CHINA PHARMA HOLDINGS, INC.

Previous wording

Helpson has taken a more cautious and flexible attitude towards initiating and progressing any project for existing products’ consistency evaluation to cope with the changing macro environment of drug sales in China. In 2018, relevant Chinese authorities decided to implement trial Centralized Procurement (“CP”) activities in 11 selected pilot cities (including 4 municipalities and 7 other cities), since then, nine rounds of CP activities have been carried out as of November 13, 2024, which significantly reduced the price of the drugs that won the bids. In addition, the consistency evaluation has been adopted as one of the qualification standards for participating in the CP activities. As a result, Helpson needs to balance between the market access brought by CP, the investment of financial resources and time to obtain the qualification of CP, and the sharp decline in the price of drugs included in CP before making decisions regarding CP for any products.

Current wording

Helpson has taken a more cautious and flexible attitude towards initiating and progressing any project for existing products’ consistency evaluation to cope with the changing macro environment of drug sales in China. In 2018, relevant Chinese authorities decided to implement trial Centralized Procurement (“CP”) activities in 11 selected pilot cities (including 4 municipalities and 7 other cities), since then, ten rounds of CP activities have been carried out as of August 7, 2025, which significantly reduced the price of the drugs that won the bids. In addition, the consistency evaluation has been adopted as one of the qualification standards for participating in the CP activities. As a result, Helpson needs to balance between the market access brought by CP, the investment of financial resources and time to obtain the qualification of CP, and the sharp decline in the price of drugs included in CP before making decisions regarding CP for any products.

Previous wording

The most significant revenue decrease in terms of dollar amount was in the “Anti-Viral/ Infection & Respiratory” category. It generated $0.72million for the three months ended March 31, 2025, compared to $0.93 million for the three months ended March 31, 2024, which represented a decrease of $0.21million. This decrease was mainly due to the decrease in sales of the Roxithromycin Dispersible Tablet due to market fluctuation.

Current wording

The most significant revenue increase in terms of dollar amount was in the “Anti-Viral/ Infection & Respiratory” category. It generated $0.53million for the three months ended June 30, 2025, compared to $0.48 million for the three months ended June 30, 2024, which represented an increase of $0.05million. This increase was mainly due to the increase in sales of the Clarithromycin due to market fluctuation.

Previous wording

Our “CNS Cerebral & Cardio Vascular” product category generated $0.34 million in sales revenue for the three months ended March 31, 2025, compared to $0.32 million for the same period last year, which represented an increase of $0.02million. This increase was mainly due to the increase in sales of Alginic Sodium Diester Injection due to market fluctuation.

Current wording

Our “CNS Cerebral & Cardio Vascular” product category generated $0.42 million in sales revenue for the three months ended June 30, 2025, compared to $0.37 million for the same period last year, which represented an increase of $0.05 million. This increase was mainly due to the increase in sales of Alginic Sodium Diester Injection due to market fluctuation.

Previous wording

“Digestive” product category generated $0.06million in sales revenue for the three months ended March 31, 2025, compared to $0.04million for the same period last year, which represented an increase of $0.02 million. This increase was mainly due to the increase in sales of Omeprazole due to market volatility.

Current wording

“Digestive” product category generated $0.06 million in sales revenue for the three months ended June 30, 2025, compared to $0.04 million for the same period last year, which represented an increase of $0.02 million. This increase was mainly due to the increase in sales of Omeprazole due to market volatility.

Previous wording

The “Other” product category generated $0.02 million for the three months ended March 31, 2025, compared to $0.08 million for the three months ended March 31, 2024, which represented a decrease of $0.06 million. This decrease was mainly due to the decrease in sales of the Vitamin B6 for Injection due to market fluctuation.

Current wording

The “Other” product category generated $0.02 million for the three months ended June 30, 2025, compared to $0.03 million for the three months ended June 30, 2024, which represented a decrease of $0.01 million. This decrease was mainly due to the decrease in sales of the Vitamin B6 for Injection due to market fluctuation.

Previous wording

For the three months ended March 31, 2025, revenue breakdown by product category experienced certain variances compared with that of the prior year. Sales in the “Anti-Viral/Infection & Respiratory” product category represented 63.4% and 54.4% of total sales in the three months ended March 31, 2025 and 2024, respectively. The “CNS Cerebral & Cardio Vascular” category represented 29.9% of total revenue for the three months ended March 31, 2025, compared to23.9% for the three months ended March 31, 2024. The “Digestive Diseases” category represented 5.0% and 14.6% of total revenue for the three months ended March 31, 2025 and 2024, respectively. The “Other” category represented1.7% and 7.1% of revenues for the three months ended March 31, 2025 and 2024, respectively.

Current wording

For the three months ended June 30, 2025, revenue breakdown by product category experienced certain variances compared with that of the prior year. Sales in the “Anti-Viral/Infection & Respiratory” product category represented 52% of total sales in each of the three months ended June 30, 2025 and 2024, respectively. The “CNS Cerebral & Cardio Vascular” category represented 40% of total revenue for the three months ended June 30, 2025, compared to 41% for the three months ended June 30, 2024. The “Digestive Diseases” category represented 6% and 4% of total revenue for the three months ended June 30, 2025 and 2024, respectively. The “Other” category represented 2% and 3% of revenues for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

For the three months ended March 31, 2025, our cost of revenue was $1.27 million, or 112.0% of total revenue, which represented a decrease of $0.39 million from $1.66 million, or 121.2% of total revenue, in the same period of 2024. The decrease in cost of revenues in the twelve months ended December 31, 2024 was mainly due to the decrease in revenue.

Current wording

For the three months ended June 30, 2025, our cost of revenue was $1.11 million, or 108.5% of total revenue, which represented a decrease of $0.83 million from $1.94 million, or 209.8% of total revenue, in the same period of 2024. The decrease in cost of revenues in the three months ended June 30, 2025 was mainly due to the decrease in amortization of our PP&E.

Previous wording

Gross loss for the three months ended March 31, 2025 was $0.14 million, compared to $0.29million for the three months ended March 31, 2024. Our gross loss margin for the three months ended March 31, 2025 was 12.0%, compared to 21.2% for the three months ended March 31, 2024.The main reasons for the decrease in the gross loss rate were: some of our machinery and equipment have reached their accounting useful life and all the depreciation has been accrued. As a result, the product cost has decreased.

Current wording

Gross loss for the three months ended June 30, 2025 was $0.09 million, compared to $1.02 million for the three months ended June 30, 2024. Our gross loss margin for the three months ended June 30, 2025 was 8.5%, compared to 109.8% for the three months ended June 30, 2024. The main reasons for the improvement in the gross loss rate were: the decrease in amortization of our PP&E and the decrease in the allowance of inventory obsolescence.

Previous wording

Our selling expenses for the three months ended March 31, 2025 were $0.09million, a decrease of $0.02million compared to $0.11million for the three months ended March 31, 2024. Selling expenses accounted for 7.7% of the total revenue for the three months ended March 31, 2025 compared to 7.9% for the three months ended March 31, 2024. Because of the adjustments in the sales practices and Chinese national CP, we reduced selling expenses to efficiently support the sales and the collection of accounts receivable, especially in the context of the increasing impact of CP, like other players in the industry, we have reduced the promotion expenses.

Current wording

Our selling expenses for the three months ended June 30, 2025 were $0.10 million, a decrease of $0.01 million compared to $0.11 million for the three months ended June 30, 2024. Selling expenses accounted for 9.9% of the total revenue for the three months ended June 30, 2025 compared to 12.0% for the three months ended June 30, 2024. Because of the adjustments in the sales practices and Chinese national CP, we reduced selling expenses to efficiently support the sales and the collection of accounts receivable, especially in the context of the increasing impact of CP, like other players in the industry, we have reduced the promotion expenses.

Previous wording

Our general and administrative expenses for the three months ended March 31, 2025were $0.51 million, an increase of $0.02 million compared to $0.49 million for the three months ended March 31, 2024. General and administrative expenses accounted for 44.6% and 35.7% of our total revenues for the three months ended March 31, 2025 and 2024, respectively. Reason for this increase was mainly due to the increased amortization of intangible asset.

Current wording

Our general and administrative expenses for the three months ended June 30, 2025 were $0.44 million, an increase of $0.35 million compared to $0.09 million for the three months ended June 30, 2024. General and administrative expenses accounted for 43.0% and 9.9% of our total revenues for the three months ended June 30, 2025 and 2024, respectively. Reason for this increase was mainly due to the increased amortization of intangible asset.

Previous wording

The amount of net accounts receivable that was past due (or the amount of accounts receivable that was more than 180 days old) was $0.07 million and $0.06 million as of March 31, 2025 and December 31, 2024, respectively.

Current wording

The amount of net accounts receivable that was past due (or the amount of accounts receivable that was more than 180 days old) was $0.08 million and $0.06 million as of June 30, 2025 and December 31, 2024, respectively.

Previous wording

The following table illustrates our trade accounts receivable aging distribution in terms of the percentage of the total accounts receivable, respective gross accounts receivables as well as the allocated allowance for credit losses as of March31, 2025and 2024:

Current wording

The following table illustrates our trade accounts receivable aging distribution in terms of the percentage of the total accounts receivable, respective gross accounts receivables as well as the allocated allowance for credit losses as of June 30, 2025 and 2024:

Previous wording

Our allowance for credit losses as a percentage of accounts receivable of trade accounts receivable was 97.6% and 98.3% as of March31, 2025 and December 31, 2024, respectively.

Current wording

Our allowance for credit losses as a percentage of accounts receivable of trade accounts receivable was 98.1% and 98.3% as of June 30, 2025 and December 31, 2024, respectively.

Previous wording

We recognize credit losses per actual write-offs as well as changes of allowance for credit losses. To the extent that our current allowance for credit losses is higher than that of the previous period, we recognize a bad debt expense for the difference during the current period, and when the current allowance is lower than that of the previous period, we recognize a credit gains for the difference. The allowance for credit losses balances were $13.6million as of March 31, 2025 and $13.9million as of December 31, 2024, respectively. The changes in the allowances for credit losses of trade accounts receivable during the three months ended March 31, 2025 and 2024 were as follows:

Current wording

We recognize credit losses per actual write-offs as well as changes of allowance for credit losses. To the extent that our current allowance for credit losses is higher than that of the previous period, we recognize a bad debt expense for the difference during the current period, and when the current allowance is lower than that of the previous period, we recognize a credit gains for the difference. The allowance for credit losses balances were $13.6 million as of June 30, 2025 and $13.9 million as of December 31, 2024, respectively. The changes in the allowances for credit losses of trade accounts receivable during the six months ended June 30, 2025 and 2024 were as follows:

Previous wording

Our operating loss for the three months ended March 31, 2025 was $0.76 million, compared to $0.92 million in the same period in 2024.

Current wording

Our operating loss for the three months ended June 30, 2025 was $0.65 million, compared to $1.39 million in the same period in 2024.

Previous wording

Net loss for the three months ended March 31, 2025 was $0.79 million, compared to net loss of $0.96 million for the three months ended March 31, 2024. The decrease in net loss was mainly a result of the decline in cost.

Current wording

Net loss for the three months ended June 30, 2025 was $0.53 million, compared to net loss of $1.44 million for the three months ended June 30, 2024. The improvement in net loss was mainly a result of the decline in cost.

Previous wording

Loss per basic and diluted common share was $0.24 for the three months ended March 31, 2025 and $0.72 for the three months ended March 31, 2024, respectively.

Current wording

Loss per basic and diluted common share was $0.16 for the three months ended June 30, 2025 and $0.89 for the three months ended June 30, 2024, respectively.

Previous wording

The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 3,261,911 for the three months ended March 31, 2025, as compared to 1,333,059 for the same period in 2024.

Current wording

The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 3,261,911 for the three months ended June 30, 2025, as compared to 1,612,426 for the same period in 2024.

Previous wording

Our principal source of liquidity is cash generated from operations and bank lines of credit. Currently the Company has not witnessed or expected to encounter any difficulties to refinance those lines of credit this year. As of March 31, 2025, the aggregated advance from our CEO was $1.15 million for use in operations. Our cash and cash equivalents were $0.41million, representing 2.9% of our total assets, as of March 31, 2025, as compared to $0.63 million, representing 4.2% of our total assets as of March 31, 2024. All of the $0.41million of cash and cash equivalents as of March 31, 2025are considered to be reinvested indefinitely in the Company’s Chinese subsidiary, Helpson and are not expected to be available for payment of dividends or for other payments to its parent company or to its shareholders.

Current wording

Our principal source of liquidity is cash generated from operations and bank lines of credit. Currently the Company has not witnessed or expected to encounter any difficulties to refinance those lines of credit this year. As of June 30, 2025, the aggregated advance from our CEO was $1.40 million for use in operations. Our cash and cash equivalents were $0.63 million, representing 4.5% of our total assets, as of June 30, 2025, as compared to $0.63 million, representing 4.2% of our total assets as of December 31, 2024. All of the $0.63 million of cash and cash equivalents as of June 30, 2025 are considered to be reinvested indefinitely in the Company’s Chinese subsidiary, Helpson and are not expected to be available for payment of dividends or for other payments to its parent company or to its shareholders.

Previous wording

The Company obtained various lines of credit in details described under Note 8 to its audited consolidated financial statements contained in this report which is incorporated by reference herein.

Current wording

The Company obtained various lines of credit which details were described under Note 8 to its unaudited consolidated financial statements contained in this report which is incorporated by reference herein.

Previous wording

Net cash used in operating activities was $0.06 million in the three months ended March 31, 2025, compared to $0.59million in the same period in 2024.

Current wording

Net cash used in operating activities was $0.23 million in the six months ended June 30, 2025, compared to $0.66 million of net cash generated in the same period in 2024.

Previous wording

As of March 31, 2025, our net trade accounts receivable was $0.33 million, an increase of $0.10million from $0.23million as of December 31, 2024.

Current wording

As of June 30, 2025, our net trade accounts receivable was $0.27 million, an increase of $0.04 million from $0.23 million as of December 31, 2024.

Previous wording

As of March 31, 2025, total inventory was $1.98 million, compared to $2.27 million as of December 31, 2024.

Current wording

As of June 30, 2025, total inventory was $1.68 million, compared to $2.27 million as of December 31, 2024.

Previous wording

During the three months ended March 31, 2025, net cash used in investing activities was $0.08million. This was mainly due to the investment in purchasing of equipment, and the development of a medicine formula. And there was no investing activities for the three months ended March 31, 2024.

Current wording

During the six months ended June 30, 2025, net cash used in investing activities was $0.09 million. This was mainly due to the investment in purchasing of equipment, and the development of a medicine formula. And there was $0.03 million used in investing activities for the six months ended June 30, 2024.

Previous wording

Cash flow used by financing activities was $70,033 in the three months ended March 31, 2025; compared to $6,856 provided for the same period for the three months ended March 31, 2024.

Current wording

Cash flow used by financing activities was $0.09 million in the six months ended June 30, 2025; compared to $0.01 million provided in the same period in 2024.

Previous wording

According to relevant PRC laws, companies registered in the PRC, including our PRC subsidiary, Helpson, are required to allocate at least ten percent (10%) of their after-tax net income, as determined under the accounting standards and regulations in the PRC, to statutory surplus reserve accounts until the reserve account balances reach fifty percent (50%) of the companies’ registered capital prior to their remittance of funds out of the PRC. Allocations to these reserves and funds can only be used for specific purposes and are not transferrable to the parent company in the form of loans, advances or cash dividends. As of March 31, 2025 and December 31, 2024, Helpson’s net assets totaled ($6,785,000)and ($6,197,000), respectively. Due to the restriction on dividend distribution to overseas shareholders, the amount of Helpson’s net assets that was designated for general and statutory capital reserves, and thus could not be transferred to our parent company as cash dividends, was 50% of Helpson’s registered capital, which was both $8,145,000 as of March 31, 2025 and December 31, 2024, respectively. The amount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets at March 31, 2025 and December 31, 2024. There were no allocations to the statutory surplus reserve accounts during the three months ended March 31, 2025.

Current wording

According to relevant PRC laws, companies registered in the PRC, including our PRC subsidiary, Helpson, are required to allocate at least ten percent (10%) of their after-tax net income, as determined under the accounting standards and regulations in the PRC, to statutory surplus reserve accounts until the reserve account balances reach fifty percent (50%) of the companies’ registered capital prior to their remittance of funds out of the PRC. Allocations to these reserves and funds can only be used for specific purposes and are not transferrable to the parent company in the form of loans, advances or cash dividends. As of June 30, 2025 and December 31, 2024, Helpson’s net assets totaled ($7,187,000) and ($6,197,000), respectively. Due to the restriction on dividend distribution to overseas shareholders, the amount of Helpson’s net assets that was designated for general and statutory capital reserves, and thus could not be transferred to our parent company as cash dividends, was 50% of Helpson’s registered capital, which was both $8,145,000 as of June 30, 2025 and December 31, 2024, respectively. The amount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets as of June 30, 2025 and December 31, 2024. There were no allocations to the statutory surplus reserve accounts during the six months ended June 30, 2025.

Previous wording

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. The discussion of our critical accounting policies contained in Note 1 to our consolidated financial statements, “Organization and Significant Accounting Policies”, included in the Company’s annual report on Form 10-Q for the three months ended March 31, 2025, which is incorporated herein by reference.

Current wording

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. The discussion of our critical accounting policies contained in Note 1 to our consolidated financial statements, “Organization and Significant Accounting Policies”, included in the Company’s annual report on Form 10-Q for the six months ended June 30, 2025, which is incorporated herein by reference.