CHINA PHARMA HOLDINGS, INC.

YEARS ENDED DECEMBER 31, 2025 AND 2024

NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

***Organization and Nature of Operations –***China Pharma Holdings, Inc., a Nevada corporation (“China Pharma”), owns 100% of Onny Investment Limited (“Onny”), a British Virgin Islands corporation, which owns 100% of Hainan Helpson Medical & Biotechnology Co., Ltd (“Helpson”), a company organized under the laws of the People’s Republic of China (the “PRC”). China Pharma Holdings, Inc. and its subsidiaries are referred to herein as the Company.

Onny acquired 100% of the ownership in Helpson on May 25, 2005, by entering into an Equity Transfer Agreement with Helpson’s three former shareholders. The transaction was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for Establishment of Enterprises with Foreign Investment in the PRC on the same day. Helpson received its business license evidencing its Wholly Foreign Owned Enterprise (“WFOE”) status on June 21, 2005.

Helpson is principally engaged in the development, manufacture and marketing of pharmaceutical products for human use in connection with a variety of high-incidence and high-mortality diseases and medical conditions prevalent in the PRC. All of its operations are conducted in the PRC, where its manufacturing facilities are located. Helpson manufactures pharmaceutical products in the form of dry powder injectables, liquid injectables, tablets, capsules, and cephalosporin oral solutions. The majority of its pharmaceutical products are sold on a prescription basis and all have been approved for at least one or more therapeutic indications by the National Medical Products Administration (the “NMPA”, formerly China Food and Drug Administration, or CFDA) based upon demonstrated safety and efficacy.

Liquidity and Going Concern

As of December 31, 2025, the Company had cash and cash equivalents of $0.3 million and an accumulated deficit of $47.2 million and the Company’s current liabilities exceeded current assets by $5.1 million. In addition, the Company had incurred net losses of $3.2 million and had cash inflows from operating activities of $0.07 million for the year ended December 31, 2025. The Company’s Chairperson, Chief Executive Officer and Interim Chief Financial Officer Ms. Li has advanced an additional $0.26 million during fiscal year 2025 for an aggregate of $1,435,136 as of December 31, 2025 to provide working capital and enabled the Company to make the required payments related to its former construction loan facility and current lines of credit. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to the production of its existing products, debt service costs and selling and administrative costs. These conditions raise substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued. To alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, management plans to enhance the sales model of advance payment, and further strengthen its collection of accounts receivable. Further, the Company is currently exploring strategic alternatives to accelerate the launch of nutrition products. In addition, management believes that the Company’s existing property, plant and equipment can serve as collateral to support additional bank loans. The Company will implement multiple measures simultaneously across procurement, production, human resources, and marketing to reduce operating costs. In procurement, the Company will consolidate purchasing activities where practical to enhance bargaining power with suppliers. In production, operations will be optimized through approaches such as centralized manufacturing cycles and shifting energy-intensive processes to off-peak hours to reduce power costs. Production personnel will be deployed efficiently to minimize labor expenses while maintaining quality standards. In human resources, the Company will optimize staffing levels and implement targeted incentives to improve work efficiency and output quality, thereby controlling labor costs. Marketing expenditures will be focused on high-return channels through data-driven targeting and channel optimization. Additionally, the Company will enhance employee training in production techniques and cost management principles, fostering a culture of cost awareness throughout the organization. Management believes that, if successfully implemented, these measures may improve the Company’s cash position and allow the Company to fund its operations in the next twelve months, however, there can be no assurance that the Company will be able to fully execute the planned initiatives, achieve its strategic alternatives, and resolve the conditions raising substantial doubt about its ability to continue as a going concern.

Pursuant to the requirements of Accounting Standards Codification (ASC) 205-40,Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Under ASC 205-40, the strategic alternatives being pursued by the Company cannot be considered probable at this time because none of the Company’s current plans have been finalized at the time of the issuance of these financial statements and the implementation of any such plan is not probable of being effectively implemented as none of the plans are entirely within the Company’s control. Accordingly, substantial doubt is deemed to exist about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

Reverse Stock Splits– Effective April 15, 2025, China Pharma implemented a 1-for -10 reverse stock split. Effective March 6, 2024, the Company implemented a 1-for-5 reverse split of its common stock. All share and per share disclosures have been retroactively restated to reflect the impact of the reverse stock split. The reverse stock splits are more fully discussed in Note 13.*** ***

Consolidation and Basis of Presentation– The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are expressed in United States dollars. The accompanying consolidated financial statements include the accounts and operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidation.

Helpson’s functional currency is the Chinese Renminbi. Helpson’s revenue and expenses are translated into United States dollars at the average exchange rate for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses from translating Helpson’s financial statements are included in accumulated other comprehensive income, which is a component of stockholders’ equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity that is party to the transaction are included in the results of operations.

**Accounting Estimates-**The methodology used to prepare the Company’s financial statements is in conformity with U.S. GAAP, which requires the management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Therefore, actual results could differ from those estimates.

Cash and Cash Equivalents– Cash and cash equivalents include interest bearing and non-interest bearing bank deposits, money market accounts, and short-term banker’s acceptances notes purchased with maturities of three months or less.

***Trade Accounts Receivable and Allowance for Doubtful Accounts –***Trade accounts receivables are carried at the original invoiced amounts less an allowance for credit losses. The allowances for credit losses are calculated based on the current expected credit losses model based on a detailed review of certain individual customer accounts and an estimation of the overall economic conditions affecting the Company’s customer base. The Company reviews a customer’s credit history before extending credit to the customer. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additions to the allowance would be required. A provision is made against accounts receivable to the extent they are considered unlikely to be collected. (Reversal) Charges to credit losses totaled ($4,029) and $5,072 for the years ended December 31, 2025 and 2024, respectively.

Trade accounts receivable that have been fully allowed for and determined to be uncollectible are charged against the allowance in the period the determination is made. The Company charged off uncollectible trade accounts receivable balances in the amount of $13,878,582 and $0 against the allowance for the years ended December 31, 2025 and 2024, respectively. Customer balances outstanding for more than one year are allowed for at a greater rate than more current balances when calculating the allowance for doubtful accounts.

Advances to Suppliers and Contract Liabilities – Common practice in the PRC is to make advances to suppliers for materials and to incur contract liabilities when advances from customers for finished products are received. Advances to suppliers are applied to trade accounts payable when the materials are received. Contract liabilities incurred when advances received from customers are applied against trade accounts receivable when finished products are sold. The Company reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would recognize bad debt expense in the period they are considered unlikely to be collected.

***Inventory –***Inventory consists of raw materials, work in process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using a weighted average. For work in process and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company’s production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future demand and market conditions. For finished goods and work in process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped. A total of $549,218 and $450,738 was written off during the years ended December 31, 2025 and 2024, respectively.

Accounts and other payables – Accounts and other payables represent liabilities for goods, accrued payroll and loans. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they are presented as non-current liabilities.

***Lines of Credit and Interest –***The Company records lines of credit or other loans at the principal amount received. Interest is accrued using the effective interest method over the term of the related borrowing.

***Leases –***At lease commencement, the Company records a lease liability based on the present value of lease payments over the expected lease term including any options to extend the lease that the Company is reasonably certain to exercise. The Company calculates the present value of lease payments using an incremental borrowing rate as the Company’s leases do not provide an implicit interest rate. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. At the lease commencement date, the Company records a corresponding right-of-use lease asset based on the lease liability, adjusted for any lease incentives received and any initial direct costs paid to the lessor prior to the lease commencement date. The Company may enter into leases with an initial term of 12 months or less (“Short-Term Leases”). For any Short-Term Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the balance sheet.

After lease commencement, the Company measures its leases as follows: (i) the lease liability based on the present value of the remaining lease payments using the discount rate determined at lease commencement and (ii) the right-of-use lease asset based on the remeasured lease liability, adjusted for any unamortized lease incentives received, any unamortized initial direct costs and the cumulative difference between rent expense and amounts paid under the lease agreement. Any lease incentives received and any initial direct costs are amortized on a straight-line basis over the expected lease term. Rent expense is recorded on a straight-line basis over the expected lease term.

Valuation of Long-Lived Assets – The carrying values of long-lived assets are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying values may not be recoverable. When such an event occurs, the Company projects the undiscounted cash flows to be generated from the use of the asset and its eventual disposition over the remaining life of the asset. If projections indicate that the carrying value of an asset will not be recovered, it is reduced by the estimated excess of the carrying value over the projected discounted cash flows estimated to be generated by the asset. If there is uncertainty both in timing and amount, the Company will use the projected discounted cash flows to be generated by the asset. For the years ended December 31, 2025 and 2024, the Company evaluated its long-lived assets and determined that no impairment adjustments were necessary.

Property, Plant and Equipment – Property, plant and equipment are stated at cost. Maintenance and repairs are charged to expenses as incurred and major improvements are capitalized. Gains or losses on sale, trade-in or retirement are included in operations during the period of disposition. Depreciation relating to office equipment was included in general and administrative expenses, while all other depreciation was included in cost of revenue.

Intangible assets, net– Intangible assets are NMPA approved medical formulas, Technology from Bonier and Invention Patents which are recorded at cost less accumulated amortization. Intangible assets are amortized using the straight-line basis over the following estimated useful lives:

Revenue Recognition – Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company does not disaggregate its revenue streams as the economic factors underlying the contracts are similar and provide no significant distinction. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company’s contracts are fixed price and reflect standalone pricing for each item. Due to the nature of the products sold, there are no returns. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon buyer’s designated carrier or the buyer picks up the goods at the Company’s warehouse.

For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adoption rules. The Company has received advance deposits for orders less than one year. These advances total $111,580 and $162,208 and are recorded as a liability on the accompanying balance sheet as “Contract liabilities” as of December 31, 2025 and 2024, respectively.

Cost of Revenues – Cost of revenues includes wages, materials, depreciation, handling charges, and other expenses associated with the manufacture and delivery of products.

Research and Development – Research and development expenditures are recorded as expenses in the period in which they occur.

Credit Risk – The carrying amount of accounts receivable included in the balance sheet represents the Company’s exposure to credit risk in relation to its financial assets. No other financial asset carries a significant exposure to credit risk. The Company performs ongoing credit evaluations of each customer’s financial condition. The Company maintains allowances for doubtful accounts and such allowances in aggregate have not exceeded management’s estimates.

The Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors’ interests. The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. Company bank accounts in China are not subject to a certain insurance coverage and will follow the provisions set forth in the PRC Bankruptcy Law should any bank where the Company has accounts declare bankruptcy.

Interest Rate Risk – The Company is exposed to the risk arising from changing interest rates, which may affect the ability of repayment of existing debts and viability of securing future debt instruments within the PRC.

**Loss Per Share -**Basic loss per share is calculated by dividing loss available to common stockholders by the weighted-average number of shares of common stock outstanding, excluding unvested stock. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common shares, including unvested stock, had been issued and if the additional common shares were dilutive.

As of December 31, 2025, the Company has potentially dilutive common shares related to the option to purchase 13,300 shares of common stock is excluded from the computation of diluted net loss per share for all periods presented because the effect is anti-dilutive due to net losses of the Company.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. The amendments in this ASU are intended to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. For interim and annual reporting periods, an entity shall disaggregate, in a tabular format disclosure in the notes to financial statements, all relevant expense captions presented on the face of the income statement in continuing operations into the purchases of inventory, employee compensation, depreciation, amortization, and depletion. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this Update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements. In January 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-01 — Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This ASU amends the effective date of Update 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. We are currently evaluating the impact the adoption of ASU 2024-03 will have on its consolidated financial statements and related disclosures. We do not expect the adoption of this accounting standard to have an impact on our Consolidated Financial Statements but will require certain additional disclosures.

In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. The ASU provides additional guidance on whether induced conversion or extinguishment accounting should be applied to certain settlements of convertible debt instruments that do not occur in accordance with the instruments’ preexisting terms. The ASU requires entities to apply a preexisting contract approach. To qualify for induced conversion accounting under this approach, the inducement offer is required to preserve the form of consideration and result in an amount of consideration that is no less than that issuable pursuant to the preexisting conversion privileges. ASU 2024-04 clarifies how entities should assess the form and amount of consideration when applying this approach. In addition, the new ASU clarifies that induced conversion accounting can be applied to settlements of certain convertible debt instruments that are not currently convertible as long as the instrument contained a substantive conversion feature as of both its issuance date and the inducement offer acceptance date. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are currently evaluating the impact the adoption of ASU 2024-04 will have on its consolidated financial statements and related disclosures.

In January 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-01 — Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This ASU amends the effective date of Update 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact the adoption of ASU 2025-01 will have on its consolidated financial statements and related disclosures.

From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption.

NOTE 2 – ACCOUNTS RECEIVABLE, NET

Accounts receivable, net, consist of the following:

The allowance for credit losses balances were $0.01 million and $13.59 million as of December 31, 2025 and December 31, 2024, respectively. The changes in the allowances for credit losses during the years ended December 31, 2025 and 2024 were as follows:

NOTE 3 – INVENTORIES

Inventories consisted of the following:

Changes to the provision for obsolescence consisted of the following:

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Depreciation relating to office equipment was included in general and administrative expenses, while all other depreciation was included in cost of revenue. Depreciation expense was $652,026 and $2,170,820 for the years ended December 31, 2025 and 2024, respectively.

NOTE 5 – INTANGIBLE ASSETS

Intangible assets represent the cost of medical formulas approved for production by the NMPA, the intellectual property acquired from Chengdu Bonier Medical Technology Development Co., Ltd. through certain Technology Transfer Agreement (“Bonier Agreement”) and the invention patents and intellectual property acquired pursuant to Technology Transfer Agreements. No costs were reclassified from advances to intangible assets during the years ended December 31, 2025 and 2024, respectively.

On December 22, 2025, the Company entered into a Technology Transfer Agreement (the “Zhang Agreement”) with Juan Zhang (“Transferor Zhang”). Transferor Zhang owns an invention patent of an Ipragliflozin tablets and Method for Its Preparation. Pursuant to the Agreement, Transferor Zhang will transfer the ownership of the patent to Helpson. Transferor Zhang or its designated third party shall provide relevant technical services, which include but are not limited to product research and development, writing of registration materials, registration application and other technical services.

The aggregate transfer price as contemplated by the Zhang Agreement is $9.66 million which was paid to the Transferor and his four designees upon the issuance of 7,000,000 shares of common stock of the Company at $1.38 per share based on the closing market price of the Company’s common stock on the acquisition date of the intangible asset. The Company recorded the amount as intangible assets on the accompanying balance sheet as of the closing date.

On December 4, 2025, the Company entered into a Technology Transfer Agreement the (“Lijie Tang Agreement”) with Lijie Tang (“Transferor Tang”) Transferor Tang owns an invention patent of a Captopril microcapsule and Method for Its Preparation. The seller or its designated third party shall provide relevant technical services, which include but are not limited to product research and development, writing of registration materials, registration application and other technical services.

The aggregate transfer price as contemplated by the Lijie Tang Agreement Agreement is $5.81 million which was paid to the Transferor upon the issuance of 3,500,000 shares of common stock of the Company at $1.66 per share based on the closing market price of the Company’s common stock on the acquisition date of the intangible asset. The Company recorded the amount as intangible assets on the accompanying balance sheet as of the closing date.

On August 29, 2025, the Company entered into a Technology Transfer Agreement (the “Yan Yang Agreement”) with Yan Yang (“Transferor Yang”). Transferor Yang owns an Apremilast Vector and method for its preparation, which has obtained a patent for the treatment of chronic obstructive pulmonary disease (the “Liu Invention Patent”). Pursuant to the Tao Liu Agreement, Transferor Yang will transfer the ownership of the Yang Invention Patent to Helpson. Transferor Yang or his designated third party shall provide relevant technical services in Haikou, which include but are not limited to product research and development, writing of registration materials, registration application and other technical services.

The aggregate transfer price as contemplated by the Yan Yang Agreement is $2.446 million which was paid to the Transferor and his two designees upon the issuance of 1,760,000 shares of common stock of the Company at $1.39 per share based on the closing market price of the Company’s common stock as of the closing date. The Company recorded the amount as intangible assets on the accompanying balance sheet on the acquisition date of the intangible asset. The value of the intangible asset will be amortized over its remaining useful life of approximately 15.5 years.

On November 22, 2024, Helpson entered into a Technology Transfer Agreement (the “Li Yong Agreement”) with Li Yong (“Transferor Yong”). Transferor Yong owns an invention patent of a pharmaceutical composition for treatment of psoriatic arthritis and moderate to severe plaque psoriasis (the “Yong Invention Patent”). Pursuant to the Li Yong Agreement, Transferor Yong will transfer the ownership of the Yong Invention Patent to Helpson.

The aggregate transfer price as contemplated by the Agreement is $580,000 which was paid to the Transferor and his two designees upon the issuance of 2,900,000 shares of common stock of the Company at $0.20 per share based on the closing market price of the Company’s common stock as of the closing date of December 2, 2024. The Company recorded the amount as intangible assets on the accompanying balance sheet as of the closing date.

On November 22, 2024, Helpson entered into a Technology Transfer Agreement (the “Zhao Xijun Agreement”) with Zhao Xijun (“Transferor Xijun”). Transferor Xijun owns an invention patent of a riboflavin stomach floating tablet and a preparation method thereof (the “Xijun Invention Patent”). Pursuant to the Li Yong Agreement, Transferor Yong will transfer the ownership of the Xijun Invention Patent to Helpson and provide relevant technical services.

The aggregate transfer price as contemplated by the Agreement is $580,000 which was paid to the Transferor and his two designees upon the issuance of 2,900,000 shares of common stock of the Company at $0.20 per share based on the closing market price of the Company’s common stock as of the closing date of December 2, 2024. The Company recorded the amount as intangible assets on the accompanying balance sheet as of the closing date.

On November 22, 2024, Helpson entered into a Technology Transfer Agreement (the “Zhao Chunhai Agreement”) with Zhao Chunhai (“Transferor Chunhai”). Transferor Chunhai owns an invention patent of a pharmaceutical composition for the treatment of gray nail (the “Chunhai Invention Patent”). Pursuant to the Zhao Chunhai Agreement, Transferor Chunhai will transfer the ownership of the Chunhai Invention Patent to Helpson and provide relevant technical services.

The aggregate transfer price as contemplated by the Agreement is $600,000 which was paid to the Transferor and his two designees upon the issuance of 3,000,000 shares of common stock of the Company at $0.20 per share based on the closing market price of the Company’s common stock as of the closing date of December 2, 2024. The Company recorded the amount as intangible assets on the accompanying balance sheet as of the closing date.

On November 22, 2024, Helpson entered into a Technology Transfer Agreement (the “Du Pingping Agreement”) with Du Pingping (“Transferor Pingping”). Transferor Pingping owns an invention patent drug composition of ansetropisimvastatin (the “Pingping Invention Patent”). Pursuant to the Du Pingping Agreement, Transferor Pingping will transfer the ownership of the Pingping Invention Patent to Helpson and provide relevant technical services.

The aggregate transfer price as contemplated by the Agreement is $570,000 which was paid to the Transferor and his two designees upon the issuance of 2,850,000 shares of common stock of the Company at $0.20 per share based on the closing market price of the Company’s common stock as of the closing date of December 2, 2024. The Company recorded the amount as intangible assets on the accompanying balance sheet as of the closing date.

On February 2, 2024, Helpson entered into a Technology Transfer Agreement (the “Lihua Li Agreement”) with Lihua Li (“Transferor Li”). Transferor Li owns an invention patent of a pharmaceutical composition for treatment of psoriasis (the “Li Invention Patent”). Pursuant to the Lihua Li Agreement, Transferor Li will transfer the ownership of the Li Invention Patent to Helpson. Transferor Li or his designated third party shall provide relevant technical services in Haikou, which include but are not limited to product research and development, writing of registration materials, registration application.

The aggregate transfer price as contemplated by the Agreement is $1.365 million which was paid to the Transferor and his two designees upon the issuance of 3,000,000 shares of common stock of the Company at $0.455 per share based on the closing market price of the Company’s common stock as of the closing date. The Company recorded the amount as intangible assets on the accompanying balance sheet as of the closing date. The value of the intangible asset will be amortized over its remaining useful life of approximately 20 years. During the ten years after the product launches to the market, if and only if the product generates profit, Helpson shall pay 10% of the net profit of the sales in cash on an annual basis to Transferor Li.

There wereno service fees or profit payments paid related to the Bonier Agreement or the Technology Transfer Agreements from 2025 and 2024 for the years ended December 31, 2025 and 2024, respectively.

Approved medical formulas are amortized from the date NMPA approval is obtained over their individually identifiable estimated useful life, which range fromten tothirteen years. It is at least reasonably possible that a change in the estimated useful lives of the medical formulas could occur in the near term due to changes in the demand for the drugs and medicines produced from these medical formulas. Amortization expense relating to intangible assets was $851,609 and $447,246 for the years ended December 31, 2025 and 2024 which was included in the general and administrative expenses. Medical formulas typically do not have a residual value at the end of their amortization period.

Intangible assets consisted of NMPA approved medical formulas, a Utility Model Patent and eight Invention Patents as follows:

The estimated aggregate annual amortization expense for each of the next five years and thereafter is as follows:

Amortization expenses for the years ended December 31, 2025 and 2024 were $851,611 and $447,244, respectively.

NOTE 6 – OTHER PAYABLES

Other Payables consisted of the following:

NOTE 7 – RELATED PARTY TRANSACTIONS

The Company had previously received advances from its Chairperson Li. Total amounts owed to her were $1,435,136 and $1,144,985 and are recorded as “Borrowings from related parties” on the accompanying condensed consolidated balance sheets as of December 31, 2025 and December 31, 2024, respectively. Chairperson Li has advanced an additional $0.25 million during the year ended December 31, 2025 to provide working capital and enabled the Company to make the required payments related to its current lines of credit. In June, 2025 Chunming Dong, the husband of Chairperson Li, advanced RMB 1,000,000 ($142,272) to the Company for working capital. The advance was interest free until December 31, 2025 and effective January 1, 2026 bears interest at an annual rate of 3.3 %. On June 20, 2025, the Company borrowed RMB 1,750,000 (US$248,973) from Chairperson Li. No interest shall be charged if the loan is repaid in full by December 31, 2025. An annual interest rate of 3.3% shall apply to the unpaid principal from January 1, 2026, and the loan shall be payable withinone year of the loan agreement. On July 8, 2019 the Company entered into a loan agreement in exchange for cash of RMB 4,770,000 ($738,379) with its Chairperson Li. The loan bears interest at a rate of 4.35% and was payable withinone year of the loan agreement. The due date of the loan agreement has been extended annually on identical terms, and is currently due on July 9, 2026. Total interest expense related to the loan for the years ended December 31, 2025 and 2024 was $27,272 and $27,353, respectively. Compensation payable to the Chairperson Li is included in “Other payables” in the accompanying condensed consolidated balance sheet totaling $1,875,506 and $1,559,506 as of December 31, 2025 and 2024, respectively.

NOTE 8 – LINES OF CREDIT

On February 24, 2023 the Company received an advance on the line in the amount of RMB 3,500,000 (approximately $0.51 million). The Company has no further availability on this line of credit. The line of credit was paid in full on December 15, 2023, five days before the due date of December 20, 2023. On December 20, 2023, the Company received a new line of credit in the amount of RMB 3,800,000 with an interest rate of 3.9% and is due December 15, 2024. The loan was fully paid on November 7, 2024. The loan was obtained on identical terms and an advance was made in the amount of RMB 3,800,000 on November 11, 2024 with the balance maturing on June 21, 2025. On December 21, 2024, the Company entered into a new line of credit in the amount of RMB 3,500,000 with an interest rate of 3.9% and is due on June 22, 2025. On December 2, 2024 the Company renewed the line on identical terms. The RMB 3,500,000 was advanced on the same date, with the due date of the loan maturing on June 21, 2025. On June 17, 2025, the Company repaid the loan balances of RMB 7,300,000 (approximately $1.0 million). On June 25, 2025 the Company obtained a new line of credit facility in the amount of RMB 5,000,000 and received proceeds of RMB 5,000,000 (approximately $0.7 million). The new facility has an interest rate of 3.6%. The loan is due on June 20, 2026In addition, the Company’s Chief Executive Officer and Chair of the Board personally guaranteed the new line of credit and pledged personal assets as collateral for the loan Total interest expense under this facility for years ended December 31, 2025 and 2024 was $32,237 and $39,347, respectively.

On September 25, 2023 the Company entered into a three-year revolving loan and received proceeds of RMB 10,000,000 (approximately $1.4 million). The interest rate for the loan was 3.35% for the first twelve-months of the loan and adjusted based on the latest one-year loan market quotation rate less 10 basis points as published by the China National Interbank Funding Center on the working day prior to each twelve-month anniversary of the loan. With the reduction of the Loan Prime Rate by the bank on September 20, 2024, the loan interest rate for this transaction was lowered to 3.25% effective September 21, 2024. Additionally, the company repaid RMB 1,102,500 (approximately $153,000) through December 31, 2025, the loan interest rate for this transaction was lowered to 2.9% effective September 21, 2025. The loan is due on September 20, 2026. The loan is collateralized by the Company’s production facility and the included production line equipment and machinery. As of December 31, 2025, the net carrying amount of property, plant and equipment pledged as collateral amounted to $3,351,250 (2024: $3,712,190).In addition, the Company’s Chief Executive Officer and Chair of the Board personally guaranteed the new line of credit. Total interest expense under this facility for years ended December 31, 2025 and 2024 was $42,528 and $47,418, respectively.

Principal payments on the above lines of credit are all due within one year of the balance sheet date.

Fair Value of Lines of Credit – The carrying amounts of the Company’s fixed-rate borrowings, which are due within 12 months, approximate their fair values due to the short-term nature of these instruments.

NOTE 9 – CONVERTIBLE NOTE PAYABLE

On November 17, 2021, China Pharma entered into a Securities Purchase Agreement (the “Agreement”) pursuant to which the Company issued an unsecured convertible promissory note (the “Note”) to an institutional accredited investor Streeterville Capital, LLC (the “Investor”). The transaction contemplated under the Agreement was closed on November 19, 2021. The Note matured on February 17, 2023. On April 13, 2023 China Pharma entered into an Amendment (the “Amendment”) with the Investor which extended the maturity date of the Convertible Note Payable to May 19, 2024. As consideration for the extension, China Pharma agreed to an extension fee of $65,639, representing 2.0% of the balance of the Note and accrued interest on the date of the Amendment. The amount was satisfied by increasing the Note balance by the amount of the extension fee. The Company recorded this as additional interest expense during the second quarter of 2023. In addition, China Pharma decreased the price at which the Investor can convert the balance from 85% to 82% of the lowest daily volume weighted average price during theten trading days immediately preceding the applicable redemption conversion, and assumed an additional obligation to redeem a portion of the outstanding balance of the Note monthly or be subject to additional penalty fees.

On May 23, 2024, the Company entered into an Amendment No. 2 (the “Second Amendment”), to the Note by which the parties have agreed to extend the maturity date of the Note to August 19, 2025. In consideration of the extension, the Company has agreed to pay to the Investor an extension fee equal to two percent (2%) of the outstanding balance of the Note (“Extension Fee”) totaling $10,934, and lower the minimum monthly redemption amount from the outstanding balance of the Note that the Company is obligated to redeem from $150,000 to $37,182.33. The Second Amendment also includes customary representations and warranties by the Company. The Company recognized the Extension Fee as interest expense for the year ending December 31, 2024.

The Note was originally convertible into 70,000 shares of China Pharma’s common stock at a price of $75.00 per share through April 19, 2022. Thereafter, the Note was convertible into 35,000 shares at a price of $150.00 per share.

Interest accrued on the outstanding balance of the Note at 5% per annum compounded daily. Upon the occurrence of an Event of Default as defined in the Note, interest accrues at the lesser of 22% per annum or the maximum rate permitted by applicable law. In addition, upon any Event of Default, the Investor may accelerate the outstanding balance payable under the Note, which will increase automatically upon such acceleration by 15% or 5%, depending on the nature of the Event of Default.

Investor may redeem all or any part the outstanding balance of the Note, subject to $500,000 per calendar month, at any time after one hundred twenty-one (121) days from the Purchase Price Date, as defined in the Note, upon three trading days’ notice, in cash or converting into shares of China Pharma’s common stock, at a price equal to 82% multiplied by the lowest daily volume weighted average price during theten trading days immediately preceding the applicable redemption conversion, subject to certain adjustments and ownership limitations specified in the Note. The Note provides for liquidated damages upon failure to comply with any of the terms or provisions of the Note. The Company may prepay the outstanding balance of the Note with the Investor’s consent. At inception, the Note was redeemable into 176,229 shares based on the lowest volume weighted average price of $29.79085 on the inception date of November 19, 2021.

Total interest expense for the years ended December 31, 2025 and 2024 was $0 and $29,088, respectively.

On January 11, 2024, the Investor delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.3945, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 38,023 shares of common stock to the Investor on January 16, 2024.

On February 1, 2024, the Investor delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.3725, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 40,269 shares of common stock to the Investor on February 5, 2024.

On February 16, 2024, the Investor delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.3675, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 40,817 shares of common stock to the Investor on February 21, 2024.

On April 2, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2927, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 51,245 shares of common stock to the Investor on April 3, 2024.

On April 17, 2024, the Investor delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2774, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 54,074 shares of common stock to the Investor on April 19, 2024.

On May 20, 2024, the Investor delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2539, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 59,079 shares of common stock to the Investor on May 21, 2024.

On June 17, 2024, the Investor delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2137, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 70,192 shares of common stock to the Investor on June 17, 2024.

On September 11, 2024, the Investor delivered its notice of redemption for $100,000 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 69,687 shares of common stock to the Investor on September 12, 2024.

On October 1, 2024, the Investor delivered its notice of redemption for $100,000 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 69,687 shares of common stock to the Investor on October 2, 2024.

On November 4, 2024, the Investor delivered its notice of redemption for $100,000 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 69,687 shares of common stock to the Investor on November 4, 2024.

On December 9, 2024, the Investor delivered its notice of redemption for $117,060 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 81,576 shares of common stock to the Investor on December 11, 2024.** **

Upon the issuance of the shares related to the December 9, 2024 conversion, there is no remaining balance of the Note and related accrued, and the Note had been fully redeemed and satisfied.

NOTE 10 – LEASES

The Company has leases for certain office and production facilities in the PRC which are classified as operating leases. The leases contain payment terms for fixed amounts. Options to extend are recognized as part of the lease liabilities and recognized as right of use assets when management estimates to renew the lease. There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed by leases. For the years ended December 31, 2025 and 2024, operating lease cost was $75,534 and $58,931, respectively and cash paid for amounts included in the measurement of lease liabilities for operating cash flows from operating leases was $78,705 and $61,135, respectively. As of December 31, 2025 and December 31, 2024, the Company reported right of use assets of $181,828 and $38,298, respectively and lease liabilities of $183,176 and $39,323, respectively.

Minimum lease payments for the Company’s operating lease liabilities were as follows for the twelve month period ended December 31:

The Company has leases with terms less than one year for certain provincial sales offices that are not material.

NOTE 11 – INCOME TAXES

Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Liabilities are established for uncertain tax positions expected to be taken in income tax returns when such positions are judged to meet the “more-likely-than-not” threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are included as a component of other expenses As of December 31, 2025 and 2024, the Company did not have any significant unrecognized uncertain tax positions. U.S. income tax returns for the years ended December 31, 2021 through December 31, 2025 and the Chinese income tax return for the year ended December 31, 2025 remain open to examination by the relevant taxing authorities.

Under the current tax law in the PRC, the Company is e subject to the enterprise income tax rate of 25%.

Following is a reconciliation of income taxes calculated at the federal statutory rates to the provision for income taxes:

The temporary differences which give rise to the deferred income tax assets and liability are as follows:

As of December 31, 2025, Helpson had net operating loss carryforwards for PRC tax purposes of approximately $30.7 million which are available to offset any future taxable income through 2030. Approximately $6.8 million of these carryforwards expired in December 2025. The Company also has net operating losses for United States federal income tax purposes of approximately $11.7 million of which $5.1 million is available to offset future taxable income, if any, through 2040, and $6.6 million are available for carryforward indefinitely subject to a limitation of 80% of taxable income for each tax year.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The Company is currently assessing its impact on our condensed consolidated financial statements. U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those differences become deductible or tax loss carry forwards are utilized. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods on which the deferred tax assets are deductible or can be utilized, management believes it is not likely for the Company to realize all benefits of the deferred tax assets as of December 31, 2025 and 2024. Therefore, the Company provided for a valuation allowance against its deferred tax assets of $22.9 million and $21.7 million as of December 31, 2025 and 2024, respectively.

The Company also incurred various other taxes, comprised primarily of business taxes, value-added taxes, urban construction taxes, education surcharges and others. Any unpaid amounts are reflected on the balance sheets as accrued taxes payable.

NOTE 12 – FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, a hierarchy has been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; and Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The Company uses fair value to measure the value of the banker’s acceptance notes it holds at December 31, 2025 and 2024. The banker’s acceptance notes are recorded at cost which approximates fair value. The Company held the following assets and liabilities recorded at fair value:

NOTE 13 – STOCKHOLDERS’ EQUITY

China Pharma is authorized to issue 500,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value. The preferred stock may be issued in series with such designations, preferences, stated values, rights, qualifications or limitations as determined solely by the Board of China Pharma.

On August 29, 2025 the Company issued 1,760,000 shares of common stock at a price of $1.39 per share based on the closing market price as of that date pursuant to the Yan Yang Agreement as discussed in Note 5.

According to relevant PRC laws, companies registered in the PRC, including China Pharma’s PRC subsidiary, Helpson, are required to allocate at least 10% of their after tax income, as determined under the accounting standards and regulations in the PRC, to statutory surplus reserve accounts until the reserve account balances reach 50% of the company’s 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. The amount designated for general and statutory capital reserves is $8,145,000 at December 31, 2025 and December 31, 2024. As of December 31, 2025 and 2024, the balance of the required statutory reserves was $nil.

Effective April 15, 2025, the Company implemented a 1-for-10 reverse split of its common stock. The reverse stock split was approved by the Company’s Board of Directors through unanimous written consent and the Company’s stockholders at its Annual Meeting for the fiscal year ended on December 31, 2023, which was held on December 22, 2024. Upon the effectiveness of the reverse stock split, every 10 shares of the Company’s issued and outstanding common stock were automatically converted intoone share of issued and outstanding common stock. No fractional shares were issued as a result of the reverse stock split. Instead, any fractional shares that resulted from the split were rounded up to the next whole number. The reverse stock split affects all stockholders uniformly and does not alter any stockholder’s percentage interest in the Company’s outstanding common stock, except for adjustments that may result from the treatment of fractional shares. All share and per share amounts have been retroactively restated for all periods presented in the accompanying unaudited condensed consolidated financial statements.

Effective March 6, 2024, the Company implemented a 1-for-5 reverse split of its common stock. The reverse stock split was approved by the Company’s Board of Directors through unanimous written consent and the Company’s stockholders at its Annual Meeting for the fiscal year ended on December 31, 2022, which was held on December 17, 2023. Upon the effectiveness of the reverse stock split, every 5 shares of the Company’s issued and outstanding common stock were automatically converted intoone share of issued and outstanding common stock. No fractional shares were issued as a result of the reverse stock split. Instead, any fractional shares that resulted from the split were rounded up to the next whole number. The reverse stock split affects all stockholders uniformly and does not alter any stockholder’s percentage interest in the Company’s outstanding common stock, except for adjustments that may result from the treatment of fractional shares. All share and per share amounts have been retroactively restated for all periods presented in the accompanying consolidated financial statements.

2025 Share Issuances

On December 4, 2025, the Company issued 3,500,000 shares of common stock at a price of $1.66 per share based on the closing market price as of that date pursuant to the Lijie Tang Agreement as discussed in Note 5.

On December 22, 2025, the Company issued 7,000,000 shares of common stock at a price of $1.38 per share based on the closing market price as of that date pursuant to the Zhang Agreement as discussed in Note 5.

On August 29, 2025, the Company issued 1,760,000 shares of common stock at a price of $1.39 per share based on the closing market price as of that date pursuant to the Yan Yang Agreement as discussed in Note 5.

2024 Share Issuances

On January 11, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.3945, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 380,228 shares of common stock to the Investor on January 16, 2024.

On February 1, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.3725, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 402,685 shares of common stock to the Investor on February 5, 2024.

On February 16, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.3675, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 408,164 shares of common stock to the Investor on February 21, 2024.

On April 2, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2927, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 512,470 shares of common stock to the Investor on April 3, 2024.

On April 17, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2774, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 540,735 shares of common stock to the Investor on April 19, 2024

On May 20, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2539, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 590,783 shares of common stock to the Investor on May 21, 2024.

On June 17, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $150,000 of the Note and related interest at the conversion price of $0.2137, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 701,918 shares of common stock to the Investor on June 17, 2024.

On September 11, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $100,000 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 696,864 shares of common stock to the Investor on September 12, 2024.

On October 1, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $100,000 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 696,864 shares of common stock to the Investor on October 2, 2024.

On November 4, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $100,000 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during theten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 696,864 shares of common stock to the Investor on November 4, 2024.

On December 9, 2024, the Investor discussed in Note 9 delivered its notice of redemption for $117,060 of the Note and related interest at the conversion price of $0.1435, which was 82% of the lowest volume weighted average price during the ten trading days immediately preceding the applicable redemption conversion. Accordingly, the Company issued a total of 815,746 shares of common stock to the Investor on December 11, 2024.

On December 12, 2024, the Company entered into that certain securities purchase agreement (the “SPA”) with an institutional investor (the “Institutional Investor”) for an at-the-market offering. Under the SPA, the Institutional Investor may purchase, at its sole discretion, shares of the Company’s common stock having an aggregate offering price of up to $600,000 within the commitment period from December 12, 2024 to December 31, 2024.

On December 12, 2024, pursuant to the SPA, the Investor agreed to purchase $180,000 of common stock at a price of $0.20 per share and the Company issued 900,000 shares of its common stock. As of December 31, 2024 the Institutional Investor has not delivered the proceeds of $180,000 to the Company. As such the Company has recorded a receivable as a contra equity account in the amount of $180,000.

On December 23, 2024, the Company and the Institutional Investor reached an agreement to rescind (the “Recission”) that certain SPA.

2010 Incentive Plan

On November 12, 2010, the Company’s Board adopted the Company’s 2010 Incentive Plan (the “Plan”), which was then approved by stockholders on December 22, 2010. On October 17, 2019, the Board of Directors approved the First Amendment to the 2010 Incentive Plan (the “Amendment”), pursuant to which the term of the 2010 Incentive Plan was extended to December 31, 2029. The Amendment was adopted by the stockholders on December 19, 2019. On October 25, 2021, the Board of Directors approved, and on December 27, 2021 our stockholders adopted the Amendment No.2 to the Plan to increase the number of shares of the Common Stock, that are reserved thereunder by 10,000 shares from 8,000 shares to 18,000 shares. On October 27, 2022 the Board of Directors approved and on December 27, 2022, the stockholders adopted the Amended and Restated Long Term 2010 Incentive Plan to increase the number of shares of common stock that are reserved thereunder by an additional 10,000 shares from 18,000 to 28,000. On December 17, 2023 the stockholders approved Amendment No. 1 to the Amended and Restated Long Term 2010 Incentive Plan to increase the number of shares from 28,000 to 58,000. On December 22, 2024 the stockholders approved Amendment No. 2 to the Amended and Restated Long Term 2010 Incentive Plan to increase the number of shares from 58,000 to 69,600. On December 30, 2025 the stockholders approved Amendment No. 3 to the Amended and Restated Long Term 2010 Incentive Plan to increase the number of shares from 69,600 to 569,600. The Plan gives the Company the ability to grant stock options, restricted stock, stock appreciation rights and performance units to its employees, directors and consultants, or those who will become employees, directors and consultants of the Company and/or its subsidiaries. The Plan currently allows for equity awards of up to 569,600 shares of common stock. Through December 31, 2025, there were 8,470 shares of stock and stock options granted and outstanding under the Plan. A total of 1,330 options were outstanding as of December 31, 2025 under the Plan. As such, there are 559,800 additional units available for issuance under the Plan.

There were no issuances of securities from the Plan for the year ended December 31, 2025 and 2024, and as such, no compensation expense was recognized for the period.

As of December 31, 2025 and 2024, there wasno remaining unrecognized compensation expense related to stock options or restricted stock grants.

NOTE 14 – LOSS PER SHARE

The following table presents the computation of basic and diluted net loss per share for the years ended December 31, 2025 and 2024:

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Current vulnerability due to certain concentrations

For the year ended December 31, 2025, no customer accounted for greater than 10.0% of sales and two customers accounted for 39.2% and 14.4% of accounts receivable. Two suppliers accounted for 26.6% and 26.3% of raw material purchases, and two different products accounted for 32.6% and 25.6% of revenue.

For the year ended December 31, 2024, no customer accounted for greater than 10.0% of sales and two customers accounted for 63.7% and 13.7% of accounts receivable. Three suppliers accounted for 22.9%,21.3% and 14.6% of raw material purchases, and two different products accounted for 34.5% and 24.5% of revenue.

Nature of Operations

**Economic environment -**Substantially all of the Company’s operations are conducted in the PRC, and therefore the Company is subject to special considerations and significant risks not typically associated with companies operating in the United States of America. These risks include, among others, the political, economic and legal environments and fluctuations in the foreign currency exchange rate. The Company’s results from operations may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. The unfavorable changes in global macroeconomic factors may also adversely affect the Company’s operations.

In addition, all of the Company’s revenue is denominated in the PRC’s currency of Renminbi (RMB), which must be converted into other currencies before remittance out of the PRC. Both the conversion of RMB into foreign currencies and the remittance of foreign currencies abroad require approval of the PRC government.