AOXING PHARMACEUTICAL COMPANY, INC.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. __

Revenue for the three months ended March 31, 2017 was $5,701,989, down 13.1% year-over-year from the revenue of $6,563,944 realized during the three months ended March 31, 2016. Revenue for the nine months ended March 31, 2017 was $21,280,396, down 9.5% year-over-year from the revenue of $23,504,605. The year-over-year revenue decrease during this quarter was mainly due to lower sales for products other than Zhongtong'an. Sales for Zhongtong'an, which represented 92.5% of total sales for the three months ended March 31, 2017, increased 6.9% year-over-year. Our Tilidine product has not yet contributed to sales.

Research and development expenses were $77,202 for the three months ended March 31, 2017, compared to ($35,743) a year ago. The reported research and development expenses for the third quarter fiscal 2016 had a positive earnings contribution mainly due to reversal of an earlier R&D expense. Also, R&D expenses often fluctuate significantly from one period to another, reflecting the progress and timing of our various development projects. For the first nine months of fiscal 2017, R&D expenses were $530,891, down from $1,171,668 a year ago. Depreciation and amortization expenses were $119,970 for the fiscal third quarter 2017, down from $121,723 a year ago. For the nine months ended March 31, 2017, D&A expenses were $358,667, compared to $381,379 reported a year ago.

Net interest expense was $650,130 for the three months ended March 31, 2017, up from $600,572 net interest expense for the three months ended March 31, 2016. For the first nine months of fiscal 2017, net interest expense was $1,947,015, down from $2,509,508 reported for the same period a year ago.

 Our cash balance as of March 31, 2017 was $7,080,460, compared to $6,912,100 as of June 30, 2016. Cash using for operating activities was $2,794,428 during the nine month period ended March 31, 2017, as compared to $1,965,846 cash used in operations during the nine month period ended March 31, 2016. Cash flow from operation was impacted by increases in accounts receivable $7,628,847 and prepaid expenses and other current assets $5,073,660, offset partially by higher accrued expenses and other current liabilities and accounts payable.  During this reporting period, we did not make any major investment.