Aoxing Pharmaceutical (AOXG) 10-Q 2014 Q3 Quarterly report

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, 2014

[ ] 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_______acceleratedfiler_________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 14, 2014, the number of shares outstanding of the Registrant’s common stock was 49,874,822 with $.001 par value.

QUARTERLY REPORT ON FORM 10-Q

FOR THE FISCAL QUARTER ENDED MARCH 31, 2014

TABLE OF CONTENTS

		Page No
Part I	Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheet – March 31, 2014 (unaudited) and June 30, 2013	1
	Consolidated Statements of Operations and Other Comprehensive Income (Loss) – for the Three and Nine Months Ended March 31, 2014 and 2013 (Unaudited)	2
	Consolidated Statements of Cash Flows – for the Nine Months Ended March 31, 2014 and 2013 (Unaudited)	3
	Notes to Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	17
Part II	Other Information
Item 1	Legal Proceedings	18
Item 1A	Risk Factors	18
Item 2	Unregistered Sale of Securities and Use of Proceeds	18
Item 3	Defaults Upon Senior Securities	18
Item 4	Mine Safety Disclosures	18
Item 5	Other Information	18
Item 6	Exhibits	19
Signatures		19

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			June 30,
	2014			2013
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,390,540		$	4,007,823
Accounts receivable, net of allowance for doubtful accounts of $792,632and $663,983, respectively		4,142,911			2,842,703
Inventories, net		1,901,070			2,621,878
Prepaid expenses and other current assets		3,334,339			2,419,790
TOTAL CURRENT ASSETS		11,768,860			11,892,194
LONG-TERM ASSETS:
Property and equipment, net of accumulated depreciation		26,524,075			26,941,778
Intangible assets, net		561,387			606,643
Investment in joint venture		262,045			292,265
TOTAL LONG-TERM ASSETS		27,347,507			27,840,686
TOTAL ASSETS	$	39,116,367		$	39,732,880
IABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings	$	5,272,208		$	3,312,757
Accounts payable		3,762,022			3,412,344
Loan payable – bank		21,510,609			8,467,729
Current portion of loan payable - related parties		1,354,524			2,101,998
Accrued expenses and other current liabilities		3,780,643			4,408,676
TOTAL CURRENT LIABILITIES		35,680,006			21,703,504
LONG-TERM LIABILITIES:
Loan payable - related parties		1,736,206			1,561,013
Loan payable - others		2,889,983			1,403,591
Long-term bank loans		-			10,116,027
Deferred income		366,621			365,211
TOTAL LONG-TERM LIABILITIES		4,992,810			13,445,842
Common stock, par value $0.001, 100,000,000 shares authorized, 49,874,822 shares issued and outstanding on March 31, 2014 and 49,814,822 shares issued and outstanding on June 30, 2013		49,875			49,815
Additional paid in capital		58,310,646			58,296,906
Accumulated deficit		(61,516,838	)		(55,633,998	)
Accumulated other comprehensive income		2,983,497			2,956,846
TOTAL SHAREHOLDERS' EQUITY OF THE COMPANY		(172,820	)		5,669,569
NONCONTROLLING INTEREST IN SUBSIDIARIES		(1,383,629	)		(1,086,035	)
TOTAL EQUITY		(1,556,449	)		4,583,534
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	39,116,367		$	39,732,880

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,
	2014			2013			2014			2013
SALES	$	2,445,793		$	1,885,133		$	9,489,708		$	7,804,664
COST OF SALES		1,425,630			708,395			5,464,000			3,064,377
GROSS PROFIT		1,020,163			1,176,738			4,025,708			4,740,287
OPERATING EXPENSES:
Research and development expense		222,654			186,972			491,370			1,406,631
General and administrative expenses		798,674			491,086			2,246,628			1,857,924
Selling expenses		559,226			2,662,948			3,436,015			4,977,821
Depreciation and amortization		157,483			136,098			477,493			448,535
Impairment on intangible assets		-			-			-			614,648
TOTAL OPERATING EXPENSES		1,738,037			3,477,104			6,651,506			9,305,559
LOSS FROM OPERATIONS		(717,874	)		(2,300,366	)		(2,625,798	)		(4,565,272	)
OTHER INCOME (EXPENSE):
Interest expense, net of interest income		(1,195,471	)		(790,089	)		(3,524,563	)		(2,057,883	)
Equity in loss of joint venture, net		(49	)		(29,353	)		(31,476	)		(80,829	)
Subsidy income		-			390,458			-			390,458
TOTAL OTHER EXPENSE		(1,195,520	)		(428,984	)		(3,556,039	)		(1,748,254	)
LOSS BEFORE INCOME TAXES		(1,913,394	)		(2,729,350	)		(6,181,837	)		(6,313,526	)
Income tax expense (credit)		-			-			-			-
NET LOSS		(1,913,394	)		(2,729,350	)		(6,181,837	)		(6,313,526	)
Net loss attributed to non-controlling interest in subsidiaries		(91,257	)		(133,689	)		(298,997	)		(293,881	)
LOSS ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY		(1,822,137	) )		(2,595,661	)		(5,882,840	)		(6,019,645	)
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment		(4,340	)		45,306			28,055			109,056
COMPREHENSIVE LOSS		(1,826,477	)		(2,550,355	)		(5,854,785	)		(5,910,589	)
Other comprehensive income (loss) attributable to non-controlling interest		(217	)		2,265			1,403			5,453
COMPREHENSIVE LOSS ATTRIBUTABLE TO THE COMPANY	$	(1,826,260	))	$	(2,552,620	)	$	(5,856,188	)	$	(5,916,042	)
BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.04	)	$	(0.05	)	$	(0.12	)	$	(0.12	))
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		49,850,077			49,814,822			49,850,077			49,728,178

See accompanying notes to the consolidated financial statements

2

AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the nine months ended
	March 31,
	2014			2013
OPERATING ACTIVITIES:
Net loss	$	(5,882,840	)	$	(6,019,645	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		744,152			841,540
Bad debts		126,595			50,798
Common stock issued for services		13,800			291,567
Equity in loss of joint venture, net		31,476			80,829
Net loss attributable to non-controlling interests		(298,997	)		(293,880	)
Inventory markdown		-			(21,518	)
Impairment charge on intangible assets		-			614,648
Changes in operating assets and liabilities:
Accounts receivable		(1,421,042	)		80,058
Inventories		733,887			(393,404	)
Prepaid expenses and other current assets		(908,822	)		(1,190,140	)
Accounts payable		337,864			(339,802	)
Accrued expenses and other current liabilities		(647,034	)		(250,302	)
NET CASH USED IN OPERATING ACTIVITIES		(7,170,961	)		(6,549,251	)
INVESTING ACTIVITIES:
Acquisition of property and equipment		(172,530	)		(387,827	)
NET CASH USED IN INVESTING ACTIVITIES		(172,530	)		(387,827	)
FINANCING ACTIVITIES:
Proceeds from bank loans		13,062,804			10,309,442
Payment of bank loans		(10,196,154)			(3,965,170	)
Short-term borrowings, net of repayment		1,954,534			-
Payment/(proceed)of other borrowings		1,486,963			(189,296	)
Repayment of loans to related party		(588,773	)		(126,885	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		5,719,374			6,028,091
EFFECT OF EXCHANGE RATE ON CASH		6,834			20,180
DECREASE IN CASH		(1,617,283)			(888,807	)
CASH – BEGINNING OF PERIOD		4,007,823			3,682,743
CASH – END OF PERIOD	$	2,390,540		$	2,793,936
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,093,765		$	1,926,360
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, 2014

(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, 2013 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year 2013. These interim financial statements should be read in conjunction with that report.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013 filed on October 15, 2013.

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, 2014, 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”). As of March 31, 2014, 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. As of June 30, 2011, the manufacturing operations of LRT had been completely integrated into Hebei. Currently over 90% of the Company’s revenues derive from one herbal extraction, obtained from the acquisition of LRT, which is used to alleviate oral/dental and bone pain.

Investment in Joint Venture (“JV”)

On April 26, 2010, 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”). Hebei Aoxing has a 51% stake in API, while Macfarlan Smith (Hong Kong) Ltd (a wholly owned subsidiary of JM) holds 49%. Each company has equal representation on the board of directors that will oversee a management team responsible for corporate strategies and operations. The JV is located on the Hebei campus in Xinle City, 200 kilometers southwest of Beijing. On March 10, 2010, the JV obtained a business license from the City Industry & Commercial Administrative Bureau. 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.

5

As of March 31, 2014, 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, 2014.

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

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

In July 2013, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update or ASU No. 2013-11, "Income Taxes (Topic740):  Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry forward, a Similar Tax Loss, or a Tax Credit Carry forward Exists (a consensus of the FASB Emerging Issues Task Force)." This ASU states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry forward, a similar tax loss, or a tax credit carry forward, except in certain situations. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application are permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. The adoption of this amendment is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2014, the FASB issued ASU No. 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity's operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for periods beginning after December 15, 2014. The Company currently does not have operations that are reported as discontinued operations and does not expect the adoption of this guidance to have a material effect the Company’s financial position, results of operations, or cash flows.

3                      GOING CONCERN

The Company incurred a net loss of $6,181,837and had $7,170,961 negative cash flow from operations during the nine month period ended March 31, 2014. As of March 31, 2014, the Company’s current liabilities exceeded its current assets by $23,911,146. The Company had cash and cash equivalents of $2,390,540as of March 31, 2014. 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.

Considering the high loan balance and significant negative working capital, the management of the Company believes that the large negative working capital will improve gradually through converting $3.0 million related party debt into equity by the end of 2014, equity fund raising and improving operating results in order to sustain paying higher interests and fund on-going operations.

6

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 nine month period ended March 31, 2014, the Company obtained an extension of the short term borrowing of $3.2 million from SJZ Construction Investment Corporation for another 12 months. The loan was originally due on November 3, 2013 and the new due date is November 11, 2014. The Company further obtained a $3.2 million bank loan from China Merchant Bank during the period ended March 31, 2014. In addition, the Company terminated the advertising contracts with five television stations at the end of September 2013 in order to reduce costs.

Considering that revenue for the period ended March 31, 2014 was higher than revenue during the prior year, though new products did not make significant contributions, management believes operating cash flows will turn positive in the coming years as a result of its new marketing campaign and increased brand awareness of the main products. Management believes that the increased market demand for its main product in the near future and sales from several new products based on last year marketing effort will be sufficient to offset the increased interest expenses and generate substantial positive operating cash flows. 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 both debt and equity financing and adopted various cost-saving strategies.

 4                     INVENTORIES, NET

Inventories consist of the following:

	March 31,			June 30,
	2014			2013
Work in process		$	372,098		$	1,041,267
Raw materials			543,542			509,209
Finished goods			985,430			1,071,402
		$	1,901,070		$	2,621,878

The provisions for obsolete inventory as of March 31, 2014 and June 30, 2013 were $387,611 and $386,120, 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, 2014			June 30, 2013
Current assets	$	7,306		$	8,964
Noncurrent assets		830,116			844,268
Current liabilities		382,434		$	338,761
Noncurrent liabilities		-			-
Equity		454,988		$	514,471
Revenue		-			-
General and administrative expenses		(61,718	)	$	(224,989	)
Net loss	$	(61,718	)	$	(224,989	)

7

6                      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and taxes consist of the following:

	March 31,		June 30,
	2014		2013
Accrued salaries and benefits	$	805,321	$	867,961
Accrued interest		1,066,285		698,320
Accrued taxes		194,436		255,275
Deposit payable		631,065		429,610
Due to employees		46,696		46,516
Advance from customers		344,856		516,183
Other accounts payable		669,023		711,486
Other accrued expenses and current liabilities		22,961		883,325
	$	3,780,643	$	4,408,676

  7                    LOAN PAYABLE – BANK

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

	March 31,		June 30,
	2014		2013
Bank Note in the amount of 30 million RMB with Bank of Communications of China bearing an annual floating rate of  7.872%, set to be 20% higher than the interest rate of the China Peoples Bank rate, initially made on April 29, 2011 and renewed again on April 18, 2013 for one year maturing on April 17, 2014	$	4,866,654	$	4,847,936
Bank Note in the amount of 20 million RMB with Postal Savings Bank bearing an 7.8%interest per annum, made on June 18, 2013 for one year maturing on June 17, 2014		3,244,436		3,231,958
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 December 26, 2014	$	3,244,436	$	-
Bank Note in the amount of 42.6 million RMB with Beijing International Trust Co., Ltd bearing an 18.0% interest per annum, made on September 24, 2012 for two year maturing on September 23, 2014		6,910,647		387,835
Bank Note in the amount of 20 million RMB with Beijing International Trust Co., Ltd bearing an 16.5% interest per annum, made on December 20, 2012 and will mature on September 21, 2014		3,244,436		-
	$	21,510,609	$	8,467,729

8

8                      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 17.00% and 15.88% per annum as of March 31, 2014 and June 30, 2013 respectively. Loans will mature as follows:

	March 31,			June 30,
	2014			2013
Within one year	$	1,354,524		$	2,101,998
1 – 2 years		-			1,561,013
2 – 3 years		1,736,206			-
Total		3,090,730			3,663,011
Less current portion		(1,354,524	)		(2,101,998	)
Loan payable-related parties, non-current	$	1,736,206		$	1,561,013

9                      LOAN PAYABLE – OTHER

Loan payable – other consist of loans from unrelated third-parties, bearing interest at an average rate of 10.85% and 17.86% per annum as of March 31, 2014 and June 30, 2013 respectively. Loans will mature as following:

	March 31,		June 30,
	2014		2013
Within one year	$	-	$	-
1 – 2 years		-		1,403,591
2 – 3 years		2,889,983		-
Total		2,889,983		1,403,591
Less current portion		-		-
Loan payable-other, non-current	$	2,889,983	$	1,403,591

10                    ISSUANCE OF COMMON STOCK

No new shares were issued by the Company during the period ended March 31, 2014.

11                    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,
	2014			2013
Tax at U.S. Statutory rate	$	(2,163,643	)	$	(1,254,462	)
Tax rate difference between China and U.S.		634,777			(358,609	)
Change in Valuation Allowance		1,528,866			1,613,071
Effective tax rate	$	-		$	-

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 11                   TAXES (Continued)

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

	For nine months ended March 31,
	2014			2013
Current	$	-		$	-
Deferred - U.S.		(68,510	)		(152,571	)
Deferred - China		(1,460,356	)		(1,460,500	)
Valuation allowance - U.S.		68,510			152,571
Valuation allowance - China.		1,460,356			1,460,500
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, 2014 and June 30, 2013.

12                   CONCENTRATIONS

Sales to three major customers were 6%, 6% and 5% of total sales for the three months ended March 31, 2014.  Sales to three major customers accounted for 49%, 25% and 10% of total sales for the three months ended March 31, 2013. The decrease in concentration in major customers was due to a change of sales strategy from distribution channel to direct sales. As of March 31, 2014, three major customers accounted for 6%, 4% and 3% of Company’s accounts receivable balance. As of March 31, 2013, two major customers accounted for 13% and 4% of the Company’s accounts receivable balance.

Sales of two major products represented approximately 91% and 3% of total sales for the three months ended March 31, 2014 and March 31, 2013. 

13                   SUBSEQUENT EVENTS

In accordance with ASC 855, “Subsequent Events”, the Company has evaluated subsequent events that have occurred through the date of issuance of these financial statements and has determined that there was no material event that occurred after the date of the balance sheets included in this report.

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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, 2013. 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 Shijiazhuang Lerentang Pharmaceutical Company Limited (“LRT”).    LRT was engaged in the manufacture and distribution of Chinese traditional medicines focusing on pain management related therapeutics within China.  In exchange for transfer of ownership of LRT to Hebei Aoxing, the Company paid to the shareholders of LRT 80 million 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.

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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. The total capital investment is projected to be approximately $15 million during the first five years. Approximately $1 million of capital resources had been invested in the joint venture as of June 30, 2013.

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.

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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.

Results of Operations

Revenues for the three months ended March 31, 2014 were $2,445,793, representing a 30% increase over the revenues of $1,885,133 realized during the three months ended March 31, 2013. Revenues for the nine months ended March 31, 2014 were $9,489,708, representing a 22% increase over the revenues of $7,804,664realized during the nine months ended March 31, 2013. The increase in revenue was mainly attributable to the increase in sales of our main product, Zhongtongan. Sales of Zhongtongan were aided by our decision to expand our sales reach from the original pediatric and stomatological divisions to cover a new market in the gynecology and orthopaedics divisions in the hospitals.  To support this new direction in sales, we rebuilt the Company’s sales force and increased distribution channels, which led to an increase in sales during the periods. Our marketing effort was aided by the fact that the Company’s key product, Zhongtongan, is now pre-approved to be included in the Essential Drug List (“EDL”) of at least 4 provinces. Drugs included in the EDL are reimbursable under the national health care plan.  We anticipate that inclusion in the EDL will substantially increase sales in the near future.

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Cost of sales was $1,425,630 for the three months ended March 31, 2014, which was 101% higher than the $708,395 incurred during the three months ended March 31, 2013. Cost of sales was $5,464,000 for the nine months ended March 31, 2014, which was 78% higher than the $3,064,377 in costs incurred during the nine months ended March 31, 2013.  The main reason for the increase in cost of sales was the increase in cost of raw materials as a result of a harvest shortfall at the end of 2013. However, we expect the cost of raw materials will be reduced by the fourth quarter of 2014.

As a result of the increase in cost of raw materials, gross profit of $1,020,163 and $4,025,708 during the three and nine months ended March 31, 2014 was 20.7% and18.3% lower than the same periods a year earlier. Gross margins, in turn, were only 41.7% and 42.4% during the three and nine month periods ended March 31, 2014 compared to 62.4% and 60.7% in the same periods of last year. We expect gross margin will be improved in the following quarters due to reduction in the cost of raw materials and manufacturing efficiency enhancements.

Research and development (“R&D”) expenses were $222,654 during the three months ended March 31, 2014, representing a 19%increase from $186,972incurred during the three months ended March 31, 2013. R&D expenses fluctuate significantly from one period to another, reflecting the progress and timing of our various development projects. R&D expenses during the nine months ended March 31, 2014 were 65%lower than during the nine months ended March 31, 2013. We do not expect the reduction in R&D expenses will have significant impact on the product roll-out, as the Company has already devoted sufficient resources in R&D during prior years.

General and administrative expenses were $798,674 in the three months ended March 31, 2014, representing a63% increase from $490,177 incurred during the three months ended March 31, 2013. General and administrative expenses were $2,246,628 in the nine months ended March 31, 2014, 21% higher than the $1,857,924incurred during the nine months ended March 31, 2013. The increase in general and administrative expenses resulted from the increase in salary expenses due to gradual expansion of our operations.

Selling expenses in the amount of $3,436,015 incurred during the nine months ended March 31, 2014 were 31% lower than the $4,977,821 incurred during the nine months ended March 31, 2013.  The decrease was mainly attributable to a decrease in advertising cost during the periods. In December 2012 the Company signed six advertising contracts totaling approximately $4.8 million with five different television stations.  These advertising contracts were terminated during the quarter ended September 30, 2013. We do not expect the termination of advertising contracts will affect the future sales as the previous marketing effort already increased our brand awareness. As a result of the termination, selling expenses in the amount of $559,226 incurred during the three months ended March 31, 2014 were 79% lower than $2,662,948 incurred on selling expenses during the three months ended March 31, 2013. The decrease in selling expenses was also caused by a decrease in travel expenses.

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Despite the reduction in gross profit due to increased cost of sales during fiscal 2014, we reduced our loss from operations for the nine months ended March 31, 2014 to $2,625,798 from $3,950,624 incurred during the same period a year earlier. The decrease in loss from operations was due to the reduction in R&D and selling expenses. In addition, we incurred a $0.6 million impairment on intangible assets expense during the nine months ended March 31, 2013.

Net interest expense was $3,524,563 for the nine months ended March 31, 2014, an increase of 71% from net interest expense of $2,057,893 for the nine months ended March 31, 2013.  The Company’s short and long term debt increased by $9,142,080 from March 31, 2013 to March 31, 2014, causing the increase in net interest expense.

Equity in loss of joint venture was $49 and $31,476 for the three and nine months periods ended March 31, 2014, an improvement from the $29,353 and $80,829incurred during the comparable periods of fiscal 2013.The losses related to the JV with Johnson MatheyPlc are expected to continue, as the JV has not commenced operations.

The Company realized a net loss of $1,913,394 for the three months ended March 31, 2014 and $6,181,837for the nine months ended March 31, 2014.  However, because the Company owns only 95% of Hebei Aoxing, 5% of the Company’s net loss was attributed to the non-controlling interest. Therefore the net loss attributable to the shareholders of Aoxing Pharmaceutical for the three and nine months ended March 31, 2014 was $1,822,137 and $5,882,840, respectively.  In comparison, during the three and nine months ended March 31, 2013, the net loss attributable to the Company’s shareholders was $2,959,661 and $6,019,645, after deducting the 5% non-controlling interest in Hebei Aoxing.

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, 2014 was $2,390,540, compared to $4,007,823 as of June 30, 2013. We sustained our cash position, despite using $7.2 million in operative activities, by increasing our bank loans.

Operations during the nine month period ended March 31, 2014 used $7,170,961 in cash, as compared to $6,549,251 used during the nine month period ended March 31, 2013.  The primary reason for the increased use of cash was the increase in accounts receivable during the recent period.

Our investing activities during the nine month period ended March 31, 2014 consisted of $172,530 cash used to purchase additional property and equipment.

Our financing activities during the nine months ended March 31, 2014 yielded $5,719,374 in net cash. We increased our bank loans, net of repayments, by $2,866,650. In addition we obtained $3,441,497 in miscellaneous short term loans, from which we used $588,773 to reduce our obligations to related parties.

Our working capital deficit on March 31, 2014 was $23,911,146, which was $14,099,835more than the working capital deficit of $9,811,311 on June 30, 2013.  The primary reasons for the increase in our working capital deficit are our net loss, which we funded by an increase in short-term bank loans, and the reclassification of $10.1 million in bank debt from long-term to current liabilities.

15

As a result of several debts refinancing during the nine month period ended March 31, 2014, our debt service obligations on March 31, 2014 were as following:

Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years	More Than  5 Years
Banks	$	21,510,609	$	21,510,609
Interest Commitment - Banks		2,635,780		2,635,780
Affiliates		3,090,730		1,354,524	$	1,736,206
Interest Commitment - Affiliates		356,048		356,048
Short-term  Borrowings		5,272,208		5,272,208
Interest Commitment -  Short-term Borrowings		778,665		778,665
Others		2,889,983				2,889,983
Interest Commitment - Others		313,427				313,427
TOTAL	$	36,847,450	$	31,907,834	$	4,936,616

For the next 12 months, management anticipates cash use from operations will decrease, because of increased product sales and efforts to preserve cash such as suspending non-essential research and development projects and terminating our television advertising contracts. Additionally, management does not expect any large capital expenditure projects in the next 12 months.  As a result, the Company will be able to operate at much lower cash burn rates, without any major impact on its operations. The management believes the improving operating results will cover the increase in interest expenses due to higher loan balances.

The Company anticipates support from related parties.  The Company already obtained commitment from related parties to convert approximately US$3 million of amounts due to related parties into the Company’s common stock. The Company also obtained commitment from our Chairman to provide additional loans of up to US$3.2 million to fund the Company operations. Furthermore, the Company will continue to seek financing to fund expansion of our operations, extend our reach to broader markets, or to acquire additional entities. We may rely on bank borrowing as well as capital raises through strategic partnerships.  We are actively exploring various proposals and alternatives in order to secure sources of financing and improve our financial position. We are also exploring potential strategic partnerships, which could provide a capital infusion to the Company.

We have incurred recurring operating losses and had an accumulated deficit of $61.5 million as of March 31, 2014. In addition, we had negative working capital of $23.9 million as of March 31, 2014.  Our history of operating losses and lack of binding financing commitments raise substantial doubt as to our ability to continue as a going concern. Despite recent negative operating cash flow positions, our management anticipates that we will generate sufficient cash flows to fund our operations for the next twelve months by increasing revenues and profit margins of our core product sales and continued support from our lenders to rollover debt when it becomes due. If future sales do not meet our forecasts, we may be required to fund operations by raising additional capital or seek external financing. As such, our ability to achieve our business plan is primarily dependent upon our ability to achieve our planned level of operations and/or obtain sufficient additional capital at acceptable costs. With respect to these objectives, we cannot provide any assurance that we will succeed. If events or circumstances occur such that we are unable to or do not meet our operating plan as expected and/or do not secure additional financing, we may be required to significantly curtail or cease operations.

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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, we carried out an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2014.  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’s accounting personnel are 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, 2014 for the purposes described in this paragraph.

To remediate the weakness, the Company plans to continue to train our internal accountants in US GAAP and SEC reporting and engaged a 3rd party consultant. Although our accounting staff is professional and experienced in accounting requirements and procedures generally accepted in the PRC, management has determined they require additional training for US GAAP and SEC reporting. We plan for the above deficiency to be remediated, which we hope will provide for greater credibility and consistency in the financial statements.

Changes in Internal Control over Financial Reporting.

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.

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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, 2013.

Item 2.       Unregistered Sale of Securities and Use of Proceeds

(a)   Unregistered sales of equity securities

The Company did not make any unregistered sales of equity securities during the third quarter of fiscal year 2014

(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 2014.

Item 3.     Defaults Upon Senior Securities

None

Item 4.      Mine Safety Disclosures

None

Item 5.      Other Information

None

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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.

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: May 14, 2014	By: /s/ Zhenjiang Yue
	Zhenjiang Yue, Chief Executive Officer
	(Principal Executive Officer)
Date: May 14, 2014	By: /s/ Guoan Zhang
	Guoan Zhang, Acting Chief Financial Officer
	(Principal Accounting and Financial Officer)

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