CHINA PHARMA HOLDINGS, INC.

Previous wording

China’s consistency evaluation of generic drugs continues to proceed for the three months ended September 30, 2025. 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. However, no other new products of ours have achieved the same status as of the date of this report.

Current wording

China’s consistency evaluation of generic drugs continues to proceed for the three months ended March 31, 2026. 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 addition, Helpson continues to explore the field of comprehensive healthcare. Comprehensive healthcare is a general concept proposed by the Chinese government according to the development of the times, social needs and changes in disease spectrum. According to the Outline of “Healthy China 2030” issued by Chinese government in October 2016, the total size of China’s health service industry is expected to reach RMB 16 trillion (approximately $2.5 trillion) by 2030. This industry focuses on people’s daily life, aging and diseases, pays attention to all kinds of risk factors and misunderstandings affecting health, calls for self-health management, and advocates the comprehensive care throughout the entire process of life. It covers all kinds of health-related information, products, and services, as well as actions taken by various organizations to meet the health needs. In response to this trend, Helpson launched Noni enzyme, a natural, Xeronine-rich antioxidant food supplement at the end of 2018. It also launched wash-free sanitizers and masks, in 2020, to address the market needs caused by COVID-19 in China. As Chinese government officially terminated its zero-case policy, now the responsibility to protect people from the impact of COVID-19 falls more to the citizens themselves, and masks and sanitizers have been popular since COVID-19. Helpson has sufficient production capacity for medical masks, surgical masks, KN95 masks, and N95 masks, which also meets the personal needs for protection against other respiratory infectious diseases. Helpson’s N95 medical protective mask has received registration certificate at the end of 2022 and has been on the market in the mainland China nationwide.

Current wording

In addition, Helpson continues to explore the field of comprehensive healthcare. Comprehensive healthcare is a general concept proposed by the Chinese government according to the development of the times, social needs and changes in disease spectrum. According to the Outline of “Healthy China 2030” issued by Chinese government in October 2016, the total size of China’s health service industry is expected to reach RMB 16 trillion (approximately $2.5 trillion) by 2030. This industry focuses on people’s daily life, aging and diseases, pays attention to all kinds of risk factors and misunderstandings affecting health, calls for self-health management, and advocates comprehensive care throughout the entire process of life. It covers all kinds of health-related information, products, and services, as well as actions taken by various organizations to meet health needs. Responding to industry development trends, Helpson launched noni enzyme at the end of 2018, a natural antioxidant dietary supplement rich in xeronine. In 2020, the Company introduced no-rinse disinfectant and protective mask products to meet market demand driven by the COVID-19 pandemic in China. At the end of 2022, the Company obtained the medical device registration certificate for its N95 medical protective masks. Accordingly, the Company has sufficient production capacity for medical masks, surgical masks, KN95 masks and N95 masks, which enabled it to support demand for public and personal protective equipment related to respiratory infectious disease prevention.

Previous wording

Revenue was $0.8 million for the three months ended September 30, 2025, as compared to $1.1 million in the same period 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.

Current wording

Revenue was $0.98 million for the three months ended March 31, 2026, representing a decrease of $0.16 million compared to $1.14 million for the three months ended March 31, 2025. This decline was mainly due to an increasing number of drugs from other medicine providers being included in the national CP program, while Helpson’s comparable products had not passed consistency evaluation and were not qualified to participate in CP. As a result, sales of these products decreased.

Previous wording

Set forth below are our revenues by product category in millions (USD) for the three months ended September 30, 2025 and 2024, respectively:

Current wording

Set forth below are our revenues by product category in millions (USD) for the three months ended March 31, 2026 and 2025:

Previous wording

Our selling expenses for the nine months ended September 30, 2025 and 2024 were $0.27 million and $0.35 million, respectively. Selling expenses accounted for 9.1% of the total revenue in the nine months ended September 30, 2025 compared to 10.4% in the same period in 2024.

Current wording

Our selling expenses for the three months ended March 31, 2026 were $0.10 million, an increase of $0.01 million compared to $0.09 million for the same period in 2025. Selling expenses accounted for 9.7% of total revenue for the three months ended March 31, 2026, compared to 7.7% for the same period in 2025. The increase in proportion was primarily due to lower sales revenue.

Previous wording

Our research and development expenses for the three months ended September 30, 2025 were $0.04 million, as compared to $0.09 million in the same period in 2024. Research and development expenses accounted for 5.3% and 8.0% of our total revenues in the three months ended September 30, 2025 and 2024, respectively. These expenditures were mainly used for our increased efforts in the consistency evaluations of our existing products.

Current wording

Our research and development expenses were $0.08 million for the three months ended March 31, 2026, compared to $0.03 million for the same period in 2025. Research and development expenses accounted for 8.5% and 2.6% of our total revenues for the three months ended March 31, 2026 and 2025, respectively. These expenditures were primarily related to the consistency evaluation of existing products.

Previous wording

In general, our normal customer credit or payment terms are 180 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 have adopted 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 $0.11 million and $0.06 million as of September 30, 2025 and December 31, 2024, respectively.

Current wording

The amount of net accounts receivable that was past due (or the amount of accounts receivable that was more than 180 days old) was $0.06 million and $0.06 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

The following tables illustrate our accounts receivable aging distribution in terms of percentage of total accounts receivable, respective gross accounts receivables as well as the allocated allowance for credit losses as of September 30, 2025 and December 31, 2024:

Current wording

The following table illustrates our trade accounts receivable aging distribution in terms of the percentage of the total accounts receivable, respective gross accounts receivables as well as the allocated allowance for credit losses as of March 31, 2026 and December 31, 2025:

Previous wording

Since the fourth quarter of 2018, our bad debt allowance estimate practice has been updated to a policy that we consider 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 bad debt allowance based on age of the accounts receivables: 10% of accounts receivable that is between 180 days and 365 days old, 70% of accounts receivable that is between 365 days and 720 days old, and 100% of accounts receivable that is 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 23.7% and 97.7% as of September 30, 2025 and 2024, respectively. The decrease of 74.0% was due to the written-off of accounts receivable over 8-year-old in August 2025.

Current wording

Our allowance for credit losses as a percentage of accounts receivable of trade accounts receivable was 4.6% and 5.1% as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

We conduct analysis and review on accounts receivables for customers on a specific, per-customer basis in the fourth fiscal quarter of each fiscal year. For customers (i) whose business license has been cancelled or expired; (ii) whose key business certificates such as GSP (Good Supply Practice) license have been invalid or revoked; (iii) who have no ability to continue operations, or (iv) who are encountering other issues that lead to accounts receivable unrecoverable, the receivable will be written-off as per the resolution of our Board of Directors.

Current wording

We conduct analysis and review of accounts receivables for customers on a specific, per-customer basis in the fourth fiscal quarter of each fiscal year. For customers (i) whose business license has been cancelled or expired; (ii) whose key business certificates such as GSP (Good Supply Practice) license have been invalid or revoked; (iii) who have no ability to continue operations, or (iv) who are encountering other issues that lead to accounts receivable unrecoverable, the receivable will be written-off as per the resolution of our Board of Directors.

Previous wording

We recognize bad debt expenses 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 $0.07 million and $13.9 million as of September 30, 2025 and December 31, 2024, respectively. The changes in the allowances for credit losses during the three months ended September 30, 2025 and 2024 were as follows:

Current wording

We recognize credit losses per actual write-offs as well as changes of allowance for credit losses. To the extent that our current allowance for credit losses is higher than that of the previous period, we recognize a bad debt expense for the difference during the current period, and when the current allowance is lower than that of the previous period, we recognize a credit gain for the difference. The allowance for credit losses balances was $0.009 million as of March 31, 2026 and $0.01 million as of December 31, 2025, respectively. The changes in the allowances for credit losses of trade accounts receivable during the three months ended March 31, 2026 and 2025 were as follows:

Previous wording

The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 3,874,085 for the three months ended September 30, 2025, and 1,730,672 for the three months ended September 30, 2024.

Current wording

Loss per basic and diluted common share was $0.04 for the three months ended March 31, 2026 and $0.24 for the three months ended March 31, 2025, respectively. The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 25,602,002 for the three months ended March 31, 2026, as compared to 3,261,911 for the same period in 2025.

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 September 30, 2025, the aggregated advance from our CEO was $ 1.4 million for use in operations. Our cash and cash equivalents were $0.27 million, representing 1.7% of our total assets, as of September 30, 2025, as compared to $0.63 million, representing 4.2% of our total assets as of December 31, 2024. All of the $0.27 million of cash and cash equivalents as of September 30, 2025 are considered to be reinvested indefinitely in the Company’s Chinese subsidiary, Helpson and are not expected to be available for payment of dividends or for other payments to its parent company or to its shareholders.

Current wording

Our principal source of liquidity is cash generated from operations and bank lines of credit. Currently, we have not encountered or expect to encounter any difficulties in refinancing these lines of credit this year. As of March 31, 2026, we received an aggregate advance of $1.47 million from our CEO for use in operations. Our cash and cash equivalents totaled $0.17 million, representing 0.4% of our total assets, as of March 31, 2026, compared to $0.41 million, or 2.9% of total assets, as of March 31, 2025. All of the $0.17 million of cash and cash equivalents as of March 31, 2026 is considered to be reinvested indefinitely in our Chinese subsidiary, Helpson, and is not expected to be available for payment of dividends or for other payments to us as the parent company or to our shareholders.

Previous wording

The Company obtained various lines of credit in details described under Note 7 to its unaudited condensed consolidated financial statements contained in this report which is incorporated by reference herein.

Current wording

We obtained various lines of credit, as described in Note 8 to our unaudited condensed consolidated financial statements included in this Report, which are incorporated by reference herein.

Previous wording

Although the Company renewed lines of credit in 2025 there can be no assurance that the Company will be able to achieve its future strategic goals, including the launch of new products. This raises substantial doubt about the Company’s ability to continue as a going concern. Although our Chairperson and Chief Executive Officer had advanced funds for working capital in the third quarter for fiscal year ending December 31, 2025 there can be no assurances that this will continue in the future. We may seek additional debt or equity financing as necessary when we believe the market conditions are the most advantageous to us and/or require us to reduce certain discretionary spending, which could have a material adverse effect on our ability to achieve our business objectives. There can be no assurance that any additional financing will be available on acceptable terms, if at all.

Current wording

We cannot guarantee the achievement of our future strategic goals, including the launch of new products. This raises substantial doubt about our ability to continue as a going concern. Although our Chairperson and Chief Executive Officer had advanced funds for working capital for the three months ended March 31, 2026, there can be no assurances that this support will continue in the future. We may seek additional debt or equity financing as necessary when market conditions are favorable and/or may need to reduce certain discretionary spending, which could have a material adverse effect on our ability to achieve our business objectives. There can be no assurance that any additional financing will be available on acceptable terms, if at all.

Previous wording

Net cash used in operating activities was $3,729 for the nine months ended September 30, 2025, compared to $704,836 in the same period in 2024.

Current wording

Net cash used in our operating activities was $0.06 million for the three months ended March 31, 2026, compared to $0.07 million for the same period in 2025.

Previous wording

As of September 30, 2025, our net trade accounts receivable was $0.22 million, compared to $0.23 million as of December 31, 2024.

Current wording

As of March 31, 2026, our net trade accounts receivable was $0.20 million, a decrease of $0.04 million from $0.24 million as of December 31, 2025.

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 September 30, 2025 and December 31, 2024, Helpson’s net assets totaled ($7,710,000) 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 September 30, 2025 and December 31, 2024, respectively. The amount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets as of September 30, 2025 and December 31, 2024. There were no allocations to the statutory surplus reserve accounts during the nine months ended September 30, 2025.

Current wording

According to relevant PRC laws, companies registered in the PRC, including our PRC subsidiary, Helpson, are required to allocate at least ten percent (10%) of their after-tax net income, as determined under the accounting standards and regulations in the PRC, to statutory surplus reserve accounts until the reserve account balances reach fifty percent (50%) of the companies’ registered capital prior to their remittance of funds out of the PRC. Allocations to these reserves and funds can only be used for specific purposes and are not transferrable to the parent company in the form of loans, advances or cash dividends. As of March 31, 2026 and December 31, 2025, Helpson’s net assets totaled ($8,884,096) and ($8,251,000), respectively. Due to the restriction on dividend distribution to overseas shareholders, the amount of Helpson’s net assets that was designated for general and statutory capital reserves, and thus could not be transferred to our parent company as cash dividends, was 50% of Helpson’s registered capital, which was both $8,145,000 as of March 31, 2026 and December 31, 2025, respectively. The amount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets as of March 31, 2026 and December 31, 2025. There were no allocations to the statutory surplus reserve accounts during the three months ended March 31, 2026.

Previous wording

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. The discussion of our critical accounting policies contained in Note 1 to our consolidated financial statements, “Organization and Significant Accounting Policies”, included in the Company’s annual report on Form 10-K for fiscal year ended December 31, 2024, which is incorporated herein by reference.

Current wording

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. The discussion of our critical accounting policies contained in Note 1 to our consolidated financial statements, “Organization and Significant Accounting Policies”, included in the Company’s annual report on Form 10-Q for the three months ended March 31, 2026, which is incorporated herein by reference.