific revenue recognition guidance under current US GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company is currently assessing the impact the adoption of ASU 2014-09 and the effect of the standard on our ongoing financial reporting.

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-12 (“ASU 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.” ASU 2014-12 requires 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. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. Entities may apply the amendments in this Update 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 evaluating the impact of adopting this Update on its financial statements.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Currently, there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term “substantial doubt”, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for the first annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of adopting this update on its financial statements.

In January 2015, the FASB issued Accounting Standards Update No. 2015-01, “Income Statement-Extraordinary and Unusual Items (Subtopic 225-20)”, which simplifies income statement presentation by eliminating the concept of an extraordinary item. As a result, entities will no longer segregate an extraordinary item from the results of ordinary operations; separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; and disclose income taxes and earnings per share data applicable to an extraordinary item. The guidance is effective for the Company beginning the first quarter of fiscal 2017 with early adoption permitted. The adoption of this guidance is not expected to have a significant impact on our consolidated financial position, results of operations, or cash flows.

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2 Business Description and Significant Accounting Policies

9 Months Ended

Mar. 31, 2015

Notes

2 Business Description and Significant Accounting Policies

2                   BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES

Aoxing Pharmaceutical Co., Inc. (“the Company” or “AoxingPharma”) 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 March 31, 2015, the Company had one operating subsidiary: HebeiAoxing Pharmaceutical Co., Inc. (“Hebei”), which is organized under the laws of the People’s Republic of China (“PRC”) and 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 SFDA 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. The manufacturing operations of LRT had been completely integrated into Hebei.

Investment in Joint Venture (“JV”)

On April 26, 2010, AoxingPharma 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 JV represents a significant 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 JV. Hebei will contribute capital, fixed assets and related active pharmaceutical ingredients manufacturing licenses. The JVcompany is called HebeiAoxing API Pharmaceutical Company, Ltd. (“API”). HebeiAoxing 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 JV is located on the Hebei campus in Xinle City, 200 kilometers southwest of Beijing. The Company accounts for its investment in the JV under the equity method of accounting.

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, purchase price allocation of its acquisitions 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.

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.

Fair value measurement

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.

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 and classified within Level 1 of the fair value Hierarchy.

As of March 31, 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 March 31, 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 has been adjusted to fair value as it is deemed to be impaired.

Recent accounting pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 will eliminate transaction-specific and industry-specific revenue recognition guidance under current US GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company is currently assessing the impact the adoption of ASU 2014-09 and the effect of the standard on our ongoing financial reporting.

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-12 (“ASU 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.” ASU 2014-12 requires 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. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. Entities may apply the amendments in this Update 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 evaluating the impact of adopting this Update on its financial statements.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which will explicitly require management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Currently, there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term “substantial doubt”, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for the first annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of adopting this update on its financial statements.

In January 2015, the FASB issued Accounting Standards Update No. 2015-01, “Income Statement-Extraordinary and Unusual Items (Subtopic 225-20)”, which simplifies income statement presentation by eliminating the concept of an extraordinary item. As a result, entities will no longer segregate an extraordinary item from the results of ordinary operations; separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; and disclose income taxes and earnings per share data applicable to an extraordinary item. The guidance is effective for the Company beginning the first quarter of fiscal 2017 with early adoption permitted. The adoption of this guidance is not expected to have a significant impact on our consolidated financial position, results of operations, or cash flows.

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CONSOLIDATED BALANCE SHEETS PARENTHETICAL (USD $)	Mar. 31, 2015	Jun. 30, 2014
CONSOLIDATED BALANCE SHEETS
Allowance for doubtful accounts	$ 1,046,176	$ 1,562,109
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	68,789,847	49,874,822
Common stock shares outstanding	68,789,847	49,874,822

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12 Taxes

9 Months Ended

Mar. 31, 2015

Notes

12 Taxes

12           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:

	For nine months ended March 31,
	2015		2014
Tax at U.S. Statutory rate	$	500,320	$	(2,163,643)
Tax rate difference between China and U.S.		(2,655,633)		634,777
Change in Valuation Allowance		2,155,314		1,528,866
Effective tax rate	$	-	$	-

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

	For nine months ended March 31,
	2015		2014
Current	$	-	$	-
Deferred - U.S.		(38,113)		(68,510 )
Deferred - China		(2,617,521)		(1,460,356 )
Valuation allowance - U.S.		38,113		68,510
Valuation allowance - China.		2,117,201		1,460,356
Total	$	-	$	-

The deferred tax assets are substantially related to loss carry forwards for the past 5 years under Chinese tax law. The Company determined a full valuation allowance was necessary as of March 31, 2015 and June 30, 2014.

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Document and Entity Information	9 Months Ended
	Mar. 31, 2015	May 15, 2015
Document and Entity Information
Entity Registrant Name	AOXING PHARMACEUTICAL COMPANY, INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Entity Central Index Key	0001060426
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		69,819,259

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13 Concentrations

9 Months Ended

Mar. 31, 2015

Notes

13 Concentrations

13           CONCENTRATIONS

Sales to two major customers were 6.19% and 5.56% of total sales for the three months ended March 31, 2015.  Sales to two major customers accounted for 6% and 6% of total sales for the three months ended March 31, 2014. As of March 31, 2015, the two major customers accounted for 3% and 0% of Company’s accounts receivable balance. As of June 30, 2014, the two major customers accounted for nil and 1% of Company’s accounts receivable balance.

Sales of two major products represented approximately 96% and 1% of total sales for the three months ended March 31, 2015. Sales of two major products represented approximately 91% and 3% of total sales for the three months ended March 31, 2014. 

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CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Revenue
SALES	$ 6,590,736	$ 2,445,793	$ 17,586,519	$ 9,489,708
COST OF SALES	1,078,200	1,425,630	4,090,586	5,464,000
GROSS PROFIT	5,512,536	1,020,163	13,495,933	4,025,708
OPERATING EXPENSES:
Research and development expense	73,970	222,654	277,117	491,370
General and administrative expenses	662,065	798,674	1,994,560	2,246,628
Selling expenses	2,548,848	559,226	5,527,281	3,436,015
Depreciation and amortization	135,973	157,483	416,049	477,493
TOTAL OPERATING EXPENSES	3,420,856		8,215,007
PROFIT/(LOSS) FROM OPERATIONS	2,091,680	(717,874)	5,280,926	(2,625,798)
OTHER INCOME (EXPENSE):
Interest expense, net of interest income	(1,246,920)	(1,195,471)	(4,068,200)	(3,524,563)
Equity in loss of joint venture, net	(19,688)	(49)	(67,677)	(31,476)
Subsidy income	4,866		284,439
TOTAL OTHER EXPENSE	(1,261,742)	(1,195,520)	(3,851,438)	(3,556,039)
PROFIT (LOSS) BEFORE INCOME TAXES	829,938	(1,913,394)	1,429,488	(6,181,837)
Income tax expense (credit)
NET PROFIT/ (LOSS)	829,938	(1,913,394)	1,429,488	(6,181,837)
Net Profit /(loss) attributed to non-controlling interest in subsidiaries	51,962	(91,257)	92,213	(298,997)
PROFIT (LOSS) ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY	777,976	(1,822,137)	1,337,275	(5,882,840)
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment	14,766	(4,340)	50,284	28,055
COMPREHENSIVE PROFIT (LOSS)	792,742	(1,826,477)	1,387,559	(5,854,785)
Other comprehensive income (loss) attributable to non-controlling interest	738	(217)	2,514	1,403
COMPREHENSIVE PROFIT/ (LOSS) ATTRIBUTABLE TO THE COMPANY	$ 792,004	$ (1,826,260)	$ 1,385,045	$ (5,856,188)
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE	$ 0.01	$ (0.04)	$ 0.02	$ (0.12)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	67,638,657	49,850,077	60,907,137	49,850,077

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7 Accrued Expenses and Other Current Liabilities

9 Months Ended

Mar. 31, 2015

Notes

7 Accrued Expenses and Other Current Liabilities

7              ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and taxes consist of the following:

	March 31,		June 30,
	2015			2014
Accrued salaries and benefits	$	722,425		$	817,306
Accrued interest		1,530,754			1,294,934
Accrued taxes		1,139,878			418,485
Deposit payable		575,928			605,130
Due to employees		46,942			46,746
Advance from customers		284,327			733,144
Other accounts payable		1,807,018			286,376
Other accrued expenses and current liabilities		775,996			232,669
	$	6,883,268		$	4,434,790

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6. Short-term Borrowing

9 Months Ended

Mar. 31, 2015

Notes

6. Short-term Borrowing

6.          SHORT-TERM BORROWING

             Short-term borrowing consists of the following:

		For Nine Months		For the Year
		Ended		Ended
		March 31, 2015		June 30, 2014
Shijiazhuang Finance Bureau  (a)	$	81,538	$	81,199
Shijiazhuang Construction Investment Group Co. Ltd   (b)		5,218,441		3,247,966
TianJin Heng Xing Mirco finance Bureau   (c)		4,076,906		-
Hebei Chuangyu Investment Group Co., Ltd		-	$	1,948,780
Hebei Hengrui Sunshine Pharmacy Co., Ltd		-		3,247,966
Mr. Liu Shujun		-	$	260,519
Mr. Li Hui		2,303		538,208
Shijiazhuang Red Property Management Co., Ltd		-		2,073,826
Total	$	9,379,188	$	11,398,464

a)        A non – interest bearing note payable to Shijiazhuang 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 note bears an annual interest rate of 15% and was due on August 3, 2013 and further extended to July 12, 2015. The note was secured by certain registered trademarks and renewal certificates relating to Aoxing’s Zhongtongan capsule.

c)        A one year term loan from TianJin Heng Xing Mirco Finance Bureau. The note bears an annual interest rate of 20.04% and is due on March 17, 2016.  

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2 Business Description and Significant Accounting Policies: Fair Value Measurement (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Fair Value Measurement

Fair value measurement

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.

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 and classified within Level 1 of the fair value Hierarchy.

As of March 31, 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 March 31, 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 has been adjusted to fair value as it is deemed to be impaired.

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14 Subsequent Events

9 Months Ended

Mar. 31, 2015

Notes

14 Subsequent Events

14           SUBSEQUENT EVENTS

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.

Paid in capital was increased by $1,400,000 as a result of the issuance of the above common stock.

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10 Loan Payable - Other

9 Months Ended

Mar. 31, 2015

Notes

10 Loan Payable - Other

10           LOAN PAYABLE – OTHER

Loan payable – other consist of loans from unrelated third-parties, bearing interest at an average rate of 17.90% and 17.57% per annum as of March 31, 2015 and June 30, 2014 respectively. Loans will mature as following:

	March 31,	June 30,
Within one year	2015	2014
1 – 2 years	1,360,466
2 – 3 years	-	1,354,810
Total	1,360,466	1,354,810
Less current portion	-	-
Loan payable-other, non-current	1,360,466,	$   1,354,810

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8 Loan Payable - Bank

9 Months Ended

Mar. 31, 2015

Notes

8 Loan Payable - Bank

8              LOAN PAYABLE – BANK

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

	March 31,		June 30,
	2015			2014
Bank Note in the amount of 20 million RMB with China Merchant Bank bearing an annual floating rate of 7.8%, initially made on December 27, 2013 for one year maturing on 26 December 2014.	$	--		$	3,247,966
Bank Note in the amount of 30 million RMB with Postal Savings Bank bearing an 7.8% interest per annum, made on July 22, 2014 for one year maturing on July 21, 2015		4,892,288			--
Bank Note in the amount of 20 million RMB with China Merchants Bank bearing an 7% interest per annum, made on Jan 05, 2015 for one year maturing on Jan 04, 2016		3,261,525
Bank Note in the amount of 30 million RMB with China HuiRong Co., Ltd bearing an 10.0% interest per annum, initially made on March 17, 2015 for one year maturing on 16 March, 2016	$	4,892,289		$	--
Bank Note in the amount of 20 million RMB with China Everbright Bank bearing an 7.84% interest per annum, made on Jan 16, 2015 for one year maturing on Jan 15, 2016		3,261,525
	$	16,307,627		$	3,247,966

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9 Loan Payable - Related Parties

9 Months Ended

Mar. 31, 2015

Notes

9 Loan Payable - Related Parties

9               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 17.76% and 13.94% per annum as of March 31, 2015 and June 30, 2014 respectively. Loans will mature as follows:

	March 31,		June 30,
	2014		2013
Within one year		$            1,310,403		$       1,084,248
1 – 2 years		-		-
2 – 3 years		4,044,986		6,146,803
Total		5,355,389		7,231,051
Less current portion		(1,310,403)		(1,084,248)
Loan payable-related parties, non-current		$             4,044,986		$       6,146,803

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11 Issuance of Common Stock

9 Months Ended

Mar. 31, 2015

Notes

11 Issuance of Common Stock

11           Issuance of Common Stock

On August 28, 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 November 5, 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 340,000 shares of common stock to independent directors for services rendered by them.

On January 29, 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 5, 2015, the Company issued 480,000 shares of its common stock to a creditor at $0.5 per share to offset a loan payable.

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2 Business Description and Significant Accounting Policies (Details)	9 Months Ended
	Mar. 31, 2015
Details
Noncontrolling Interest, Ownership Percentage by Parent	95.00%
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest	100.00%

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2 Business Description and Significant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Use of Estimates in The Preparation of Financial Statements

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, purchase price allocation of its acquisitions 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.

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5 Equity-method Investment in Joint Venture: Equity Method Investments (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Equity Method Investments

		For Nine Months		For the Year
		Ended		Ended
		March 31, 2015		June 30, 2014
Current assets	$	10,161	$	23,144
Noncurrent assets		770,579		795,273
Current liabilities		600,516	$	506,354
Noncurrent liabilities		--		--
Equity		180,225	$	312,063
Revenue		--		--
General and administrative expenses		(132,701)	$	(205,323)
Net loss	$	(132,701)	$	(205,323)

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13 Concentrations (Details)	9 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2014
Details
Concentration Risk, Customer	two major customers were 6.19% and 5.56% of total sales	two major customers accounted for 6% and 6% of total sales
Concentration Risk, Other Risk	two major customers accounted for 3% and 0% of Company’s accounts receivable balance		two major customers accounted for nil and 1% of Company’s accounts receivable balance
Concentration Risk, Product	two major products represented approximately 96% and 1% of total sales	two major products represented approximately 91% and 3% of total sales

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8 Loan Payable - Bank: Schedule of Long-term Debt Instruments (Details) (USD $)	Mar. 31, 2015	Jun. 30, 2014
Loans Payable To Bank Current	$ 16,307,627	$ 3,247,966
China Merchant Bank
Loans Payable To Bank Current		3,247,966
Postal Savings Bank
Loans Payable To Bank Current	4,892,288
ChinaMerchantBank2Member
Loans Payable To Bank Current	3,261,525
China HuiRong Co., Ltd
Loans Payable To Bank Current	4,892,289
ChinaEverbrightBankMember
Loans Payable To Bank Current	$ 3,261,525

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
OPERATING ACTIVITIES:
Net income/ (loss)	$ 1,337,275	$ (5,882,840)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	813,636	744,152
Inventory markdown	(7,852)
Bad debts (written back)/written off	(296,168)	126,595
Common stock issued for services	30,150	13,800
Equity in loss of joint venture, net	67,677	31,476
Net profit/(loss) attributable to non-controlling interests	92,213	(298,997)
Change in accounts receivable	(2,512,353)	(1,421,042)
Change in inventories	240,017	733,887
Change in prepaid expenses and other current assets	(846,157)	(908,822)
Change in accounts payable	3,811,731	349,946
Change in accrued expenses and other current liabilities	2,417,693	(659,116)
NET CASH GENERATED FROM (USED IN) OPERATING ACTIVITIES	5,147,862	(7,170,961)
INVESTING ACTIVITIES:
Acquisition of property and equipment	(3,008,154)	(172,530)
NET CASH USED IN INVESTING ACTIVITIES	(3,008,154)	(172,530)
FINANCING ACTIVITIES:
Proceeds from bank loans	13,002,908	13,062,804
Payment of bank loans		(10,196,154)
Short-term borrowings, net of repayment	(2,060,018)	1,954,534
Proceed/?Payment? of other borrowings	(10,174,775)	1,486,963
Sale of common stock	1,395,758
Repayment of loans to related party	(1,895,196)	(588,773)
NET CASH PROVIDED BY FINANCING ACTIVITIES	268,677	5,719,374
EFFECT OF EXCHANGE RATE ON CASH	48,785	6,833
INCREASE/ (DECREASE) IN CASH	2,457,170	(1,617,283)
CASH - BEGINNING OF PERIOD	2,329,660	4,007,823
CASH - END OF PERIOD	4,786,830	2,390,540
Supplemental disclosures of cash flow information:
Cash paid for interest	2,566,158	3,093,765
Cash paid for income taxes

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5 Equity-method Investment in Joint Venture

9 Months Ended

Mar. 31, 2015

Notes

5 Equity-method Investment in Joint Venture

5              EQUITY-METHOD INVESTMENT IN JOINT VENTURE

The Company accounts for its investment in API (see Note 2), under the equity method of accounting.

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

		For Nine Months		For the Year
		Ended		Ended
		March 31, 2015		June 30, 2014
Current assets	$	10,161	$	23,144
Noncurrent assets		770,579		795,273
Current liabilities		600,516	$	506,354
Noncurrent liabilities		--		--
Equity		180,225	$	312,063
Revenue		--		--
General and administrative expenses		(132,701)	$	(205,323)
Net loss	$	(132,701)	$	(205,323)

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6. Short-term Borrowing: Schedule of Short-term Debt (Tables)

9 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Short-term Debt

		For Nine Months		For the Year
		Ended		Ended
		March 31, 2015		June 30, 2014
Shijiazhuang Finance Bureau  (a)	$	81,538	$	81,199
Shijiazhuang Construction Investment Group Co. Ltd   (b)		5,218,441		3,247,966
TianJin Heng Xing Mirco finance Bureau   (c)		4,076,906		-
Hebei Chuangyu Investment Group Co., Ltd		-	$	1,948,780
Hebei Hengrui Sunshine Pharmacy Co., Ltd		-		3,247,966
Mr. Liu Shujun		-	$	260,519
Mr. Li Hui		2,303		538,208
Shijiazhuang Red Property Management Co., Ltd		-		2,073,826
Total	$	9,379,188	$	11,398,464

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5 Equity-method Investment in Joint Venture: Equity Method Investments (Details) (USD $)	9 Months Ended	12 Months Ended
	Mar. 31, 2015	Jun. 30, 2014
Details
Equity Method Investment, Summarized Financial Information, Current Assets	$ 10,161	$ 23,144
Equity Method Investment, Summarized Financial Information, Noncurrent Assets	770,579	795,273
Equity Method Investment, Summarized Financial Information, Current Liabilities	600,516	506,354
Equity Method Investment Summarized Financial Information, Equity	180,225	312,063
Equity Method Investment, Summarized Financial Information, Cost of Sales	(132,701)	(205,323)
Equity Method Investment, Summarized Financial Information, Gross Profit (Loss)	$ (132,701)	$ (205,323)

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2 Business Description and Significant Accounting Policies: Investment in Joint Venture ("JV") (Policies)

9 Months Ended

Mar. 31, 2015

Policies

Investment in Joint Venture ("JV")

Investment in Joint Venture (“JV”)

On April 26, 2010, AoxingPharma 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 JV represents a significant 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 JV. Hebei will contribute capital, fixed assets and related active pharmaceutical ingredients manufacturing licenses. The JVcompany is called HebeiAoxing API Pharmaceutical Company, Ltd. (“API”). HebeiAoxing 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 JV is located on the Hebei campus in Xinle City, 200 kilometers southwest of Beijing. The Company accounts for its investment in the JV under the equity method of accounting.