CHINA PHARMA HOLDINGS, INC.

Previous wording

China’s consistency evaluation of generic drugs continues to proceed for the year ended December 31, 2024. Helpson has always taken the task of promoting the consistency evaluation as a top priority, and worked on them actively. However, for each drug’s consistency evaluation, due to the continuous dynamic changes of the detailed consistency evaluation policies, market trends, expected investments, and expected returns of investment (“ROI”), the whole industry, including Helpson, has been making slow progresses in terms of the consistency evaluation. One of the flagship products, Candesartan tablets, a hypertension product, has passed generic-drug-consistency-evaluation in early August 2023.

Current wording

China’s consistency evaluation of generic drugs continues to proceed for the year ended December 31, 2025. Helpson has always taken the task of promoting consistency evaluation as a top priority and worked on them actively. However, for each drug’s consistency evaluation, due to the continuous dynamic changes of the detailed consistency evaluation policies, market trends, expected investments, and expected returns of investment (“ROI”), the whole industry, including Helpson, has been making slow progresses in terms of the consistency evaluation. One of the flagship products, Candesartan tablets, a hypertension product, passed generic-drug-consistency-evaluation in early August 2023.

Previous wording

In April 2024, Helpson began serving as a Contract Manufacturing Organization (CMO) for a project, undertaking its R&D and post-market commercial production. This initiative generated approximately $50,000 in revenue within the year. Under the contract terms, once the product is launched, the company will continue providing production services, further boosting sales revenue and ensuring sustained cash inflows. This project successfully completed process verification in January 2025 and is currently undergoing stability testing. Registration with the National Medical Products Administration (NMPA) is expected in the third quarter of 2025. Moving forward, we will leverage our competitive advantages as a CMO, including our highly skilled technical team, state-of-the-art facilities, multiple production lines, ample capacity, extensive manufacturing expertise, and a robust quality management system.

Current wording

In April 2024, Helpson began serving as a Contract Manufacturing Organization (CMO) for a project, undertaking its R&D and post-market commercial production. This initiative generated approximately $50,000 in revenue within the year. In 2025 this (CMO) project generated $33,227 in revenue .Under the contract terms, once the customer’s product is launched, the company will continue providing production services, further boosting sales revenue and ensuring sustained cash inflows. This project successfully completed process verification in January 2025 and is currently undergoing stability testing. Registration with the National Medical Products Administration (NMPA) has made in the third quarter of 2025. Moving forward, we will leverage our competitive advantages as a CMO, including our highly skilled technical team, state-of-the-art facilities, multiple production lines, ample capacity, extensive manufacturing expertise, and a robust quality management system.

Previous wording

Revenue was $4.5 million for the year ended December 31, 2024, which represented a decrease of $2.5 million, as compared to $7.0 million for the year ended December 31, 2023. This decline was mainly due to an increasing number of drugs from other medicine providers being included in national CP, while Helpson’s peer products have not passed consistency evaluation. As a result, they are not qualified to participate in CP, the resulting sales has decreased.

Current wording

Revenue was $4.1 million for the year ended December 31, 2025, which represented a decrease of $0.4 million, as compared to $4.5 million for the year ended December 31, 2024. This decline was mainly due to an increasing number of drugs from other medicine providers being included in national CP, while Helpson’s peer products have not passed consistency evaluation. As a result, they are not qualified to participate in CP, the resulting sales has decreased.

Previous wording

The “Anti-Viral/ Infection & Respiratory” product category generated $2.75 million for the year ended December 31, 2024, compared to $3.57 million for the year ended December 31, 2023, which represented a decrease of $0.82 million. This decrease was mainly due to a decrease in sales of Helpson not passing the consistency evaluation of Roxithromycin and therefore not being able to participate in CP.

Current wording

The most significant revenue decrease in terms of dollar amount was in the “Anti-Viral/ Infection & Respiratory” category. It generated $2.48 million for the year ended December 31, 2025, compared to $2.75 million for the year ended December 31, 2024, which represented a decrease of $0.27 million. This decrease was mainly due to the decrease in sales of the Cefaclor Dispersible Tablets due to a decrease in sales of Helpson not passing the consistency evaluation of Roxithromycin and therefore not being able to participate in CP.

Previous wording

Our “CNS Cerebral & Cardio Vascular” product category generated $1.35 million in sales revenue for the year ended December 31, 2024, compared to $1.62 million for the same period last year, which represented a decrease of $0.27 million. This decrease was mainly due to the decrease in sales of Ozagrel Sodium for Injection due to market fluctuation.

Current wording

The “CNS Cerebral & Cardio Vascular” product category generated $1.32 million for the year ended December 31, 2025, compared to $1.35 million for the year ended December 31, 2024, which represented a decrease of $0.03 million. This decrease was mainly due to a decrease in sales of Candesartan.

Previous wording

“Others” product category generated $0.18 million in sales revenue for the year ended December 31, 2024, compared to $0.73 million for the same period last year, which represented a decrease of $0.55 million. This decrease was mainly due to the decrease in sales of Vitamin B6 for Injection due to market volatility.

Current wording

“Others” product category generated $0.07 million in sales revenue for the year ended December 31, 2025, compared to $0.18 million for the same period last year, which represented a decrease of $0.11 million. This decrease was mainly due to the decrease in sales of Vitamin B6 for Injection due to market volatility.

Previous wording

For the year ended December 31, 2024, 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 61% and 51% of total sales in the years ended December 31, 2024 and 2023, respectively. The “CNS Cerebral & Cardio Vascular” category represented 30% of total revenue for the year ended December 31, 2024, compared to 23% for the year ended December 31, 2023. The “Digestive Diseases” category represented 4% and 16% of total revenue for the years ended December 31, 2024 and 2023, respectively. The “Other” category represented 4% and 10% of revenues for the years ended December 31, 2024 and 2023, respectively.

Current wording

For the year ended December 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 60% and 61% of total sales in the years ended December 31, 2025 and 2024, respectively. The “CNS Cerebral & Cardio Vascular” category represented 32% of total revenue for the year ended December 31, 2025, compared to 30% for the year ended December 31, 2024. The “Digestive Diseases” category represented 6% and 4% of total revenue for the years ended December 31, 2025 and 2024, respectively. The “Other” category represented 2% and 4% of revenues for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Notably, during the year ended December 31, 2024, the company generated an OEM income of $53,338, accounting for 1% of our total revenue.

Current wording

Notably, during the year ended December 31, 2025, the company generated an OEM income of $33,227, accounting for 1% of our total revenue, which was attributed from the service income from the service Helpson provided to Contract Manufacturing Organization (CMO) for a project, undertaking its R&D and post-market commercial production.

Previous wording

Gross loss for the year ended December 31, 2024 was $2.0 million, compared to $0.3 million for the year ended December 31, 2023. Our gross loss margin for the year ended December 31, 2024 was 43.8%, compared to 4.0% for the year ended December 31, 2023. The main reasons for the increase in the gross loss rate were: the rise in idle equipment costs of approximately $0.66 million, the increase in inventory impairment provisions of approximately $0.86 million, and the significant decline in product sales.

Current wording

Gross loss for the year ended December 31, 2025 was $0.1 million, compared to $2.0 million for the year ended December 31, 2024. Our gross loss margin for the year ended December 31, 2025 was 3.2%, compared to 43.8% for the year ended December 31, 2024. The decrease in the gross loss rate was primarily driven by lower depreciation, as certain property and equipment (“PP&E”) became fully depreciated in the fiscal year ended December 31, 2024, and a reduction in inventory obsolescence.

Previous wording

Our selling expenses for the year ended December 31, 2024 were $0.53 million, a decrease of $0.25 million compared to $0.78 million for the year ended December 31, 2023. Selling expenses accounted for 11.7% of the total revenue for the year ended December 31, 2024 compared to 11.1% for the year ended December 31, 2023. 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 year ended December 31, 2025 were $0.38 million, a decrease of $0.15 million compared to $0.53 million for the year ended December 31, 2024. Selling expenses accounted for 9.1% of the total revenue for the year ended December 31, 2025 compared to 11.7% for the year ended December 31, 2024. As a result of implementation of centralized volume-based procurement programs administered by the National Healthcare Security Administration, the Company has reduced traditional selling and promotional activities.

Previous wording

Our general and administrative expenses for the year ended December 31, 2024 were $1.78 million, an increase of $0.32 million compared to $1.47 million for the year ended December 31, 2023. General and administrative expenses accounted for 39.4% and 20.9% of our total revenues for the years ended December 31, 2024 and 2023, respectively. Reason for this increase was the amortization expenses related to the purchased patent technology in 2024.

Current wording

Our general and administrative expenses for the year ended December 31, 2025 were $2.45 million, an increase of $0.67 million compared to $1.78 million for the year ended December 31, 2024. General and administrative expenses accounted for 59.2% and 39.4% of our total revenues for the years ended December 31, 2025 and 2024, respectively. Reason for this increase was the increase of amortization expenses related to the purchased patent technology in 2025.

Previous wording

Our research and development expenses for the year ended December 31, 2024 was $0.28 million, compared to $0.24 million for the year ended December 31, 2023. Research and development expenses accounted for 6.3% and 3.4% of our total revenues for the years ended December 31, 2024 and 2023, respectively. These expenditures were mainly spent on the consistency evaluation of the existing products.

Current wording

Our research and development expenses for the year ended December 31, 2025 was $0.28 million, compared to $0.28 million for the year ended December 31, 2024. Research and development expenses accounted for 6.8% and 6.3% of our total revenues for the years ended December 31, 2025 and 2024, respectively. These expenditures were mainly spent on the consistency evaluation of the existing products.

Previous wording

Our allowance for credit losses for the year ended December 31, 2024 was $5,702, as compared to reversal of bad debt expense of $15,757 for the same period in 2023.

Current wording

For the year ended December 31, 2025, the Company recorded a reversal of bad debt expense of $1,018, compared to bad debt expense of $5,072 for the same period in 2024.

Previous wording

In general, our normal customer credit or payment terms are 90 days. This has not changed in recent years. Such relatively long credit term is due to the peculiar environment affecting the Chinese pharmaceutical market, as deferred payments by state-owned hospitals to local drug distributors are common, and their deferred payments will indirectly delay the payments from our customers to us. Due to the timeliness requirements of the NMPA for logistics of drug sales, Helpson, like most other pharmaceutical companies in China, sells substantially all the drugs to local drug distributors, certified by GSP (Good Supply Practice), the standard of products supply, which is a standard protocol to control the quality of the products during circulation. These GSP certified distributors then sell the drugs to state-owned hospitals. The GSP certified distributors’ payments to us are usually delayed as they will pay us after they receive payment from the state-owned hospitals. Therefore, as most of our customers are GSP certified distributors, we adopt a unified policy for bad debt allowance reserves for GMP’s customers who are typically GSP certified distributors. As is typical in the Chinese pharmaceutical market, there are no written contracts between the Company and any of its GSP certified distributors requesting the distributors to pay the Company’s account receivable upon their receipt of funds from the distributors’ customers, or state-owned hospitals. Nevertheless, the Company’s customers typically process the payment of the account receivable to the Company upon their receipt of payment from their customers, i.e., the state-owned hospitals, as a matter of implied consensus or industry standard. In the event the length of collection term is deviated from any of the past pattern of any particular customer, the Company will adjust its credit term.

Current wording

In general, our normal customer credit or payment terms are 90 days. This has not changed in recent years. Such relatively long credit term is due to the peculiar environment affecting the Chinese pharmaceutical market, as deferred payments by state-owned hospitals to local drug distributors are common, and their deferred payments will indirectly delay the payments from our customers to us. Due to the timeliness requirements of the NMPA for logistics of drug sales, Helpson, like most other pharmaceutical companies in China, sells substantially all the drugs to local drug distributors, certified by GSP (Good Supply Practice), the standard of products supply, which is a standard protocol to control the quality of the products during circulation. These GSP certified distributors then sell the drugs to state-owned hospitals. The GSP certified distributors’ payments to us are usually delayed as they will pay us after they receive payment from the state-owned hospitals. Therefore, as most of our customers are GSP certified distributors, we adopt a unified policy for bad debt allowance reserves for GMP’s customers who are typically GSP certified distributors. As is typical in the Chinese pharmaceutical market, there are no written contracts between the Company and any of its GSP certified distributors requesting the distributors to pay the Company’s account receivable upon their receipt of funds from the distributors’ customers, or state-owned hospitals. Nevertheless, the Company’s customers typically process the payment of the account receivable to the Company upon their receipt of payment from their customers, i.e., the state-owned hospitals, as a matter of implied consensus or industry standard. In the event the length of collection term is deviated from any of the past patterns of any particular customer, the Company will adjust its credit term.

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 $0.06 million and $0.01 million as of December 31, 2024 and 2023, 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 $0.06 million and $0.06 million as of December 31, 2025 and 2024, respectively.

Previous wording

Our allowance for credit losses estimate practice using the current expected credit loss method considers accounts receivable balances aged within 180 days current, except for any individual uncollectible account assessed by management. We account for the following respective percentage as credit loss allowance based on age of the accounts receivables: 10% of accounts receivable that are between 180 days and 365 days old, 70% of accounts receivable that are between 365 days and 720 days old, and 100% of accounts receivable that are greater than 720 days old.

Current wording

Our allowance for credit losses estimate practice using the current expected credit loss method considers accounts receivable balances aged within 180 days current, except for any individual uncollectible account assessed by management.

Previous wording

Our allowance for credit losses as a percentage of accounts receivable of trade accounts receivable was 98.3% and 96.5% as of December 31, 2024 and 2023, respectively.

Current wording

Our allowance for credit losses as a percentage of accounts receivable of trade accounts receivable was 5.1% and 98.3% as of December 31, 2025 and 2024, respectively. The decrease in the allowance rate was mainly due to the write-off of long-outstanding accounts receivable during 2025, which reduces both gross accounts receivable and the allowance for doubtful accounts by the same amount, and lowers the ratio of allowance for doubtful accounts to gross accounts receivable.

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 bad debt credit for the difference. The allowance for credit losses balances were $13.6 million and $13.8 million as of December 31, 2024 and December 31, 2023, respectively. The changes in the allowances for credit losses of trade accounts receivable during the years ended December 31, 2024 and 2023 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 bad debt credit for the difference. The allowance for credit losses balances was $0.01 million and $13.6 million as of December 31, 2025 and December 31, 2024, respectively. The changes in the allowances for credit losses of trade accounts receivable during the years ended December 31, 2025 and 2024 were as follows:

Previous wording

Our operating loss for the year ended December 31, 2024 was $4.59 million, compared to $2.75 million in 2023.

Current wording

Our operating loss for the year ended December 31, 2025 was $3.24 million, compared to $4.59 million in 2024.

Previous wording

Net interest expense was $0.15 million for the year ended December 31, 2024 and $0.33 million for the year ended December 31, 2023.

Current wording

Net interest expense was $0.10 million for the year ended December 31, 2025 and $0.15 million for the year ended December 31, 2024.

Previous wording

Net loss for the year ended December 31, 2024 was $4.74 million, compared to net loss of $3.08 million for the year ended December 31, 2023. The increase in net loss was mainly a result of the decline in expenses more than the decline in revenue.

Current wording

Net loss for the year ended December 31, 2025 was $3.19 million, compared to net loss of $4.74 million for the year ended December 31, 2024. The decrease in net loss was mainly a result of the decline in expenses more than the decline in revenue.

Previous wording

Loss per basic and diluted common share was $0.27 for the year ended December 31, 2024 and $0.91 for the year ended December 31, 2023, respectively.

Current wording

Loss per basic and diluted common share was $0.74 for the year ended December 31, 2025 and $2.71 for the year ended December 31, 2024, respectively.

Previous wording

The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 17,463,723 for 2024, as compared to 3,383,573 for 2023.

Current wording

The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 4,291,427 for 2025, as compared to 1,746,372 for 2024.

Previous wording

The change in weighted-average shares and per-share amounts reflects the impact of two reverse stock splits: a 1-for-10 split effective March 6, 2023, and a 1-for-5 split effective March 6, 2024. These splits reduced the number of outstanding shares, with all share and per-share amounts retroactively restated for all periods presented in the accompanying consolidated financial statements.

Current wording

The change in weighted-average shares and per-share amounts reflects the impact of three reverse stock splits: a 1-for-10 split effective March 6, 2023, and a 1-for-5 split effective March 6, 2024, and a 1-for 10 split effective April 15, 2025.These splits reduced the number of outstanding shares, with all share and per-share amounts retroactively restated for all periods presented in the accompanying consolidated financial statements.

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 December 31, 2024, the aggregated advance from our CEO was$1,144,985 for use in operations. Our cash and cash equivalents were $0.63 million, representing 4.2% of our total assets, as of December 31, 2024, as compared to $1.42 million, representing 8.6% of our total assets as of December 31, 2023. All of the $0.63 million of cash and cash equivalents as of December 31, 2024 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.

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 December 31, 2025, the aggregated advance from our CEO was $1,435,136 for use in operations. Our cash and cash equivalents were $0.35 million, representing 1.1% of our total assets, as of December 31, 2025, as compared to $0.63 million, representing 4.2% of our total assets as of December 31, 2024. All of the $0.35 million of cash and cash equivalents as of December 31, 2025 are considered to be reinvested indefinitely in the Company’s Chinese subsidiary, Helpson.

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 in detail described under Note 8 to its audited consolidated financial statements, which is included elsewhere in this annual report.

Previous wording

Net cash used in operating activities was $0.47million in the year ended December 31, 2024, compared to $0.70 million in the same period in 2023.

Current wording

Net cash provided by operating activities was $0.14 million for the year ended December 31, 2025, compared to net cash used in operating activities of $0.41 million in 2024.

Previous wording

As of December 31, 2024, our net trade accounts receivable was $0.23 million, a decrease of $0.27 million from $0.50 million as of December 31, 2023.

Current wording

As of December 31, 2025, our net trade accounts receivable was $0.24 million, an increase of $0.01 million from $0.23 million as of December 31, 2024.

Previous wording

As of December 31, 2024, total inventory was $2.27 million, compared to $3.73 million as of December 31, 2023.

Current wording

As of December 31, 2025, total inventory was $1.62 million, compared to $2.27 million as of December 31, 2024.

Previous wording

During the year ended December 31, 2024, net cash used in investing activities was $0.29 million, compared to $0.01 million for the year ended December 31, 2023. This was mainly due to the investment in the development of a medicine formula.

Current wording

During the year ended December 31, 2025, net cash used in investing activities was $0.14 million, compared to $0.29 million for the year ended December 31, 2024. This decease was mainly due to the lower investment in the development of a medicine formula.

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 December 31, 2024 and December 31, 2023, Helpson’s net assets totaled ($6,197,000) and ($5,273,000), 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 December 31, 2024 and December 31, 2023, respectively. The amount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets at December 31, 2024 and December 31, 2023. There were no allocations to the statutory surplus reserve accounts during the twelve months ended December 31, 2024.

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 December 31, 2025 and December 31, 2024, Helpson’s net assets totaled ($8,251,000) 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 December 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 as of December 31, 2025 and December 31, 2024. There were no allocations to the statutory surplus reserve accounts during the fiscal year ended December 31, 2025.