AOB American Oriental Bioengineering, Inc.

China Aoxing Pharmaceutical Company, Inc. (OTCBB: CAXG) ("China Aoxing"), a China-based pharmaceutical company specializing in research, development, manufacturing and distribution of narcotic and pain-management products, today announced financial and operational results for the three months ended December 31, 2009, or the second quarter of fiscal year 2010.

Second Quarter 2010 Highlights:

--  Successful restructuring Bank of China loan with forgiveness of
    $3,579,085 in from bond holders
--  Continuous improvement of operating efficiency with record low
    operating loss
--  Completed Phase II clinical study for oral TJSL capsules, a novel
    investigational drug to treat primary dysmenorrhea, or menstrual pain,
    in adult women
--  Completed pivotal clinical trial of Tilidine for acute and chronic
    treatments of moderate to severe pain
--  Received GMP re-certification for four dosage forms at new
    manufacturing facility

Revenues for the three months ended December 31, 2009 were $1,556,431, a 33% decrease from the revenues of $2,315,709 realized during the three months ended December 31, 2008. The decrease in revenue was impacted by the relocation of the LRT manufacturing facility in the summer of 2009. The consolidation of the LRT facility necessitated GMP re-certification of six formulations at the new facility, delaying fulfillment of the purchase orders for those formulations. As of December 31, 2009, the new facility has successfully passed the GMP re-certification on capsule, tablet, granule and oral solution formulations while re-certification on pill and tincture formulations is expected to conclude in the first half of 2010.

General and administrative expenses were $825,503 in the three months ended December 31, 2009, similar to $796,900 in the three months ended December 31, 2008.

During the three months ended in December 31, 2009, the company continued to improve its profitability and operating efficiency. Loss from operations decreased to $285,225 during the three months ended December 31, 2009, or a 39% reduction from $466,735 incurred during the three months ended December 31, 2008.

Net income for the three months ended December 31, 2009 was $5,446,154, and income attributable to the Company after 5% minority interest was $5,282,170, mainly attributable to the forgiveness of debt and the decrease in the fair value of the outstanding financial derivatives. In comparison, during the three months ended December 31, 2008, the recorded net loss was $1,999,699, and the Company recorded net loss in the amount of $1,972,987 after 5% minority interest and an expense of $1,144,012 attributable to the increase in the fair value of the outstanding financial derivatives.

Mr. Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing, commented, "We are very pleased with our financial and business results of this period. As promised, we successfully restructured our capital structure and improved our financial condition significantly, forming the important basis of our future business expansion. The GMP re-certification of four dosage forms at our manufacturing facility is an important step and will help alleviate product backlog. We are excited about the prospects for our business in 2010 and will continue advancing the new generation of narcotics and pain medicine into the market place in China."

About China Aoxing Pharmaceutical Company, Inc.

China Aoxing Pharmaceutical Company, Inc. (OTCBB: CAXG) is a pharmaceutical company specializing in research, development, manufacturing and distribution of a variety of narcotics and pain-management products. It has a strategic alliance with American Oriental Bioengineering, Inc. (NYSE: AOB). Headquartered in Shijiazhuang City, the pharmaceutical capital of China, outside of Beijing, China Aoxing 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 narcotics medicines. The Company is working closely with the Chinese government and SFDA to assure the strictly regulated availability to medical professionals of its narcotic drugs and pain medicines throughout China.

Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other risk factors identified in the Company's filings with the Securities and Exchange Commission, including the Form 10-K for the year ended June 30, 2009, may cause actual results or events to differ materially from those described in the forward-looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

          CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS



                                                December 31,    June 30,
                                                    2009          2009
                                                (Unaudited)
                  ASSETS
CURRENT ASSETS:
  Cash                                          $  6,383,715  $  1,271,922
  Accounts receivable                              1,252,030     1,064,381
  Inventory                                        1,127,255       712,521
  Deposits with suppliers                            378,432       261,780
  Deferred tax assets                              2,119,730     3,331,045
  Prepaid expenses and sundry current assets         376,983       302,449
                                                ------------  ------------
TOTAL CURRENT ASSETS                              11,638,145     6,944,098
                                                ------------  ------------

LONG - TERM ASSETS
Property and equipment, net of accummulated
 depreciation                                     24,438,138    29,324,362
Other intangible assets                            1,502,868     1,549,497
Goodwill                                          18,944,464    18,926,527
                                                ------------  ------------
TOTAL LONG-TERM ASSETS                            44,885,470    49,800,386
                                                ------------  ------------

TOTAL ASSETS                                    $ 56,523,615  $ 56,744,484
                                                ============  ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Short-Term borrowings                         $    292,517  $    292,193
  Accounts payable                                 3,056,835     2,816,711
  Deposit payable                                          -     3,871,552
  Current portion of long term debt - other           46,803       144,635
  Current portion of long term debt - related
   party                                             111,208     4,494,629
  Accrued expenses and taxes payable and other
   sundry current liabilities                      1,025,402     2,403,185
  Loan payable - Bank                                      -     6,094,428
  Convertible debentures                           1,113,294     1,023,733
                                                ------------  ------------
TOTAL CURRENT LIABILITIES                          5,646,059    21,141,066
                                                ------------  ------------

LONG-TERM DEBT-- RELATED PARTY                     4,825,431     4,104,201
                                                ------------  ------------
 -- OTHER                                          7,346,328     3,491,113
                                                ------------  ------------
WARRANT AND DERIVATIVE LIABILITIES                   887,369     3,368,901
                                                ------------  ------------


Common stock, par value $0.001, 100,000,000
 shares authorized, 91,669,562 and 82,827,999
 shares issued and outstanding at December 31,
 2009 and June 30, 2009, respectively                 91,670        82,828

Preferred stock, par value $0.001
 300,000 shares authorized
 0 shares issued and outstanding
 at December 31,2009 and June 30, 2009,
 respectively                                              -             -

Additional paid in capital                        49,200,045    39,104,586

Accumulated deficit                              (11,873,857)  (14,791,039)

Other comprehensive income                           470,951       461,017
                                                ------------  ------------
TOTAL STOCKHOLDERS' EQUITY                        37,888,809    24,857,392

NONCONTROLLING INTEREST IN SUBSIDIARIES              (70,381)     (218,189)
                                                ------------  ------------
TOTAL EQUITY                                      37,818,428    24,639,203
                                                ------------  ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 56,523,615  $ 56,744,484
                                                ============  ============



          CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
                                (UNAUDITED)


                    For the three months ended   For the six months ended
                           December 31,                December 31,
                        2009          2008          2009          2008

SALES               $  1,556,431  $  2,315,709  $  3,003,094  $  5,913,774

COST OF SALES            540,516     1,331,695       990,659     3,269,040
                    ------------  ------------  ------------  ------------

GROSS PROFIT           1,015,915       984,014     2,012,435     2,644,734
                    ------------  ------------  ------------  ------------

COSTS AND EXPENSES:
  Research and
   development
   expense                78,761        73,907       192,064       340,236
  General and
   administrative
   expenses              825,503       796,900     1,702,987     1,989,792
  Selling expenses       287,404       492,518       548,297     1,123,536
  Depreciation and
   amortization          109,473        87,424       218,690       231,882
                    ------------  ------------  ------------  ------------
    TOTAL COSTS AND
     EXPENSES          1,301,141     1,450,749     2,662,038     3,685,446
                    ------------  ------------  ------------  ------------

LOSS FROM
 OPERATIONS             (285,226)     (466,735)     (649,603)   (1,040,712)
                    ------------  ------------  ------------  ------------

OTHER INCOME
 (EXPENSE):
  Interest expense      (451,070)     (429,884)   (1,043,155)     (905,378)
  Change in fair
   value of warrant
   and derivative
   liabilities         4,623,692    (1,144,012)    2,481,533      (996,285)
  Gain on foreign
   currency
   transactions              241        60,481           241       263,518
  Loss on sale of
   assets                      0             -       (21,415)
  Forgiveness of debt  3,579,085          (555)    3,579,085     1,459,196
                    ------------  ------------  ------------  ------------
    TOTAL OTHER INCOME
     (EXPENSE)         7,751,948    -1,513,970     4,996,289      (178,949)
                    ------------  ------------  ------------  ------------

INCOME (LOSS)
 BEFORE INCOME
 TAXES                 7,466,722    (1,980,705)    4,346,686    (1,219,661)

Income taxes
 (credit)              2,020,568        18,994     1,211,315        98,687
                    ------------  ------------  ------------  ------------
NET INCOME (LOSS)      5,446,154    (1,999,699)    3,135,371    (1,318,348)

Noncontrolling
 interest in
 subsidiaries            163,984       (26,712)      147,808        28,520
                    ------------  ------------  ------------  ------------
INCOME (LOSS)
 ATTRIBUTABLE TO
 THE COMPANY           5,282,170    (1,972,987)    2,987,563    (1,346,868)

OTHER COMPREHENSIVE
 INCOME (LOSS):
  Foreign currency
   translation
   adjustment            (27,744)     (408,127)        9,934      (381,778)
                    ------------  ------------  ------------  ------------

COMPREHENSIVE
 INCOME (LOSS)      $  5,254,426  $ (2,381,114) $  2,997,497    (1,728,646)
                    ============  ============  ============  ============

BASIC AND DILUTED
 EARNINGS (LOSSES)
 PER COMMON SHARE           0.06         (0.02)         0.03         (0.02)
                    ============  ============  ============  ============
WEIGHTED AVERAGE
 NUMBER OF SHARES
 OUTSTANDING          91,669,562    82,771,294    89,540,442    81,988,536
                    ============  ============  ============  ============




          CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (UNAUDITED)


                                                 For the six months ended
                                                       December 31,
                                                    2009          2008

OPERATING ACTIVITIES:
Net income (loss)                               $  2,987,563  $ (1,346,868)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation and amortization                    538,657       601,310
    Deferred tax assets                            1,211,315             -
    Loss on sale of assets                            21,416             -
    Forgiveness of debt                           (3,640,718)   (1,459,196)
    Non-cash interest expense related to
     debentures and warrants                          89,561       125,810
    Stock issued for services                        273,454       520,187
    Change in fair value of warrants and derivative
     liability                                    (2,481,533)      996,285
    Minority interest                                147,808        28,520
  Changes in operating assets and liabilities:
    Accounts receivable                             (189,611)      237,456
    Inventories                                     (413,919)      (32,383)
    Prepaid expenses and sundry current assets      (187,396)     (200,211)
    Accounts payable                                 122,885        28,006
    Accrued expenses, taxes and sundry current
     liabilities                                     922,215    (1,569,960)
                                                ------------  ------------
NET CASH PROVIDED BY (USED IN) OPERATING
 ACTIVITIES                                         (598,303)   (2,071,044)
                                                ------------  ------------

INVESTING ACTIVITIES:
  Acquisition of property and equipment             (420,692)   (1,021,280)
  Cash received from sale of assets                  950,626             -
                                                ------------  ------------
NET CASH PROVIDED BY (USED IN) INVESTING
 ACTIVITIES                                          529,934    (1,021,280)
                                                ------------  ------------

FINANCING ACTIVITIES:
  Repayment of bank loan                          (4,270,485)
  Proceeds Other borrowings                        3,753,122     2,989,634
  Loans from related party                           715,504             -
  Sale of common stock                             5,000,000             -
                                                ------------  ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES          5,198,141     2,989,634
                                                ------------  ------------

EFFECT OF EXCHANGE RATE ON CASH                      (17,979)     (342,551)
                                                ------------  ------------

INCREASE (DECREASE) IN CASH                        5,111,793      (445,241)
CASH - BEGINNING OF PERIOD                         1,271,922     1,565,513
                                                ------------  ------------
CASH - END OF PERIOD                            $  6,383,715     1,120,272
                                                ============  ============

Supplemental disclosures of cash flow
 information:
 Non-cash financing activities:
  Conversion of AOB loan  and accrued interest
   into common stock                               4,830,847             -
                                                ============  ============
  Conversion of convertible debentures into
   common stock                                            -       290,000
                                                ============  ============
  Common stock issued as payment for accrued
   interest                                                -        25,570
                                                ============  ============

Investor Relations Contact: Brian Korb Vice President The Troup Group LLC Tel: +1 646 378 2923 Email: bkorb@troutgroup.com Website: www.chinapainmed.com