Aoxing Pharmaceutical (AOXG) 10-Q 16 May 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2016	May. 16, 2016
Document and Entity Information:
Entity Registrant Name	AOXING PHARMACEUTICAL COMPANY, INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Trading Symbol	axn
Amendment Flag	false
Entity Central Index Key	1,060,426
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		76,209,195
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	2,016
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2016	Jun. 30, 2015
CURRENT ASSETS:
Cash and cash equivalents	$ 6,046,327	$ 5,371,545
Accounts receivable, net	9,003,401	5,764,738
Notes receivable, net	16,678	89,317
Inventories, net	3,761,697	3,240,026
Prepaid expenses and other current assets	10,490,462	6,630,407
TOTAL CURRENT ASSETS	29,318,565	21,096,033
LONG-TERM ASSETS:
Property and equipment, net of accumulated depreciation	26,589,023	28,651,717
Deferred income tax	1,087,218	2,711,610
Other intangible assets, net	1,905,169	484,857
Investment in joint venture	29,036	96,475
TOTAL LONG-TERM ASSETS	29,610,446	31,944,659
TOTAL ASSETS	58,929,011	53,040,692
CURRENT LIABILITIES:
Short-term borrowings	11,513,301	12,484,356
Accounts payable	2,566,203	3,625,139
Notes payable		1,631,641
Loan payable - bank	15,035,344	16,316,408
Current portion of loan payable - related parties	13,544	5,793
Current portion of loan payable - others	15,502
Accrued expenses and other current liabilities	8,884,490	7,176,325
TOTAL CURRENT LIABILITIES	38,028,384	41,239,662
LONG-TERM LIABILITIES:
Loan payable - related parties		8,158
Loan payable - others		1,361,199
Deferred income	350,344	368,751
TOTAL LONG-TERM LIABILITIES	350,344	1,738,108
Stockholder's Equity
Common stock, par value $0.001, 100,000,000 shares authorized, 76,209,195 and 69,839,259 shares issued and outstanding on March 31, 2016 and June 30, 2015	76,209	69,839
Additional paid in capital	73,582,257	66,457,250
Accumulated deficit	(54,395,676)	(58,354,968)
Accumulated other comprehensive income	2,257,488	3,066,026
TOTAL SHAREHOLDERS' EQUITY OF THE COMPANY	21,520,278	11,238,147
NONCONTROLLING INTEREST IN SUBSIDIARIES	(969,994)	(1,175,225)
TOTAL EQUITY	20,550,284	10,062,922
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 58,929,012	$ 53,040,692

CONSOLIDATED BALANCE SHEETS PAR

CONSOLIDATED BALANCE SHEETS PARENTHETICAL - $ / shares	Mar. 31, 2016	Jun. 30, 2015
CONSOLIDATED BALANCE SHEETS PARENTHETICAL
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	76,209,195	69,839,259
Common stock shares outstanding	76,209,195	69,839,259

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Revenue
SALES	$ 6,563,944	$ 6,590,736	$ 23,504,605	$ 17,586,519
COST OF SALES	1,630,389	1,078,200	5,115,060	4,090,586
GROSS PROFIT	4,933,555	5,512,536	18,389,545	13,495,933
OPERATING EXPENSES:
Research and development expense	(35,743)	73,970	1,171,668	277,117
General and administrative expenses	1,195,094	662,065	2,650,579	1,994,560
Selling expenses	2,125,771	2,548,848	6,109,982	5,527,281
Depreciation and amortization	121,723	135,973	381,379	416,049
TOTAL OPERATING EXPENSES	3,406,845	3,420,856	10,313,608	8,215,007
INCOME FROM OPERATIONS	1,526,710	2,091,680	8,075,937	5,280,926
OTHER INCOME (EXPENSE):
Interest expense, net of interest income	(600,572)	(1,246,920)	(2,509,508)	(4,068,200)
Gain on foreign currency transactions	(83,345)
Equity in loss of joint venture, net	(24,286)	(19,688)	(63,051)	(67,677)
Subsidy income	(2,126)	4,866	202,901	284,439
TOTAL OTHER EXPENSE	(710,329)	(1,261,742)	(2,369,658)	(3,851,438)
INCOME BEFORE INCOME TAXES	816,381	829,938	5,706,279	1,429,488
Income tax expense	146,005		1,499,201
NET INCOME	670,376	829,938	4,207,078	1,429,488
Net income attributed to non-controlling interest in subsidiaries	47,656	51,962	247,785	92,213
INCOME ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY	622,720	777,976	3,959,293	1,337,275
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment	572,478	14,766	(851,093)	50,284
COMPREHENSIVE PROFIT	1,195,198	792,742	3,108,200	1,387,559
Other comprehensive income (loss) attributable to non-controlling interest	28,624	738	(42,555)	2,514
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY	$ 1,166,574	$ 792,004	$ 3,150,755	$ 1,385,045
EARNINGS PER SHARE: Basic	$ 0.01	$ 0.01	$ 0.05	$ 0.02
EARNINGS PER SHARE: Diluted	$ 0.01	$ 0.01	$ 0.05	$ 0.02
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic	75,670,953	67,638,657	72,863,479	60,907,137
WEIGHTED AVERAGE SHARES OUTSTANDING: Diluted	75,749,890	67,676,783	72,942,416	60,951,616

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
OPERATING ACTIVITIES:
INCOME ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY	$ 3,959,293	$ 1,337,275
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	779,065	813,636
Deferred income tax	1,499,201
Inventory markdown		(7,852)
Bad debts written back/(written off)	148,141	(296,168)
Common stock issued for services	241,283	30,150
Equity in loss of joint venture, net of tax	63,051	67,677
Net loss attributable to non-controlling interests	247,785	92,213
Changes in operating assets and liabilities:
Change in accounts receivable	(3,629,981)	(2,512,353)
Change in inventories	(688,065)	240,017
Change in prepaid expenses and other current assets	(4,220,230)	(846,157)
Change in accounts payable	(2,444,751)	3,811,731
Change in accrued expenses and other current liabilities	2,079,362	2,417,693
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(1,965,846)	5,147,862
INVESTING ACTIVITIES:
Acquisition of property and equipment	(96,447)	(3,008,154)
NET CASH USED IN INVESTING ACTIVITIES	(96,447)	(3,008,154)
FINANCING ACTIVITIES:
Proceeds from/(Repayment of) bank loan	(469,794)	13,002,908
Repayment of short-term borrowings	(350,257)	(2,060,018)
Repayment of other borrowings		(10,174,775)
Proceeds from/(Repayment of) loans from related party	1,348,510	(1,895,196)
Sale of common stock	2,739,000	1,395,758
NET CASH PROVIDED BY FINANCING ACTIVITIES	3,267,459	268,677
EFFECT OF EXCHANGE RATE ON CASH	(530,385)	48,785
INCREASE (DECREASE) IN CASH	674,781	2,457,170
CASH - BEGINNING OF PERIOD	5,371,545	2,329,660
CASH - END OF PERIOD	6,046,327	4,786,830
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 2,223,281	$ 2,566,158
Cash paid for income taxes
Debt extinguishment using stock	$ 2,662,597	$ 4,866,288

1. Basis of Presentation

1. Basis of Presentation	9 Months Ended
	Mar. 31, 2016
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, 2015 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year 2015. 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, 2015 filed on October 13, 2015.

2. Business Description and Sig

2. Business Description and Significant Accounting Policies	9 Months Ended
	Mar. 31, 2016
Notes
2. Business Description and Significant Accounting Policies	2. BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES Aoxing Pharmaceutical Co., Inc. (“the Company” or “Aoxing Pharma”) is a specialty pharmaceutical company specializing in research, development, manufacturing and distribution of a variety of narcotic, pain-management, and addiction treatment pharmaceutical products. As of March 31, 2016, the Company had one operating subsidiary: Hebei Aoxing Pharmaceutical Co., Inc. (“Hebei” or “Hebei Aoxing”), which is organized under the laws of the People’s Republic of China (“PRC”). The Company owns 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. By 2011 the manufacturing operations of LRT had been completely integrated into Hebei. Currently over 80% of the Company’s revenues derive from one herbal extraction, obtained from the acquisition of LRT, which is used to alleviate oral/dental and bone pain. Investment in Joint Venture (“JV”) On April 26, 2010, Aoxing Pharma and Johnson Matthey Plc (“JM”) entered into an agreement to establish a joint venture focused on research, development, manufacturing and marketing of active pharmaceutical ingredients for narcotics and neurological drugs for the China market. The joint venture represents a significant new opportunity for both companies to expand their business in the rapidly growing pharmaceutical market in China. Under the terms of the agreement, Macfarlan Smith Ltd, a wholly owned subsidiary of Johnson Matthey Plc, headquartered in the United Kingdom, will contribute technology expertise and capital to the joint venture. Hebei will contribute capital, fixed assets and related active pharmaceutical ingredients manufacturing licenses. The joint venture company is called Hebei Aoxing API Pharmaceutical Company, Ltd. (“API”). Hebei Aoxing has a 51% stake in API, while Macfarlan Smith (Hong Kong) Ltd (a wholly owned subsidiary of JM) holds 49%. Each company has equal representation on the board of directors that will oversee a management team responsible for corporate strategies and operations. The new joint venture is located on the Hebei campus in Xinle City, 200 kilometers southwest of Beijing. The Company accounts for its investment in the Joint Venture under the equity method of accounting. Intangible assets Definite lived intangible assets include the three technology transfers for Lorcaserin Hydrochloride, caffeine tablets and caffeine buccal tablets, and buprenorphine/naloxone, as well as the drug permits recorded at cost less accumulated amortization and any recognized impairment loss. The technology transfers were completed in January with agreements for stocks. The drug permits were acquired in 2008 when the Company purchased LRT and are amortized over their estimated useful life of 15 years on a straight-line basis. An intangible asset that is subject to amortization shall be reviewed for impairment in accordance with the Impairment or Disposal of Long-Lived Assets ASC 360-10. In accordance with Accounting Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, the Company performs an intangible asset impairment test for its definite-lived intangibles whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The intangible assets balance as of March 31, 2016 and June 30, 2015 are $1,905,169 and $484,857 respectively. 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, fair value of purchase option derivative liability and warranty liability, 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 company 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 Measurements 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, 2016, 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 are considered Level 2 financial instruments measured at fair value on a non-recurring basis as of March 31, 2016. The carrying amount of the common stock warrants is recorded at fair value and is determined using the Black-Scholes option pricing model based on the Company's stock price at the measurement date, exercise price of the warrant, risk-free rate and historical volatility. The company also measures certain assets, including the long-term investments and intangible assets, at fair value on a nonrecurring basis when they are deemed to be impaired. The fair values of these investments and intangible assets are determined based on valuation techniques using the best information available, and may include management judgments, future performance projections, etc. The Company classified these instruments and assets as a Level 3 of the fair value hierarchy. Recent accounting pronouncements In September 2015, the FASB issued ASU No. 2015-16, “Business Combination (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”). The amendments in this update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in ASU 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date of ASU 2015-16 with earlier application permitted for financial statements that have not been issued. We do not expect the adoption of ASU 2015-16 to have a material impact on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). Topic 740, Income Taxes, requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred income taxes, the amendments in ASU 2015-17 require that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. For public business entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We do not expect the adoption of ASU 2015-17 to have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this update eliminate the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU 2016-01, early adoption of the amendments in this update is not permitted. We do not expect the adoption of ASU 2016-01 to have a material impact on our consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

3. Going Concern

3. Going Concern	9 Months Ended
	Mar. 31, 2016
Notes
3. Going Concern	3. GOING CONCERN We have incurred operating losses in the past and had an accumulated deficit of $54.4 million as of March 31, 2016. In addition, we had negative working capital of $8.7 million 8,700,000 The Company is able to operate with negative net working capital because of loans from banks and related parties. The Company believes future positive operating cash flows, continued support from related parties, and the ability to continue to roll over short-term debt, taken together, provide adequate resources to fund ongoing operations in the foreseeable future. The Company may also seek equity financing to replace both short-term and long-term debts. The Company believes that the increased market demand for its main product in the near term and the sales from several new products in future years will produce substantial positive cash flow. Management of the Company believes that the Company's large negative working capital will improve gradually during fiscal year 2016. Management expects the improvement to come from improved operating results, by extending short term into longer term loans, and by selling equity and converting debt to equity. Management anticipates that these improvements will enable the Company to reduce current high interest expenses and fund on-going operations. Currently, there are no firm commitments for debt or equity financing. 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 going forward. In September 2015, the Company sold 2,352,941 shares of common stock and 1,764,706 common stock purchase warrants to an institutional investor and also issued warrants to purchase 141,176 shares of common stock to the placement agent and its affiliates. The company received a net proceed of $2,739,000. Each warrant will permit the holder to purchase one share of common stock from the Company at $1.74 per share.

4. Inventories, Net

4. Inventories, Net	9 Months Ended
	Mar. 31, 2016
Notes
4. Inventories, Net	4. INVENTORIES, NET Inventories consist of the following: March 31, June 30, 2016 2015 Work in process $ 410,118 $ 383,950 Raw materials 617,744 676,590 Finished goods 2,733,835 2,179,486 $ 3,761,697 $ 3,240,026 The allowance for obsolete inventory as of March 31, 2016 and June 30, 2015 was $602,303 and $465,828, respectively.

5. Equity Method Investments an

5. Equity Method Investments and Joint Ventures Disclosure	9 Months Ended
	Mar. 31, 2016
Notes
5. Equity Method Investments and Joint Ventures Disclosure	5. EQUITY-METHOD INVESTMENT IN JOINT VENTURE The Company account 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, 2016 June 30, 2015 Current assets $ 9,917 $ 11,767 Noncurrent assets 685,625 758,649 Current liabilities $ 694,822 $ 640,416 Noncurrent liabilities - - Equity $ 720 $ 130,000 Revenue - - General and administrative expenses $ 123,629 $ 183,044 Net loss $ (123,629) $ (183,044)

6. Accrued Expenses and Other C

6. Accrued Expenses and Other Current Liabilities	9 Months Ended
	Mar. 31, 2016
Notes
6. Accrued Expenses and Other Current Liabilities	6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and taxes consist of the following: March 31, June 30, 2016 2015 Accrued salaries and benefits $ 981,208 $ 1,616,963 Accrued interest 1,964,016 2,073,073 Accrued taxes 2,156,580 1,281,704 Deposit payable 563,409 572,105 Due to employee 44,622 46,967 Advance from customers 404,014 291,005 Other accounts payable 483,611 241,512 Other accrued expenses and current liabilities 2,287,030 1,052,996 $ 8,884,490 $ 7,176,325

7. Short-term Borrowing

7. Short-term Borrowing	9 Months Ended
	Mar. 31, 2016
Notes
7. Short-term Borrowing	7. SHORT-TERM BORROWING Short-term borrowing consists of the following: March 31 June 30, 2016 2015 Shijiazhuang Finance Bureau (a) $ 77,510 $ 81,582 Shijiazhuang Construction Investment Group Co., Ltd (b) 4,960,625 5,058,086 Mr. Li Hui (c) - 2,304 Hebei Henghui Investment Management Co., Ltd (d) 2,196,627 3,263,282 TianJin Heng Xing Mirco Finance Bureau (e) 3,875,488 4,079,102 Xinle SASAC Office (f) 403,051 - Total $ 11,513,301 $ 12,484,356 (a) A non-interest bearing note payable to Shijiazhuang Finance Bureau, an agency of a local government, due on demand. (b) A one-year loan from Shijiazhuang Construction Investment Group, disbursed through China Construction Bank. The notes bear an annual interest rate of 12%. $1,860,234 was due on October 25, 2015 and was extended to October 23, 2016. $3,100,391 was due on July 12, 2015 and was extended to October 25, 2015 and then further extended to October 25, 2016. The notes were secured by certain registered trademarks and renewal certificates relating to Aoxing’s Zhongtong’an capsule. (c) The balance of $2,304 as at June 30, 2015 represents unpaid portion of interest which was already repaid in fiscal 2016. (d) A six-month term loan from Hebei Henghui Investment Management Co., Ltd. The note bears an annual interest rate of 10% and has been extended to October 20, 2016. (e) A short term loan from TianJin Heng Xing Mirco Finance Bureau. The note bears an annual interest rate of 20.04%, and was extended to November 18, 2016. (f) A short term loan from Xinle State-Owned Assets Supervision and Administration Commission. This loan bears an annual interest rate of 9.6%. The term is from January 25, 2016 to June 25, 2016.

8. Debt Disclosure

8. Debt Disclosure	9 Months Ended
	Mar. 31, 2016
Notes
8. Debt Disclosure	8. LOAN PAYABLE - BANK Loan payable – bank consist of the following loans collateralized by assets of the company: March 31, June 30, 2016 2015 Bank Note in the amount of 30 million RMB with Shijiazhuang Huirong Rural Cooperative Bank bearing an annual interest rate of 10% made on September 23, 2014. The note matured on November 22, 2014 and was extended to September 15, 2016 $ 4,650,586 $ 4,894,922 Bank Note in the amount of 27 million RMB with Postal Savings Bank bearing an annual interest rate of 7.08%, made on July 22, 2014 for one year maturing on July 21, 2015 and was extended to April 6, 2017. 4,185,527 4,894,922 Bank Note in the amount of 20 million RMB with China Merchant Bank bearing an annual floating rate of 5.98%, initially made on December 27, 2013, renewed on January 13, 2015 for one year maturing on April 4, 2017. 3,100,391 3,263,282 Bank Note in the amount of 19.9 million RMB with China Everbright Bank bearing 5.655% interest per annum made on January 16, 2015 for one year maturing on January 15, 2016 and was extended to February 24, 2017. 3,098,840 3,263,282 $ 15,035,344 $ 16,316,408

9. Loan Payable - Related Parti

9. Loan Payable - Related Parties	9 Months Ended
	Mar. 31, 2016
Notes
9. Loan Payable - Related Parties	9. LOAN PAYABLE – RELATED PARTIES Loan payable – related parties bears interest at an average rate of 10.0% per annum as of March 31, 2016 and June 30, 2015. Loans will mature as follows: March 31, June 30, 2016 2015 Within one year $ 13,544 $ 5,793 1 – 2 years - 8,158 2 – 3 years - - Total 13,544 13,951 Less current portion (13,544) (5,793) $- $ 8,158

10. Long-term Debt

10. Long-term Debt	9 Months Ended
	Mar. 31, 2016
Notes
10. Long-term Debt	10. LOAN PAYABLE – OTHER Loan payable – other consist of loans from unrelated third-parties, bearing interest at an average rate of 10.0% per annum as of March 31, 2016 and June 30, 2015. Loans will mature as following: March 31, June 30, 2016 2015 Within one year $ 15,502 $ - 1 – 2 years - 1,361,199 2 – 3 years - - 3 – 4 years - - Total 15,502 1,361,199 Less current portion (15,502) - $ - $ 1,361,199 On November 4, 2015, the Company reached agreement with the creditors to convert the debt into shares of common stock. The conversion was completed on November 23, 2015, which caused the balances of other loan payable declined significantly thereafter.

11. Issuance of Common Stock an

11. Issuance of Common Stock and Warrants	9 Months Ended
	Mar. 31, 2016
Notes
11. Issuance of Common Stock and Warrants	1 1. Issuance of Common Stock AND WARRANTS During the period ended September 30, 2014, the Company issued 11,862,278 shares of common stock in satisfaction of $4.6 million in debt at $0.39 per share. 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. On September 10, 2015, the Company issued 60,000 shares of common stock to independent directors at $2.01 per share for services rendered by them. On September 30, 2015 the Company issued 2,352,941 shares of common stock and 1,764,706 common stock purchases warrants pursuant to a securities purchase agreement dated as of September 24, 2015. The purchaser was an institutional investor. Each warrant will permit the holder to purchase one share of common stock from the Company for a price of $1.74 per share. The warrants will be exercisable from March 31, 2016 until March 31, 2021. Cashless exercise of the warrants is permitted only if there is no effective registration statement permitting resale of the common shares underlying the warrants. The proceeds from the offerings were $2,739,000, net of issuance costs of $261,000 paid to the placement agent. The warrants were classified as equity at the date of issuance. They contained no provision that would require liability classification, and can be exercised on a cashless basis. Accordingly, they were classified as equity at the date of issuance. The proceeds were allocated between common stock and warrant, based on relative fair value. The issuance cost was recorded as a reduction of additional paid in capital. In connection with the aforesaid sale, the Company issued to the placement agent and its affiliates warrants to purchase 141,176 shares of common stock. The warrants issued to the placement agent and its affiliates are substantially identical to the warrants sold to the institutional investor. The fair value of these warrants, which amounted to $175,150, was classified as equity at the date of issuance and recorded as an offset to the proceeds from the issuance of the shares and warrants. The fair value of the warrants issued was estimated by using the Black-Scholes-Merton Option Pricing Model with the following assumptions: For the nine months ended March 31, 2016 Investor Stock price 0.66 Exercise price 1.74 Expected life in years 4.5 Annualized Volatility 117.21% Annual Rate of Quarterly Dividends 1.65 Discount Rate - Bond Equivalent Yield 1.21 The Company applied its best judgment to estimate key assumptions in determining the fair value of the warrants on the date of issuance. The Company used historical data to estimate stock volatilities. The risk-free rates are consistent with the terms of the warrants and are based on the United States Treasury yield curve in effect at the time of issuance. The weighted average fair value of warrants granted for the period ended September 30, 2015 was $1.24 per share. No warrants were exercised, cancelled or expired during the period ended December 31, 2015. On November 4, 2015, the Company reached agreement with three of its creditors to convert $2.66 million high interest bearing debt into 2,046,995 shares of common stock. The shares were valued at $1.30 per share and will be restricted under Rule 144. On January 5, 2016 the Board of Directors approved three technology acquisition agreements made by the Company during December 2015. Pursuant to the agreements, the Company (a) issued 800,000 shares of common stock and paid $123,000 to acquire technology relating to the formulation of Lorcaserin Hydrochloride, (b) issued 500,000 shares of common stock and paid $77,000 to acquire certain technology relating to the formulation of caffeine tablets, and (c) issued 500,000 shares of common stock and paid $77,000 to acquire certain technology relating to the formulation of Buprenorphine/Naloxone. On January 5, 2016, the Board of Directors granted options for a total of 590,000 shares of common stock to 25 employees of the Company. The options are exercisable at a price of $.64 per share, which was the closing price for the common stock on January 4, 2016. Each option has a term of five years. The options will not vest until they have been approved by the shareholders of the Company. On January 5, 2016 the Board of Directors approved two consulting agreements pursuant to which a total of 110,000 shares of common stock were issued in exchange for media and investor relations consulting services.

12. Taxes

12. Taxes	9 Months Ended
	Mar. 31, 2016
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 the nine months ended March 31, 2016 2015 Tax at U.S. Statutory rate $ 285,734 $ 500,320 Tax rate difference between China and U.S. (452,530) (2,655,633) Change in Valuation Allowance 111,879 2,155,314 Net operating loss expired - - Stock and option compensation 54,917 - Effective tax rate $ - $ - The provisions of income taxes (credit) are summarized as follows: For the nine months ended March 31, 2016 2015 Current $ $ Deferred - U.S. (341,107) (38,113) Deferred - China 1,728,429 (2,617,521) Valuation allowance - U.S. 341,107 38,113 Valuation allowance - China. (229,228) 2,117,201 Total $ 1,499,201 $ - The tax effects of temporary differences that give rise to the Company’s net deferred tax asset as of March 31, 2016 and June 30, 2015 are as follows: March 31, 2016 June 30, 2015 Net operating loss carryforward - China $ 108,050 $ 1,342,696 Net operating loss carryforward - US 2,182,243 1,935,121 Allowance for doubtful accounts 548,100 823,190 Others 452,896 808,334 3,291,289 4,909,341 Less: valuation allowance- U.S. (2,182,244) (1,935,121) Valuation allowance- China. (21,827) (262,610) Deferred tax assets $ 1,087,218 $ 2,711,610

13. Concentrations

13. Concentrations	9 Months Ended
	Mar. 31, 2016
Notes
13. Concentrations	1 3. CONCENTRATIONS Sales to two major customers accounted for 12% and 7% of total sales for the three months ended March 31, 2016. Sales to two major customers accounted for 6% and 6% of total sales for the three months ended March 31, 2015. As of March 31, 2016, two major customers accounted for 8% and 6% of Company’s accounts receivable balance. As of March 31, 2015, two major customers accounted for 3% and 0% of Company’s accounts receivable balance. Sales of two major products represented approximately 78% and 16% of total sales for the three months ended March 31, 2016. Sales of two major products represented approximately 96% and 1% of total sales for the three months ended March 31, 2015.

14. Subsequent Events

14. Subsequent Events	9 Months Ended
	Mar. 31, 2016
Notes
14. Subsequent Events	1 4. 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.

2. Business Description and S20

2. Business Description and Significant Accounting Policies: Investment in Joint Venture ("JV") (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
Investment in Joint Venture ("JV")	Investment in Joint Venture (“JV”) On April 26, 2010, Aoxing Pharma and Johnson Matthey Plc (“JM”) entered into an agreement to establish a joint venture focused on research, development, manufacturing and marketing of active pharmaceutical ingredients for narcotics and neurological drugs for the China market. The joint venture represents a significant new opportunity for both companies to expand their business in the rapidly growing pharmaceutical market in China. Under the terms of the agreement, Macfarlan Smith Ltd, a wholly owned subsidiary of Johnson Matthey Plc, headquartered in the United Kingdom, will contribute technology expertise and capital to the joint venture. Hebei will contribute capital, fixed assets and related active pharmaceutical ingredients manufacturing licenses. The joint venture company is called Hebei Aoxing API Pharmaceutical Company, Ltd. (“API”). Hebei Aoxing has a 51% stake in API, while Macfarlan Smith (Hong Kong) Ltd (a wholly owned subsidiary of JM) holds 49%. Each company has equal representation on the board of directors that will oversee a management team responsible for corporate strategies and operations. The new joint venture is located on the Hebei campus in Xinle City, 200 kilometers southwest of Beijing. The Company accounts for its investment in the Joint Venture under the equity method of accounting.

2. Business Description and S21

2. Business Description and Significant Accounting Policies: Intangible Assets (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
Intangible Assets	Intangible assets Definite lived intangible assets include the three technology transfers for Lorcaserin Hydrochloride, caffeine tablets and caffeine buccal tablets, and buprenorphine/naloxone, as well as the drug permits recorded at cost less accumulated amortization and any recognized impairment loss. The technology transfers were completed in January with agreements for stocks. The drug permits were acquired in 2008 when the Company purchased LRT and are amortized over their estimated useful life of 15 years on a straight-line basis. An intangible asset that is subject to amortization shall be reviewed for impairment in accordance with the Impairment or Disposal of Long-Lived Assets ASC 360-10. In accordance with Accounting Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, the Company performs an intangible asset impairment test for its definite-lived intangibles whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The intangible assets balance as of March 31, 2016 and June 30, 2015 are $1,905,169 and $484,857 respectively.

2. Business Description and S22

2. Business Description and Significant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies)	9 Months Ended
	Mar. 31, 2016
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, fair value of purchase option derivative liability and warranty liability, 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.

2. Business Description and S23

2. Business Description and Significant Accounting Policies: Impairment of Long Lived Assets (Policies)	9 Months Ended
	Mar. 31, 2016
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 company 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.

2. Business Description and S24

2. Business Description and Significant Accounting Policies: Fair Value Measurement (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
Fair Value Measurement	Fair value Measurements 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, 2016, 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 are considered Level 2 financial instruments measured at fair value on a non-recurring basis as of March 31, 2016. The carrying amount of the common stock warrants is recorded at fair value and is determined using the Black-Scholes option pricing model based on the Company's stock price at the measurement date, exercise price of the warrant, risk-free rate and historical volatility. The company also measures certain assets, including the long-term investments and intangible assets, at fair value on a nonrecurring basis when they are deemed to be impaired. The fair values of these investments and intangible assets are determined based on valuation techniques using the best information available, and may include management judgments, future performance projections, etc. The Company classified these instruments and assets as a Level 3 of the fair value hierarchy.

2. Business Description and S25

2. Business Description and Significant Accounting Policies: Recent Accounting Pronouncements (Policies)	9 Months Ended
	Mar. 31, 2016
Policies
Recent Accounting Pronouncements	Recent accounting pronouncements In September 2015, the FASB issued ASU No. 2015-16, “Business Combination (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”). The amendments in this update require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to also record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in ASU 2015-16 should be applied prospectively to adjustments to provisional amounts that occur after the effective date of ASU 2015-16 with earlier application permitted for financial statements that have not been issued. We do not expect the adoption of ASU 2015-16 to have a material impact on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”). Topic 740, Income Taxes, requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. To simplify the presentation of deferred income taxes, the amendments in ASU 2015-17 require that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position. For public business entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. We do not expect the adoption of ASU 2015-17 to have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The amendments in this update require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition the amendments in this update eliminate the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Except for the early application guidance discussed in ASU 2016-01, early adoption of the amendments in this update is not permitted. We do not expect the adoption of ASU 2016-01 to have a material impact on our consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The amendments in this update create Topic 842, Leases, and supersede the leases requirements in Topic 840, Leases. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business entities. Early application of the amendments in ASU 2016-02 is permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

4. Inventories, Net_ Schedule o

4. Inventories, Net: Schedule of Inventories (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Inventories	Inventories consist of the following: March 31, June 30, 2016 2015 Work in process $ 410,118 $ 383,950 Raw materials 617,744 676,590 Finished goods 2,733,835 2,179,486 $ 3,761,697 $ 3,240,026

5. Equity Method Investments 27

5. Equity Method Investments and Joint Ventures Disclosure: Equity Method Investments (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Equity Method Investments	For nine months For the year ended ended March 31, 2016 June 30, 2015 Current assets $ 9,917 $ 11,767 Noncurrent assets 685,625 758,649 Current liabilities $ 694,822 $ 640,416 Noncurrent liabilities - - Equity $ 720 $ 130,000 Revenue - - General and administrative expenses $ 123,629 $ 183,044 Net loss $ (123,629) $ (183,044)

6. Accrued Expenses and Other28

6. Accrued Expenses and Other Current Liabilities: Schedule of Accounts Payable and Accrued Liabilities (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Accounts Payable and Accrued Liabilities	March 31, June 30, 2016 2015 Accrued salaries and benefits $ 981,208 $ 1,616,963 Accrued interest 1,964,016 2,073,073 Accrued taxes 2,156,580 1,281,704 Deposit payable 563,409 572,105 Due to employee 44,622 46,967 Advance from customers 404,014 291,005 Other accounts payable 483,611 241,512 Other accrued expenses and current liabilities 2,287,030 1,052,996 $ 8,884,490 $ 7,176,325

7. Short-term Borrowing_ Schedu

7. Short-term Borrowing: Schedule of Short-term borrowing (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Short-term borrowing	Short-term borrowing consists of the following: March 31 June 30, 2016 2015 Shijiazhuang Finance Bureau (a) $ 77,510 $ 81,582 Shijiazhuang Construction Investment Group Co., Ltd (b) 4,960,625 5,058,086 Mr. Li Hui (c) - 2,304 Hebei Henghui Investment Management Co., Ltd (d) 2,196,627 3,263,282 TianJin Heng Xing Mirco Finance Bureau (e) 3,875,488 4,079,102 Xinle SASAC Office (f) 403,051 - Total $ 11,513,301 $ 12,484,356

8. Debt Disclosure_ Schedule of

8. Debt Disclosure: Schedule of Long-term Debt Instruments (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Long-term Debt Instruments	March 31, June 30, 2016 2015 Bank Note in the amount of 30 million RMB with Shijiazhuang Huirong Rural Cooperative Bank bearing an annual interest rate of 10% made on September 23, 2014. The note matured on November 22, 2014 and was extended to September 15, 2016 $ 4,650,586 $ 4,894,922 Bank Note in the amount of 27 million RMB with Postal Savings Bank bearing an annual interest rate of 7.08%, made on July 22, 2014 for one year maturing on July 21, 2015 and was extended to April 6, 2017. 4,185,527 4,894,922 Bank Note in the amount of 20 million RMB with China Merchant Bank bearing an annual floating rate of 5.98%, initially made on December 27, 2013, renewed on January 13, 2015 for one year maturing on April 4, 2017. 3,100,391 3,263,282 Bank Note in the amount of 19.9 million RMB with China Everbright Bank bearing 5.655% interest per annum made on January 16, 2015 for one year maturing on January 15, 2016 and was extended to February 24, 2017. 3,098,840 3,263,282 $ 15,035,344 $ 16,316,408

9. Loan Payable - Related Par31

9. Loan Payable - Related Parties: Schedule of Related Party Transactions (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Related Party Transactions	March 31, June 30, 2016 2015 Within one year $ 13,544 $ 5,793 1 – 2 years - 8,158 2 – 3 years - - Total 13,544 13,951 Less current portion (13,544) (5,793) $- $ 8,158

10. Long-term Debt_ Schedule of

10. Long-term Debt: Schedule of Debt (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Debt	March 31, June 30, 2016 2015 Within one year $ 15,502 $ - 1 – 2 years - 1,361,199 2 – 3 years - - 3 – 4 years - - Total 15,502 1,361,199 Less current portion (15,502) - $ - $ 1,361,199

11. Issuance of Common Stock 33

11. Issuance of Common Stock and Warrants: Assumptions Used Textblock (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Assumptions Used Textblock	For the nine months ended March 31, 2016 Investor Stock price 0.66 Exercise price 1.74 Expected life in years 4.5 Annualized Volatility 117.21% Annual Rate of Quarterly Dividends 1.65 Discount Rate - Bond Equivalent Yield 1.21

12. Taxes_ Schedule of Effectiv

12. Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Effective Income Tax Rate Reconciliation	For the nine months ended March 31, 2016 2015 Tax at U.S. Statutory rate $ 285,734 $ 500,320 Tax rate difference between China and U.S. (452,530) (2,655,633) Change in Valuation Allowance 111,879 2,155,314 Net operating loss expired - - Stock and option compensation 54,917 - Effective tax rate $ - $ -

12. Taxes_ Schedule of Componen

12. Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Components of Income Tax Expense (Benefit)	For the nine months ended March 31, 2016 2015 Current $ $ Deferred - U.S. (341,107) (38,113) Deferred - China 1,728,429 (2,617,521) Valuation allowance - U.S. 341,107 38,113 Valuation allowance - China. (229,228) 2,117,201 Total $ 1,499,201 $ -

12. Taxes_ Schedule of Deferred

12. Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables)	9 Months Ended
	Mar. 31, 2016
Tables/Schedules
Schedule of Deferred Tax Assets and Liabilities	March 31, 2016 June 30, 2015 Net operating loss carryforward - China $ 108,050 $ 1,342,696 Net operating loss carryforward - US 2,182,243 1,935,121 Allowance for doubtful accounts 548,100 823,190 Others 452,896 808,334 3,291,289 4,909,341 Less: valuation allowance- U.S. (2,182,244) (1,935,121) Valuation allowance- China. (21,827) (262,610) Deferred tax assets $ 1,087,218 $ 2,711,610

2. Business Description and S37

2. Business Description and Significant Accounting Policies (Details)	9 Months Ended
	Mar. 31, 2016
Details
Noncontrolling Interest, Ownership Percentage by Parent	95.00%
Subsidiary of Limited Liability Company or Limited Partnership, Ownership Interest	100.00%

2. Business Description and S38

2. Business Description and Significant Accounting Policies: Intangible Assets (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Details
Intangible Assets, Net (Excluding Goodwill)	$ 1,905,169	$ 484,857

3. Going Concern (Details)

3. Going Concern (Details) - USD ($)	9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Details
Working Capital Deficit	$ 8,700,000
Sale of common stock	$ 2,739,000	$ 1,395,758

4. Inventories, Net_ Schedule40

4. Inventories, Net: Schedule of Inventories (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Details
Inventory, Work in Process, Gross	$ 410,118	$ 383,950
Inventory, Raw Materials, Gross	617,744	676,590
Inventory, Finished Goods, Gross	2,733,835	2,179,486
Inventories, net	$ 3,761,697	$ 3,240,026

4. Inventories, Net (Details)

4. Inventories, Net (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Details
Allowance for Obsolete Inventory	$ 602,303	$ 465,828

5. Equity Method Investments 42

5. Equity Method Investments and Joint Ventures Disclosure: Equity Method Investments (Details) - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2016	Jun. 30, 2015
Details
Equity Method Investment, Summarized Financial Information, Current Assets	$ 9,917	$ 11,767
Equity Method Investment, Summarized Financial Information, Noncurrent Assets	685,625	758,649
Equity Method Investment, Summarized Financial Information, Current Liabilities	694,822	640,416
Equity Method Investment Summarized Financial Information, Equity	720	130,000
Equity Method Investment, Summarized Financial Information, Cost of Sales	123,629	183,044
Equity Method Investment, Summarized Financial Information, Gross Profit (Loss)	$ (123,629)	$ (183,044)

6. Accrued Expenses and Other43

6. Accrued Expenses and Other Current Liabilities: Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Details
Accrued Salaries, Current	$ 981,208	$ 1,616,963
Accrued interest	1,964,016	2,073,073
Accrued Income Taxes, Current	2,156,580	1,281,704
Deposit Liability, Current	563,409	572,105
Other Employee-related Liabilities, Current	44,622	46,967
Customer Advances, Current	404,014	291,005
Accounts Payable, Other, Current	483,611	241,512
Other Accrued Liabilities, Current	2,287,030	1,052,996
Accrued expenses and other current liabilities	$ 8,884,490	$ 7,176,325

7. Short-term Borrowing_ Sche44

7. Short-term Borrowing: Schedule of Short-term borrowing (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Short-term borrowings	$ 11,513,301	$ 12,484,356
ShijiazhuangFinanceBureauMember
Short-term borrowings	77,510	81,582
ShijiazhuangConstructionInvestmentGroupCoLtdMember
Short-term borrowings	4,960,625	5,058,086
MrLiHuiMember
Short-term borrowings		2,304
HebeiHenghuiInvestmentManagementCoLtdMember
Short-term borrowings	2,196,627	3,263,282
TianjinHengXingMircoFinanceBureauMember
Short-term borrowings	3,875,488	$ 4,079,102
Xinle SASAC Office
Short-term borrowings	$ 403,051

8. Debt Disclosure_ Schedule 45

8. Debt Disclosure: Schedule of Long-term Debt Instruments (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Loan payable - bank	$ 15,035,344	$ 16,316,408
ShijiazhuangHuirongRuralCooperativeBankMember
Loan payable - bank	4,650,586	4,894,922
PostalSavingsBankMember
Loan payable - bank	4,185,527	4,894,922
ChinaMerchantBankMember
Loan payable - bank	3,100,391	3,263,282
ChinaEverbrightBankMember
Loan payable - bank	$ 3,098,840	$ 3,263,282

9. Loan Payable - Related Par46

9. Loan Payable - Related Parties (Details)	Mar. 31, 2016	Jun. 30, 2015
Details
Accounts Payable Related Parties Interest Bearing Interest Rate	10.00%	10.00%

9. Loan Payable - Related Par47

9. Loan Payable - Related Parties: Schedule of Related Party Transactions (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Details
Current portion of loan payable - related parties	$ 13,544	$ 5,793
Loan payable - related parties		8,158
Due to Related Parties	$ 13,544	$ 13,951

10. Long-term Debt (Details)

10. Long-term Debt (Details)	Mar. 31, 2016	Jun. 30, 2015
Details
Accounts Payable, Interest-bearing, Interest Rate	10.00%	10.00%

10. Long-term Debt_ Schedule 49

10. Long-term Debt: Schedule of Debt (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Details
Current portion of loan payable - others	$ 15,502
Loan payable - others		$ 1,361,199

11. Issuance of Common Stock 50

11. Issuance of Common Stock and Warrants: Assumptions Used Textblock (Details)	9 Months Ended
	Mar. 31, 2016$ / shares
Details
Fair Value Assumptions, Stock Price	$ 0.66
Fair Value Assumptions, Exercise Price	$ 1.74
Fair Value Assumptions, Expected Term	4 years 6 months
Fair Value Assumptions, Expected Volatility Rate	117.21%
Fair Value Assumptions, Weighted Average Expected Dividend	$ 1.65
Fair Value Assumptions, Risk Free Interest Rate	1.21%

12. Taxes_ Schedule of Effect51

12. Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)	9 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Details
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount	$ 285,734	$ 500,320
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Amount	(452,530)	(2,655,633)
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount	111,879	$ 2,155,314
Stock Option Compensation	$ 54,917

12. Taxes_ Schedule of Compon52

12. Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)	3 Months Ended	9 Months Ended
	Mar. 31, 2016	Mar. 31, 2016	Mar. 31, 2015
Deferred Federal Income Tax Expense (Benefit)		$ (341,107)	$ (38,113)
Deferred Foreign Income Tax Expense (Benefit)		1,728,429	(2,617,521)
Income tax expense	$ 146,005	1,499,201
USMember
Deferred Taxes, Business Combination, Valuation Allowance, Available to Reduce Income Tax Expense		341,107	38,113
ChinaMember
Deferred Taxes, Business Combination, Valuation Allowance, Available to Reduce Income Tax Expense		$ (229,228)	$ 2,117,201

12. Taxes_ Schedule of Deferr53

12. Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Mar. 31, 2016	Jun. 30, 2015
Deferred Tax Assets, Operating Loss Carryforwards, Foreign	$ 108,050	$ 1,342,696
Deferred Tax Assets, Operating Loss Carryforwards, Domestic	2,182,243	1,935,121
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Allowance for Doubtful Accounts	548,100	823,190
Deferred Tax Assets, Other	452,896	808,334
Deferred Tax Assets, Gross	3,291,289	4,909,341
Deferred income tax	1,087,218	2,711,610
USMember
Deferred Tax Assets, Valuation Allowance	(2,182,244)	(1,935,121)
ChinaMember
Deferred Tax Assets, Valuation Allowance	$ (21,827)	$ (262,610)

13. Concentrations (Details)

13. Concentrations (Details)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Details
Concentration Risk, Customer	two major customers accounted for 12% and 7% of total sales	two major customers accounted for 6% and 6% of total sales
Concentration Risk, Other Risk	two major customers accounted for 8% and 6% of Company’s accounts receivable balance.	two major customers accounted for 3% and 0% of Company’s accounts receivable balance.
Concentration Risk, Product	two major products represented approximately 78% and 16% of total sales	two major products represented approximately 96% and 1% of total sales