AXJ Axm Pharma

On March 3, 2006, AXM Pharma, Inc. (AMEX:AXJ), (the "Company") a manufacturer of proprietary and generic pharmaceutical and nutraceutical products for the Chinese and other Asian markets, submitted a letter to the American Stock Exchange ("Amex") outlining the Company's plans to strengthen its financial condition and bring itself into compliance with Amex's continued listing standards. The Company's strategy is to raise sufficient funds to support operational activities at its Shenyang facility in China. The Company is looking primarily to raise this capital in China. As previously disclosed, the Shenyang Municipal Government has commenced the process of providing the Company approximately RMB 10 Million loan ($1.2 Million US). (Please note that any funds provided by the Shenyang Municipal Government would be in the form of an interest-free loan, not a grant as previously reported.) In addition, the Company has obtained an agreement in principle with a Chinese company to receive a three year loan of RMB 50-100 Million ($6.2-12.4 Million US), subject to receiving a first lien on the Shenyang facility. The Shenyang facility is currently subject to a lien securing a $3 Million loan from another Chinese company. Finally, the Company's CEO and members of her immediate family are prepared to sell or pledge as many as 5 million shares of their common stock holdings in the Company in order to raise funds for loans they would provide AXM Pharma. No assurance can be given that the foregoing potential sources of funding will result in the Company receiving any new financing. All are subject to finalization of legal terms and fulfillment of various conditions. Moreover, any financing received may prove insufficient to meet the Company's cash requirements.. On February 28, 2006, Thomas P. Carson and Montgomery Simus notified the Company of their decision to resign from their positions on the Board of Directors, effective immediately. On March 2, 2006, Mark J. Bluer submitted a letter of resignation informing the Company of his decision to resign from his position on the Board of Directors. Mssrs. Bluer, Carson and Simus constituted three of the Company's four independent directors. Mr. Carson also served as the chairman and financial expert for the audit committee. Mr. Simus and Mr. Bluer were members of the audit committee. In their resignation letters, Mssrs. Bluer, Carson and Simus did not identify any material disagreement with the Company's operations, policies or practices, nor were any questions raised regarding the financial statements filed by the Company with the Securities and Exchange Commission. "Mssrs. Bluer, Carson and Simus have made important contributions to the company and to the work of the board, for which we are thankful," said Wang Weishi, CEO of the Company. "We have benefited greatly from their collective wisdom, insight and experience and wish them continued success." On March 6, 2006, the Company received a letter from Amex informing the Company that it was in noncompliance with certain Amex rules related to corporate governance. Specifically, the Amex letter cited the Company's failure to (i) have a majority of independent directors, (ii) maintain an Audit Committee with at least three independent directors, (iii) have at least one financially sophisticated director on the Audit Committee, (iv) have a Nominating Committee composed solely of independent directors and (v) maintain a Compensation Committee comprised solely of independent directors. The Company must submit a plan to the Amex no later than March 20 advising Amex of its plans to correct these corporate governance deficiencies. The Board of Directors of the Company met to consider these matters and has identified potential candidates to fill the vacancies resulting from the three resignations. While no assurances can be given that the Company will be successful in recruiting new independent directors, candidates are currently being interviewed. About AXM Pharma, Inc. AXM Pharma, Inc., through its wholly owned subsidiary, AXM Pharma Shenyang, Inc. ("AXM Shenyang"), is a manufacturer of proprietary and generic pharmaceutical products, which include injectables, capsules, tablets, liquids and medicated skin products for export and domestic Chinese sales. AXM Shenyang is located in the City of Shenyang, in the Province of Liaoning, China. AXM Shenyang has an operating history of approximately 10 years. For additional information on AXM Pharma Inc., please visit http://www.axmpharma.com. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this news release include certain predictions and projections that may be considered forward-looking statements under securities law, including the statements regarding the Company's opportunities for future growth. These statements involve a number of important risks and uncertainties that could cause actual results to differ materially including, but not limited to, the performance of joint venture partners, obtaining regulatory approvals to market the Company's products, the uncertainties associated with distributing products in a developing country such as China, the availability of cash to meet near term requirements as well as other economic, competitive and technological factors involving the Company's operations, markets, services, products and prices. With respect to AXM, except for the historical information contained herein, the matters discussed in this news release are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, but are not limited to, AXM's extremely limited operating history, uncertainties related to the Company's access to additional capital, competition and dependence on key management.