AXM Pharma, Inc., is a global pharmaceutical company engaged in the production, marketing and distribution of pharmaceutical products in China. The Company produces, markets and distributes medicines in various dosages and forms in most areas of medicinal treatment, as well as herbal remedies, vitamins and adjunctive therapies. Through its wholly owned subsidiary, AXM Pharma Shenyang, Inc., the Company has utilized its production and distribution capabilities to establish a pharmaceutical operation focused on supplying the growing demand for drugs and on the opportunities for proprietary branded products in specific niche categories.

AXM completed construction of their new factory, including the Ointment/Paste facility and Solid Formulation workshop, on December 22, 2004. The factory includes over 120,000 square feet of production space with laboratory and administration buildings capable of producing 30,000,000 tubes for ointment, 500,000,000 tablets and 250,000,000 capsules annually. The new factory was constructed as a modern production and distribution facility and followed Chinese Good Manufacturing Practices (GMP) certification guidelines. AXM also intends to certify the factory under United States GMP regulations in 2005. See new factory photos.

AXM applied with the State Food and Drug Administration ("SFDA") for GMP approval in compliance with the June 30, 2004 deadline established by the State Food and Drug Administration and received notification from the SFDA of formal acceptance of the application on December 17, 2004. The Company received GMP approval from the State Food and Drug Administration ("SFDA") on January 18th, 2005 and started production in the facility on January 19th, 2005.

Werke Pharmaceuticals, Inc. is AXM Pharma's wholly owned subsidiary, which owns 100% of AXM Pharma Shenyang Inc. ("AXM China"), a Wholly Foreign Owned Enterprise (WFOE) under Chinese law. AXM Pharma Shenyang, Inc. is based in the city of Shenyang, the Peoples Republic of China. It has an operating history of 10 years from when it originally existed as Shenyang Tianwei Pharmaceutical Factory ("STPF") prior to a joint venture with Werke.

As part of a broad-based corporate development strategy, the original Shenyang plant was decommissioned in 2002 due to the significant growth of the population of Shenyang, where the surrounding area changed from a city edge industrial area to a city-center, non-industrial, urban residential neighborhood.

AXM began construction on a new state-of-the-art production facility in October of 2003. The new plant site was selected in a special Hi-Tech Industry Development Zone located several kilometers from the old plant that will provide the Company with various multi-year tax and development incentives. AXM expects the facility to become the hub of the Company's manufacturing and distribution in China.

Prior to closing the old plant the Company had approximately 320 employees; utilizing OEM manufacturing relationships with two key third-party pharmaceutical plants, the Company has reduced its work force to approximately 35 employees. It is anticipated that when the new facility is certified and becomes operational the total head count will likely approach the former number of employees and selected OEM production will be discontinued.