CHINA PHARMA HOLDINGS, INC.

Previous 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.

Current wording

China’s consistency evaluation of generic drugs continues to proceed for the six months ended June 30, 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

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.

Current wording

Revenue was $0.95 million for the three months ended June 30, 2026, which represented a decrease of $0.08 million, as compared to $1.03 million for the three months ended June 30, 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

The “CNS Cerebral & Cardio Vascular” product category generated $0.51 million in sales revenue for the three months ended March 31, 2026, compared to $0.34 million for the same period in 2025, representing an increase of $0.17 million. This increase was primarily attributable to higher sales of Gastrodin Injection and Candesartan Cilexetil. The increase in Gastrodin Injection sales was supported by its selection in centralized procurement programs across 15 provinces and municipalities, while Candesartan Cilexetil benefited from inclusion in the renewal procurement of the first eight batches of national centralized procurement.

Current wording

The “CNS Cerebral & Cardio Vascular” product category generated $0.50 million in sales revenue for the three months ended June 30, 2026, compared to $0.42 million for the same period in 2025, representing an increase of $0.08 million. This increase was primarily attributable to higher sales of Gastrodin Injection and Candesartan Cilexetil. The increase in Gastrodin Injection sales was supported by its selection in centralized procurement programs across 15 provinces and municipalities, while Candesartan Cilexetil benefited from inclusion in the renewal procurement of the first eight batches of national centralized procurement.

Previous wording

The “Digestive” product category generated $0.05 million in sales revenue for the three months ended March 31, 2026, compared to $0.06 million for the same period last year, representing a decrease of $0.01 million. This decrease was primarily due to lower sales of Omeprazole affected by market volatility.

Current wording

“Digestive” product category generated $0.12 million in sales revenue for the three months ended June 30, 2026, compared to $0.06 million for the same period in 2025, representing an increase of $0.06 million. This increase was mainly due to the increase in sales of Compound Ammonium Glycyrrhetate S for Injection due to market volatility.

Previous wording

The largest revenue decline in dollar terms were in the “Anti-Viral/ Infection & Respiratory” product category, which generated $0.41 million for the three months ended March 31, 2026, compared to $0.72 million for the three months ended March 31, 2025, representing a decrease of $0.31 million. This decrease was primarily due to lower sales of Roxithromycin Dispersible Tablets and Cefaclor Dispersible Tablets caused by market fluctuations.

Current wording

The largest revenue decline in dollar terms was in the “Anti-Viral/ Infection & Respiratory” product category, which generated $0.32 million for the three months ended June 30, 2026, compared to $0.53 million for the same period in 2025, representing a decrease of $0.21 million. This decrease was primarily due to lower sales of Roxithromycin Dispersible Tablets and Cefaclor Dispersible Tablets caused by market fluctuations.

Previous wording

The “Other” product category generated $0.01 million for the three months ended March 31, 2026, compared to $0.02 million for the three months ended March 31, 2025, representing a decrease of $0.01 million. This decrease was primarily due to lower sales of Vitamin B6 for Injection affected by market fluctuations.

Current wording

The “Other” product category generated $0.01 million for the three months ended June 30, 2026, compared to $0.02 million for the same period in 2025, representing a decrease of $0.01 million. This decrease was mainly due to the decrease in sales of Vitamin B6 for Injection due to market fluctuation.

Previous wording

For the three months ended March 31, 2026, our cost of revenue was $0.70 million, or 71.0% of total revenue, which represented a decrease of $0.57 million from $1.27 million, or 112.0% of total revenue, for the same period in 2025. The decrease was primarily due to lower depreciation expense, as certain property and equipment (“PP&E”) became fully depreciated.

Current wording

For the three months ended June 30, 2026, our cost of revenue was $0.86 million, or 91.2% of total revenue, representing a decrease of $0.25 million from $1.11 million, or 108.5% of total revenue, for the same period in 2025. The decrease in cost of revenues in the three months ended June 30, 2026 was mainly due to the decrease in depreciation of our property, plant and equipment (“PP&E.”).

Previous wording

Gross margin for the three months ended March 31, 2026 was $0.29 million, compared to a gross loss of $0.14 million for the same period of 2025. The gross profit margin was 29.0% for the three months ended March 31, 2026, compared to a gross loss margin of 12.0% for the same period in 2025.

Current wording

Gross profit for the three months ended June 30, 2026 was $0.08 million, compared to a gross loss of $0.09 million for the same period in 2025. The gross profit margin was 8.8% for the three months ended June 30, 2026, compared to a gross loss margin of 8.5% for the same period in 2025.

Previous 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.

Current wording

Our selling expenses for the three months ended June 30, 2026 were $0.11 million, an increase of $0.01 million, compared to $0.10 million for the same period in 2025. Selling expenses accounted for 12.0% of the total revenue for the three months ended June 30, 2026, compared to 9.9% for the same period in 2025. The increase in proportion was primarily due to lower sales revenue.

Previous wording

Our general and administrative expenses for the three months ended March 31, 2026 were $1.23 million, an increase of $0.72 million compared to $0.51 million for the same period in 2025. General and administrative expenses accounted for 124.7% and 44.6% of our total revenues for the three months ended March 31, 2026 and 2025, respectively. The increase was mainly attributable to the Company’s acquisition of five new patented technologies since August 2025, which resulted in higher amortization expenses for intangible assets..

Current wording

Our general and administrative expenses for the three months ended June 30, 2026 were $1.38 million, an increase of $0.94 million compared to $0.44 million for the three months ended June 30, 2025. General and administrative expenses accounted for 145.2% and 43.0% of our total revenues for the three months ended June 30, 2026 and 2025, respectively. The increase was mainly attributable to the Company’s acquisition of five new patented technologies since August 2025, which resulted in higher amortization expenses for intangible assets.

Previous 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.

Current wording

Our research and development expenses were $0.02 million and $0.02 million for the three months ended June 30, 2026 and 2025, respectively. Research and development expenses accounted for 2.0% and 2.0% of our total revenues for the three months ended June 30, 2026 and 2025, respectively. These expenditures were primarily related to the consistency evaluation of existing products.

Previous wording

The amount of net accounts receivable that was past due (or the amount of accounts receivable that was more than 180 days old) was $0.06 million and $0.06 million as of March 31, 2026 and December 31, 2025, 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 $0.11 million and $0.06 million as of June 30, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

Our allowance for credit losses as a percentage of accounts receivable of trade accounts receivable was 7.3% and 5.1% as of June 30, 2026 and December 31, 2025, respectively.

Previous wording

We recognize credit losses per actual write-offs as well as changes of allowance for credit losses. To the extent that our current allowance for credit losses is higher than that of the previous period, we recognize a bad debt expense for the difference during the current period, and when the current allowance is lower than that of the previous period, we recognize a credit 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:

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 $0.01 million as of June 30, 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 six months ended June 30, 2026 and 2025 were as follows:

Previous wording

Our credit gains for the three months ended March 31, 2026 were $3,779, compared to $1,323 for the same period in 2025. As we previously disclosed in our annual report for the fiscal year ended December 31, 2025, the write-off of long-outstanding accounts receivable during 2025 reduces both gross accounts receivable and the allowance for doubtful accounts by the same amount.

Current wording

Our credit losses for the six months ended June 30, 2026 were $2,657, compared to $709 for the same period in 2025. As we previously disclosed in our annual report for the fiscal year ended December 31, 2025, the write-off of long-outstanding accounts receivable during 2025 reduces both gross accounts receivable and the allowance for doubtful accounts by the same amount

Previous wording

Net interest expense was $0.03 million for both the three months ended March 31, 2026 and 2025, remained unchanged year-over-year.

Current wording

Net interest expense was $0.03 million for the three months ended June 30, 2026 and $0.03 million for the three months ended June 30, 2025, respectively.

Previous wording

Net loss for the three months ended March 31, 2026 was $1.14 million, compared to $0.79 million for the same period in 2025. The increase in net loss was primarily driven by an increase in amortization of intangible assets.

Current wording

Net loss for the three months ended June 30, 2026 was $1.46 million, compared to net loss of $0.53 million for the same period in 2025. The increase in net loss was primarily driven by an increase in amortization of intangible assets.

Previous 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.

Current wording

The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 40,522,002 for the three months ended June 30, 2025, compared to 3,226,156 for the same period in 2025.

Previous wording

In terms of revenue mix, our product revenue structure changed during the three months ended March 31, 2026, compared with the same period in 2025. The revenue proportion of the “CNS Cerebral & Cardio Vascular” product category increased from 29.9% to 52.2%, making it the Company’s largest revenue contributor. The revenue share of “Anti-Viral/ Infection & Respiratory” product category declined from 63.4% to 41.7%, which was primarily due to market conditions, centralized procurement policies and intensified industrial competition. Although this category remains the second-largest business segment, its relative revenue contribution has decreased. Revenue proportions for “Digestive Diseases” and “Other” product categories remained generally stable, with mild year-on-year decreases.

Current wording

In terms of revenue mix, our product revenue structure changed during the six months ended June 30, 2026, compared with the same period in 2025. The revenue proportion of the “CNS Cerebral & Cardio Vascular” product category increased from 35% to 53%, making it the Company’s largest revenue contributor. The revenue share of “Anti-Viral/ Infection & Respiratory” product category declined from 58% to 37%, which was primarily due to market conditions, centralized procurement policies and intensified industrial competition. Although this category remains the second-largest business segment, its relative revenue contribution has decreased. The revenue proportion of “Digestive Diseases” rose from 5% to 9% due to the resumption of sales of Compound Ammonium Glycyrrhetate S. Revenue from the “Other” category experienced a slight year-over-year decrease.

Previous wording

Our operating loss for the three months ended March 31, 2026 was $1.12 million, compared to $0.76 million in the same period in 2025. The increase in operating loss was mainly attributable to higher amortization of intangible assets

Current wording

Our operating loss for the six months ended June 30, 2026 was $2.55 million, compared to $1.41 million for the same period in 2025. The increase in operating loss was mainly attributable to higher amortization of intangible assets.

Previous 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.

Current wording

Our principal sources of liquidity are cash generated from operations, borrowings from Chairperson Li, and available bank lines of credit. Currently, the Company has not experienced, and does not expect to encounter, any difficulties in refinancing those lines of credit this year. As of June 30, 2026, the aggregated advance from our CEO was $1.64 million for use in operations. Our cash and cash equivalents were $0.30 million, representing 0.7% of our total assets, as of June 30, 2026, compared to $0.35 million, representing 1.1% of our total assets as of December 31, 2025. All of the $0.30 million of cash and cash equivalents as of June 30, 2026 are considered to be reinvested indefinitely in the Company’s Chinese subsidiary, Helpson, and are not expected to be available for payment of dividends or for other payments to its parent company or to its shareholders.

Previous wording

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.

Current wording

The Company obtained various lines of credit, the details of which are described in Note 8 to its unaudited condensed consolidated financial statements contained in this report, which are incorporated by reference herein.

Previous 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.

Current wording

Net cash used in operating activities was $0.09 million in the six months ended June 30, 2026, compared to $0.20 million of net cash provided by operating activities for the same period in 2025.

Previous wording

During the three months ended March 31, 2026, net cash used in investing activities totaled $0, while the same period in 2025 saw net cash used in investing activities of $0.06 million.

Current wording

During the six months ended June 30, 2026, net cash used in investing activities was $0 million. Net cash used in investing activities was $0.06 million for the six months ended June 30, 2025.

Previous wording

Cash flow used by financing activities was $79,325 in the three months ended March 31, 2026, compared to $76,820 provided for the same period for the three months ended March 31, 2025.

Current wording

Net Cash provided by financing activities was $0.04 million for the six months ended June 30, 2026, compared to $0.09 million for the same period in 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 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.

Current wording

According to relevant PRC laws, companies registered in the PRC, including our PRC subsidiary, Helpson, are required to allocate at least ten percent (10%) of their after-tax net income, as determined under the accounting standards and regulations in the PRC, to statutory surplus reserve accounts until the reserve account balances reach fifty percent (50%) of the companies’ registered capital prior to their remittance of funds out of the PRC. Allocations to these reserves and funds can only be used for specific purposes and are not transferrable to the parent company in the form of loans, advances or cash dividends. As of June 30, 2026 and December 31, 2025, Helpson’s net assets totaled ($9,499,334) 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 June 30, 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 June 30, 2026 and December 31, 2025. There were no allocations to the statutory surplus reserve accounts during the six months ended June 30, 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-Q for the three months ended March 31, 2026, 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-K for the year ended December 31, 2025, which is incorporated herein by reference.