NEW YORK, Oct. 1 /PRNewswire-FirstCall/ -- China Aoxing Pharmaceutical Company, Inc. , a pharmaceutical company based in China that specializes in analgesics and pain management products, including Oxycodone, Pholcodine, Naloxone, and Tilidine, today announced financial results for its fiscal year ended June 30, 2007.

"We are pleased to report strong business progress and financial results for fiscal 2007 and looking forward to continuing to advanced our business in fiscal 2008," commented Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing Pharmaceutical. "We are very optimistic about our opportunity to bring to China established pain management drugs, all of which are industry standards in the United States and Europe. In China, these products are highly controlled and only available through a handful of manufacturers, so we are particularly excited about our growth opportunities as we move aggressively into the commercialization stage of our product pipeline."

    Financial and Business Highlights in Fiscal 2007:
    -- China State Food & Drug Administration (SFDA) approved GMP
       certification for raw materials and injectable finished doses of
       Naloxone Hydrochloride.
    -- Successful launches of Naloxone and Shuanghuanglian in China since
       December 2006 and February 2007 respectively, with the total product
       revenues of $1,938,639 in fiscal 2007, vs. no product sales in fiscal
       2006.
    -- China SFDA granted clinical study licenses for Tilidine for the
       treatment of moderate to severe pain associated with cancer and
       surgery, as well as other forms of pain.  Tilidine is classified as a
       New Medicine by the China SFDA for moderate to severe pain since China
       Aoxing is the first company to introduce this medicine to the China
       healthcare system.
    -- China SFDA also granted clinical study license for Codeine Phosphate
       Compound Medicine, which is widely used and considered effective in
       cold and flu treatment in Western countries.  It just became available
       in China in 2006. China Aoxing is one of only two drug makers
       developing this medicine in China.
    -- China Aoxing signed a Letter of Intent to acquire Shijiazhuang Le Ren
       Tang Pharmaceutical Ltd (LRT) which offers a strong portfolio of pain
       management products, becomes accretive to China Aoxing shareholders
       upon completion.

Financial Update

China Aoxing reported revenues of $1,938,639 from the sales of Naloxone Hydrochloride injectable and Shuanghuanglian Capsules during the fiscal year ended June 30, 2007 vs. no revenue during the prior year. The initiation of revenue production represented a significant milestone in the Company's history.

Total costs and expenses for the fiscal 2007 were $4.78 million, which reflected approximately $1.48 million of general and administrative expense. The company also recognized interest expense of $940,006 as well as $270,720 of research and development costs. Including $1.53 million of non-cash deferred interest expense, the Company reported a net loss of $3.89 million in the fiscal year 2007.

Mr. Zhenjiang Yue stated, "Driven by continued execution of our business strategy and solid growth in our core product portfolio, sales in the fourth quarter of fiscal 2007 reached to $1.03 million, increased by 83% over the third quarter of fiscal 2007. In addition, we are improving our balance sheet and capital structure. I am confident that our continued focus on growth and execution will lead to positive returns for our shareholders."

Business Update

During the same period, the Company has advanced on a number of strategic and operational fronts. It signed a Letter of Intent to acquire LRT, which is expected to be accretive and complementary. The Company is also initiating clinical studies of Tilidine and Codeine Phosphate programs in the second half of calendar year 2007.

Zhenjiang concluded, "Our goal is to be a leading, fully integrated pain management company in China. For the remainder of the calendar year, we will be diligently continuing our sales efforts of approved products as well as completing and integrating our LRT acquisition. In addition, as a long term growth strategy, we are actively evaluating external opportunities including pharmaceutical and biotech products or businesses offering leading technology platform, competitive products, high technical and regulatory advantages."

Balance Sheet

As of June 30, 2007, the Company had $1.51 million of cash and working capital deficit of approximately $9.64 million, reflecting aggregate investment in R&D and infrastructure for narcotic drug business over the years. The Company had long term debt of $4.32 million and convertible debentures of $2.55 million as of June 30, 2007.

About China Aoxing Pharmaceutical Group

China Aoxing Pharmaceutical Company, Inc. is a pharmaceutical company in China specializes in research, development, manufacturing and distribution of a variety of narcotics and pain management products. It owns 60% of the equity of its operating subsidiary, Hebei Aoxing Pharmaceutical Group Co. Ltd, a corporation organized under the laws of the People's Republic of China. Hebei Aoxing is one of only a handful of companies in China to be granted the license to manufacture drugs, including Oxycodone, Pholcodine, Naloxone, Tilidine, and is working closely with the Chinese government to assure their availability throughout China.

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. You are urged to read the Company's filings with the Securities and Exchange Commission, including, but not limited to, the risk factors contained therein. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

    CONTACT
    Dr. Hui Shao
    Senior Vice President
    China Aoxing Pharmaceutical
    201-420-1075

            China Aoxing Pharmaceutical Co., Inc. and Subsidiaries

                                BALANCE SHEETS
                                   (U.S. $)

                                                       ------JUNE 30,------
                                                         2007        2006

                                    ASSETS

    CURRENT ASSETS:
      Cash                                           $1,511,127        $777
      Accounts receivable                               112,602           -
      Inventories                                       219,742           -
      Prepaid expenses and sundry current assets        117,560     156,463
         TOTAL CURRENT ASSETS                         1,961,031     157,240

    PROPERTY AND EQUIPMENT, NET OF ACCUMULATED
     DEPRECIATION                                    19,218,587  17,822,043

    DEFERRED INTEREST                                 9,531,771           -

    TOTAL ASSETS                                    $30,711,389 $17,979,283

                     LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
      Short-term borrowings                            $262,302    $249,798
      Accounts payable                                  896,300     789,957
      Loan payable - other                              499,148     499,849
      Due to stockholders                             1,133,019      29,014
      Accrued expenses and taxes payable              1,927,505     995,998
      Current portion of long-term debt               6,885,290   2,997,564
         TOTAL CURRENT LIABILITIES                   11,603,564   5,562,180

    LONG-TERM DEBT                                    4,327,982   7,898,582

    CONVERTIBLE DEBENTURES                            2,547,000           -

    STOCKHOLDERS' EQUITY                             12,232,843   4,518,521

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $30,711,389 $17,979,283

            CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (U.S. $)

                                            ------YEAR ENDED JUNE 30,------
                                                   2007         2006

    SALES                                       $1,938,639           $-

    COST OF SALES                                1,038,563            -

    GROSS PROFIT                                   900,076            -

    COSTS AND EXPENSES:
      Research and development                     270,720      136,039
      General and administrative                 1,480,844      447,946
      Interest                                     940,006      604,046
      Depreciation                                 555,998      324,916
      Amortization of deferred interest          1,532,133            -
         TOTAL COSTS AND EXPENSES                4,779,701    1,512,947

    NET LOSS                                   $(3,879,625) $(1,512,947)

    Basic and diluted earnings per common share     $(0.10)      $(0.04)

    Weighted average number of shares
     outstanding                                40,098,373   40,050,041