CPHI 10-Q
China Pharma Holdings, Inc. (CPHI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from ____________ to ____________
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
Haikou | | |
| (Address of principal executive offices) | (Zip Code) |
(China)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 11, 2026, there
were
CHINA PHARMA HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
| Page | ||
| PART I FINANCIAL INFORMATION | 1 | |
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 26 |
| Item 4. | Controls and Procedures | 26 |
| PART II OTHER INFORMATION | 27 | |
| Item 6. | Exhibits | 27 |
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CHINA PHARMA HOLDINGS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
1
CHINA
PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AMOUNTS IN U.S. DOLLARS, EXCEPT FOR SHARE DATA
(Unaudited)
| June 30, 2026 |
December 31, 2025 |
|||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Bankers acceptances | ||||||||
| Trade accounts receivable, less allowance for credit losses of $ |
||||||||
| Other receivables, less allowance for credit losses of $ |
||||||||
| Advances to suppliers | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Trade accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Other payables | ||||||||
| Contract liabilities | ||||||||
| Borrowings from related parties | ||||||||
| Lease liabilities | ||||||||
| Current portion of lines of credit | ||||||||
| Total Current Liabilities | ||||||||
| Non-current Liabilities: | ||||||||
| Lease liabilities, net of current portion | ||||||||
| Deferred tax liability | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 14) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $ |
||||||||
| Common stock, $ |
||||||||
| Additional paid-in capital | ||||||||
| Securities purchase agreement receivable | ( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
CHINA PHARMA HOLDINGS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
AMOUNTS IN U.S. DOLLARS, EXCEPT FOR SHARE DATA
(Unaudited)
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | |
$ | $ | $ | |||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit (loss) | ( |
) | ( |
) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Credit losses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income (expense): | ||||||||||||||||
| Research and development subsidy | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net other (expense) income | ( |
) | ( |
) | ||||||||||||
| Loss before income taxes | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive income - foreign currency translation adjustment | ||||||||||||||||
| Comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Loss per share: | $ | ( |
$ | ( |
$ | ( |
$ | ( |
||||||||
| Basic and diluted | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CHINA PHARMA HOLDINGS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
AMOUNTS IN U.S. DOLLARS, EXCEPT FOR SHARE DATA
(Unaudited)
| Securities | Accumulated | |||||||||||||||||||||||||||
| Additional | Purchase | Other | Total | |||||||||||||||||||||||||
| Common Stock | Paid-in | Agreement | Accumulated | Comprehensive | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Receivable | Deficit | Income | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ||||||||||||||||||||||||
| Share rounding due to reverse split | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
*
| Securities | ||||||||||||||||||||||||||||
| Additional | Purchase | Other | Total | |||||||||||||||||||||||||
| Common Stock | Paid-in | Agreement | Accumulated | Comprehensive | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Receivable | Deficit | Income | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
| Issuance of common stock for intangible assets | ||||||||||||||||||||||||||||
| Net loss for the period | - | ( |
) | ( |
) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||
| Net loss for the period | - | ( |
) | ( |
) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
AMOUNTS IN U.S. DOLLARS, EXCEPT FOR SHARE DATA
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Depreciation and amortization | ||||||||
| Amortization of right of use assets | ||||||||
| Financial expense | ||||||||
| Credit losses | ||||||||
| Write-down of inventories to net realizable value | ||||||||
| Loss on disposal of fixed assets | ||||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts and other receivables | ( | ) | ( | ) | ||||
| Advances to suppliers | ||||||||
| Inventories | ||||||||
| Trade accounts payable | ( | ) | ||||||
| Other payables and accrued expenses | ||||||||
| Advances from customers | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Net Cash (Used in) Provided By Operating Activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of property and equipment | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Payments of line of credit | ( | ) | ( | ) | ||||
| Proceeds from line of credit | ||||||||
| Borrowings and interest from related party | ||||||||
| Principal payments on lease liabilities | ( | ) | ||||||
| Net Cash Provided By (Used In) Financing Activities | ( | ) | ||||||
| Effect of Exchange Rate Changes on Cash | ( | ) | ||||||
| Net Decrease in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents at Beginning of Period | ||||||||
| Cash and Cash Equivalents at End of Period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental Noncash Investing and Financing Activities: | ||||||||
| Issuances of stock for intangible assets | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization
and Nature of Operations – China Pharma Holdings, Inc., a Nevada corporation (“China Pharma”), owns
Onny acquired
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 June
30, 2026, the Company had cash and cash equivalents of $
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.
Consolidation and Basis of Presentation – The accompanying unaudited condensed 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 unaudited condensed 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.
6
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated on consolidation. However, the results of operations included in such financial statements may not necessarily be indicative of annual results. Such financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2026 (“2025 Annual Report”).
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.
The Company uses the same accounting policies in preparing its quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
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.
Accounts Receivable and Allowance for Credit Losses – Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company uses loss-rate methods to estimate allowance for credit loss. The allowance for credit loss is estimated based upon the Company’s assessment of various factors including historical experience, the age of the accounts receivable balances, current general economic conditions, future expectations and customer-specific quantitative and qualitative factors that may affect the Company’s customers’ ability to pay. An allowance is also made when there is objective evidence for the Company to reasonably estimate the amount of probable loss.
The Company adopted ASU 2016-13 Financial Instruments — Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.
In establishing an allowance for credit losses, the Company uses reasonable and supportable information, which is based on historical collection experience, the financial condition of its customers and assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss-rate approach is based on the historical loss rates and expectations of future conditions.
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 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.
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.
7
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
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. There were no indicators of impairment of long-lived assets as of June 30, 2026 and December 31, 2025.
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.
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.
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 by 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 on lower cost basis until sold or scrapped.
Reverse Stock Splits –
Effective April 15, 2025, China Pharma implemented a
Loss
Per Share - The Company had
Recent Accounting Pronouncements
On July 30, 2025, the FASB issued ASU 2025-05, which amends ASC 326-20 to provide a practical expedient for all entities which elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset in developing reasonable and supportable forecasts as part of estimating expected credit losses, and an accounting policy election for all entities, other than a public business entity, that elect the practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient and, if so, whether it has also applied the accounting policy election. An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. Entities should apply the new guidance prospectively.
8
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
Recently issued but not yet adopted accounting pronouncements
On December 17, 2025, the FASB issued ASU 2025-12, which is to correct, clarify, and otherwise improve U.S. GAAP. ASU 2025- 12 includes 33 improvements that span a wide range of topics, including Clarifying diluted earnings per share (EPS) calculation when a loss from continuing operations exists, Clarifying disclosure requirements for lease receivables from sales-type or direct financing leases, Revising the calculation of the reference amount for beneficial interests to prevent double counting credit losses, Clarifying the permissible methods to account for treasury stock retirements, and Clarifying the guidance for transfers of receivables from contracts with customers. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this Update in an interim period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. An entity may elect to early adopt the amendments on an issue-by-issue basis. For example, an entity may decide to early adopt certain amendments and adopt the remaining amendments at the effective date. An entity should apply the amendments in this Update (except for the amendments to Topic 260, Earnings Per Share, related to Issue 4) using one of the following transition methods: (i) Prospectively to all transactions recognized on or after the date that the entity first applies the amendments, or (ii) Retrospectively to the beginning of the earliest comparative period presented. An entity should adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
On December 8, 2025, the FASB issued ASU 2025-11, which is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides “interim financial statements and notes in accordance with GAAP.” The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must “disclose events since the end of the last annual reporting period that have a material impact on the entity.” For public business entities, the amendments in ASU 2025- 11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. For all other entities, the amendments in ASU 2025- 11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2028. Early adoption is permitted for all entities. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
In January 2025, the FASB issued ASU 2025-01, “Income Statement – Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40): Clarifying the Effective Date.” This pronouncement revises the effective date of ASU 2024-03 and clarifies 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. Entities within the ASU’s scope are permitted to early adopt the accounting standard update. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.
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:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Trade accounts receivable | ||||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Trade accounts receivable, net | $ | $ | ||||||
9
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED
JUNE 30, 2026 AND 2025 (UNAUDITED)
The changes in the allowances for credit losses during the three and six months ended June 30, 2026 and 2025 were as follows:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Balance, Beginning of Period | $ | $ | $ | $ | ||||||||||||
| Credit losses | ||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||
| Balance, End of Period | $ | $ | $ | $ | ||||||||||||
NOTE 3 – INVENTORIES
Inventories consisted of the following:
| June 30, 2026 |
December 31, 2025 |
|||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | $ | $ | ||||||
| Total Inventories | ||||||||
| Less: Provision for obsolescence | ( |
) | ( |
) | ||||
| $ | $ | |||||||
Changes to the provision for obsolescence consisted of the following:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| At the beginning of the period | ||||||||||||||||
| Net additions to earnings | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| At the end of the period | ||||||||||||||||
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Permit of land use | $ | $ | ||||||
| Building | ||||||||
| Plant, machinery and equipment | ||||||||
| Motor vehicle | ||||||||
| Office equipment | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
10
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED
JUNE 30, 2026 AND 2025 (UNAUDITED)
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
| Asset | Life - years | |||
| permit of land use | ||||
| Building | ||||
| plant, machinery and equipment | ||||
| Motor vehicle | ||||
| office equipment |
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 $
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. costs were reclassified from advances to intangible assets during the six months ended June 30, 2026 and 2025, respectively.
On February 5, 2026, the Company entered into a Technology Transfer Agreement (the “Xiaoyun Chen Agreement”) with Xiaoyun Chen (“Transferor Chen”). Transferor Chen owns an invention patent of a Topiroxostat Nanoemulsion and Method for Its Preparation. Pursuant to the Xiaoyun Chen Agreement, Transferor Chen will transfer the ownership of the patent to Helpson. Transferor Chen or his designated third party shall provide relevant technical services, including, but 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 Xiaoyun Chen Agreement is $
On February 26, 2026, the Company entered into a Technology Transfer Agreement (the “Xiaoyan Zhang Agreement”) with Xiaoyan Zhang (“Transferor Zhang”). Transferor Zhang owns an invention patent of a Prinsepia Utilis Esterol Sublingual Tablets and Method for Its Preparation. Pursuant to the Xiaoyan Zhang Agreement, Transferor Zhang will transfer the ownership of the patent to Helpson. Transferor Zhang or his designated third party shall provide relevant technical services, including, but 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 Xiaoyan Zhang Agreement is $
Approved medical formulas
are amortized from the date NMPA approval is obtained over their individually identifiable estimated useful lives, which range from
11
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
Intangible assets consisted of NMPA approved medical formulas, a Utility Model Patent and three Invention Patents as follows:
| June 30, 2026 |
December 31, 2025 |
|||||||
| NMPA approved medical formulas | $ | $ | ||||||
| Technology from Bonier | ||||||||
| Invention Patents | |
|||||||
| Accumulated amortization | ( |
) | ( |
) | ||||
| Net carrying amount | ||||||||
| Intangible assets in process | ||||||||
| $ | $ | |||||||
NOTE 6 – OTHER PAYABLES
Other Payables consisted of the following:
| June 30, 2026 |
December 31, 2025 |
|||||||
| Compensation payable to officer and director (1) | $ | $ | |
|||||
| Business taxes and other | ||||||||
| Payable to Helpson’s Labor Union (2) | ||||||||
| Payable to Chunming Dong (3) | ||||||||
| Total Other Payables | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
NOTE 7 – RELATED PARTY TRANSACTIONS
On June 25,
2026, the Company borrowed RMB
On July 8, 2019, the Company entered
into a loan agreement with Chairperson Li, pursuant to which the Company borrowed RMB
12
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
On June 20, 2025, the Company borrowed
RMB
Total interest expense related to the
three loans described above for the three months ended June 30, 2026 and 2025 were $
As of June 30, 2026, the outstanding
balance of interest-free borrowings from Chairperson Li. was RMB
In June 2025,
Chunming Dong, the husband of Chairperson Li, advanced RMB
NOTE 8 – LINES OF CREDIT
On June 25,
2025, the Company entered into a new RMB
On September 25, 2023, the Company entered into
a three-year revolving loan agreement and received proceeds of RMB
Principal payments on the above lines of credit are all due within one year of the balance sheet date.
Fair Value of Borrowings Under 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.
13
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
NOTE 9 – LEASES
The Company has leases for
certain office and production facilities in the PRC which are classified as operating leases.
| June 30, 2026 | December 31, 2025 | |||||||
| Lease liabilities, current portion | $ | $ | ||||||
| Lease liabilities, non current portion | ||||||||
| $ | $ | |||||||
| Remaining Lease Term Operating Lease | ||||||||
| Discount rate | % | % | ||||||
Minimum lease payments for the Company’s operating lease liabilities were as follows for the twelve-month period ended June 30:
| 2027 | ||||
| 2028 | ||||
| Total undiscounted cash flows | ||||
| Less: Imputed interest | ( |
) | ||
| Less: Lease liabilities, current portion | ||||
| ( |
) | |||
| Lease liabilities, non current portion | $ | |||
The Company has leases with terms of less than one year for certain provincial sales offices that are not material.
NOTE 10 – 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 June 30, 2026 and December 31, 2025, the Company did 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 subject
to the enterprise income tax rate of
There was provision for income taxes for the three and six months ended June 30, 2026 and 2025, respectively, as the Company did not generate taxable income during those periods.
14
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
As of June 30, 2026, Helpson had
net operating loss carryforwards for PRC tax purposes of approximately $
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
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 June 30, 2026 and December 31, 2025.
Accordingly, the Company recorded a valuation allowance against its deferred tax assets of $
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 11 – 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 as of June 30, 2026 and December 31, 2025. The banker’s
acceptance notes are recorded at cost which approximates fair value.
| Fair Value Measurements at | |||||||||||||||
| June 30, | Reporting Date Using | ||||||||||||||
| Description | 2026 | Level 1 | Level 2 | Level 3 | |||||||||||
| Banker’s acceptance notes | $ | $ | $ | $ | |||||||||||
| Total | $ | $ | $ | $ | |||||||||||
| Fair Value Measurements at | |||||||||||||||
| December 31, | Reporting Date Using | ||||||||||||||
| Description | 2025 | Level 1 | Level 2 | Level 3 | |||||||||||
| $ | $ | $ | $ | ||||||||||||
| $ | $ | $ | $ | ||||||||||||
15
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
NOTE 12 – STOCKHOLDERS’ EQUITY
China Pharma is authorized to
issue
On February
5, 2026, the Company issued
On February
26, 2026, the Company issued
Subsequent to quarter end, on
July 22, 2026, the Company issued
According to relevant PRC laws,
companies registered in the PRC, including China Pharma’s PRC subsidiary, Helpson, are required to allocate at least
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 Amendment No.2 to the Plan to increase the number of shares of the Common Stock that
are reserved thereunder by
NOTE 13 – LOSS PER SHARE
The following table presents the computation of basic and diluted net loss per share for the three and six months ended June 30, 2026 and 2025:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: Basic and diluted weighted-average common shares outstanding | ||||||||||||||||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | $ | ( | ) | $ | ( | ) | |||||
16
CHINA PHARMA HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2026 AND 2025 (UNAUDITED)
NOTE 14 – COMMITMENTS AND CONTINGENCIES
Current vulnerability due to certain concentrations
For the six
months ended June 30, 2026, two customers accounted for
For the six
months ended June 30, 2025, one customer accounted for
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.
NOTE 15 – SUBSEQUENT EVENTS
Subsequent to quarter end, on July 22, 2026, the
Company entered into a securities purchase agreement (the “Securities Agreements”) with an institutional investor to purchase
an aggregate of
Pursuant to the terms of the Securities Purchase
Agreement, the Company and the Buyers have agreed that (i) from July 22, 2026 until the date that is the three (3) months anniversary
of the closing date, or the date on which all of the transaction documents have been executed and delivered by the applicable parties
thereto, the investor shall have the right to participate in up to an amount equal to
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The statements contained in this report with respect to our financial condition, results of operations and business that are not historical facts are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology, such as “anticipate,” “believe,” “expect,” “plan,” “intend,” “seek,” “estimate,” “project,” “could,” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the readers that any such forward-looking statements contained in this report reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors, including, but not limited to, economic, competitive, regulatory, technological, key employees, and general business factors affecting our operations, markets, growth, services, products, licenses and other factors, some of which are described in this report and some of which are discussed in our other filings with the Securities and Exchange Commission (the “SEC”). These forward-looking statements are only estimates or predictions. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.
These risk factors should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. All written and oral forward-looking statements made in connection with this report that are attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given these uncertainties, we caution investors not to unduly rely on our forward-looking statements. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by applicable law or regulation.
Business Overview & Recent Developments
China Pharma Holding Inc. (“China Pharma”) is not a Chinese operating company but a Nevada holding company. All of our operations are conducted in the PRC through Hainan Helpson Medical & Biotechnology Co., Ltd (“Helpson”), our wholly owned subsidiary incorporated under the laws of the People’s Republic of China (the “PRC”), where the manufacturing facilities are located. 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. It 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 of them 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.
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.
In response to the evolving macro-environment of pharmaceutical sales in China, Helpson has adopted a more prudent and flexible approach to the initiation and advancement of consistency evaluation projects for its existing products. In 2018, the relevant competent authorities in China decided to launch pilot Centralized Procurement (“CP”) programs in 11 selected pilot cities, including four municipalities directly under the Central Government and seven other cities. As of June 30, 2026, a total of eleven rounds of national-level CP have been implemented. Among them, the first to eighth batches of CP have successfully completed unified renewal procurement cycles, covering 316 commonly used drugs across 26 therapeutic areas. These CP initiatives have significantly reduced the prices of bid-winning drugs and reshaped the competitive landscape of the pharmaceutical market. In addition, consistency evaluation has long been established as a core qualification criterion for enterprises to participate in CP programs. Consequently, before making decisions on whether to participate in CP for any of its products, Helpson evaluates the potential market access opportunities provided by CP against the financial and time investments required to obtain CP qualification, as well as the risk of significant price declines for drugs included in the CP catalog.
18
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.
In April 2024, Helpson began serving as a Contract Manufacturing Organization (CMO) for a project, undertaking R&D and post-market commercial production activities. This initiative generated approximately $50,000 in revenue in 2024. In 2025, the CMO project generated $33,227 in revenue. Under the contract terms, following the launch of the customer’s product, the Company expects to continue providing production services, which may contribute to additional sales revenue and ensure sustained cash inflows. The project completed process validation in January 2025 and is currently undergoing stability testing. The registration application submission to the National Medical Products Administration (NMPA) was finalized in the third quarter of 2025 and is currently under regulatory review. Moving forward, the Company intends to leverage its competitive advantages as a CMO, including its highly skilled technical team, state-of-the-art facilities, multiple production lines, ample capacity, extensive manufacturing expertise, and a robust quality management system.
Results of Operations for the Three months ended June 30, 2026
Revenue
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.
Set forth below are our revenues by product category in millions (USD) for the three months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | ||||||||||||||||
| Product Category | 2026 | 2025 | Net Change | % Change | ||||||||||||
| CNS Cerebral & Cardio Vascular | 0.50 | 0.42 | 0.08 | 19 | % | |||||||||||
| Anti-Viral/ Infection & Respiratory | 0.32 | 0.53 | -0.21 | -40 | % | |||||||||||
| Digestive Diseases | 0.12 | 0.06 | 0.06 | 100 | % | |||||||||||
| Other | 0.01 | 0.02 | -0.01 | -50 | % | |||||||||||
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.
“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.
19
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.
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.
| Three Months Ended June 30, | ||||||||
| Product Category | 2026 | 2025 | ||||||
| CNS Cerebral & Cardio Vascular | 53 | % | 40 | % | ||||
| Anti-Viral/ Infection & Respiratory | 33 | % | 52 | % | ||||
| Digestive Diseases | 13 | % | 6 | % | ||||
| Other | 1 | % | 2 | % | ||||
In terms of revenue mix, the Company’s product revenue structure changed during the three 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 40% to 53%, making it the Company’s largest revenue contributor. The revenue share of the “Anti-Viral / Infection & Respiratory” product category declined from 52% to 33%, mainly driven by market conditions, centralized procurement policies and intensified industry competition. Although this category remains the Company’s second-largest business segment, its relative revenue contribution has decreased. The revenue proportion of “Digestive Diseases” rose from 6% to 13% due to the resumption of sales of Compound Ammonium Glycyrrhetate S. Revenue from the “Other” category experienced a slight year-over-year decrease.
Cost of Revenue
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.”).
Gross Profit/ (Loss) and Gross Profit/ (Loss) Margin
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.
The increase in gross margin was mainly attributable to certain machinery and equipment reaching the end of their estimated useful lives and being fully depreciated, which reduced product costs and contributed to the shift from gross loss to gross profit.
Selling Expenses
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.
General and Administrative Expenses
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.
20
Research and Development Expenses
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.
Credit Losses
Our credit losses for the three months ended June 30, 2026 were $5,538, compared to $2,032 for the same period in 2025.
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.
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.
The following table illustrates our trade accounts receivable aging distribution in terms of the percentage of the total accounts receivable, respective gross accounts receivables as well as the allocated allowance for credit losses as of June 30, 2026 and 2025:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| 1 - 180 Days | 35.77 | % | 72.38 | % | ||||
| 180 - 365 Days | 48.71 | % | 24.61 | % | ||||
| 365 - 720 Days | 12.19 | % | 1.17 | % | ||||
| > 720 Days | 3.33 | % | 1.84 | % | ||||
| Total | 100.00 | % | 100.00 | % | ||||
| Gross Trade Accounts Receivable Amount | Allocated Allowance for Doubtful Accounts | |||||||||||||||
| 30-Jun-26 | 31-Dec-25 | 30-Jun-26 | 31-Dec-25 | |||||||||||||
| 1-180 Days | 70,058 | 184,158 | 225 | 0 | ||||||||||||
| 180-365 Days | 95,391 | 62,624 | 6,245 | 6,262 | ||||||||||||
| 365-720 Days | 23,881 | 2,973 | 1,240 | 2,081 | ||||||||||||
| Over 720 Days | 6,519 | 4,680 | 6,518 | 4,680 | ||||||||||||
| Total | 195,849 | 254,435 | 14,228 | 13,023 | ||||||||||||
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.
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.
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.
21
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:
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Balance, Beginning of Period | $ | 13,023 | $ | 13,587,182 | ||||
| Credit Losses | 779 | 709 | ||||||
| Foreign currency translation adjustment | 426 | 56,115 | ||||||
| Balance, End of Period | $ | 14,228 | $ | 13,644,006 | ||||
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
Loss from Operations
Our operating loss for the three months ended June 30, 2026 was $1.43 million, compared to $0.65 million for the same period in 2025.
Research and Development Expenses
For the three months ended June 30, 2026, the research and development expenses were $0.02 million, compared to $0.02 million for the same period in 2025.
Net Interest Expense
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.
Net Loss
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.
Loss per basic and diluted common share was $0.04 for the three months ended June 30, 2026 and $0.16 for the three months ended June 30, 2025, respectively.
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.
Results of operations for the six months ended June 30, 2026
Revenue
Revenue decreased by 10.6% to $1.93 million for the six months ended June 30, 2026, compared to $2.16 million for the same period in 2025.
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Set forth below are our revenues by product category in millions (USD) for the six months ended June 30, 2026 and 2025, respectively:
| Six Months Ended June 30, | ||||||||||||||||
| Product Category | 2026 | 2025 | Net Change | % Change | ||||||||||||
| CNS Cerebral & Cardio Vascular | 1.02 | 0.76 | 0.26 | 34 | % | |||||||||||
| Anti-Viral/ Infection & Respiratory | 0.72 | 1.25 | -0.53 | -42 | % | |||||||||||
| Digestive Diseases | 0.17 | 0.11 | 0.06 | 55 | % | |||||||||||
| Other | 0.02 | 0.04 | -0.02 | -50 | % | |||||||||||
The most significant revenue increase in terms of dollar amount was our “CNS Cerebral & Cardio Vascular” product category, which generated $1.02 million in sales revenue for the six months ended June 30, 2026, compared to $0.76 million for the same period in 2025, represented an increase of $0.26 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.
“Digestive” product category generated $0.17 million in sales revenue for the six months ended June 30, 2026, compared to $0.11 million for the same period in 2025, which represented 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.
The largest revenue decline in dollar terms was in the “Anti-Viral/ Infection & Respiratory” product category, which generated $0.72 million for the six months ended June 30, 2026, compared to $1.25 million for the same period in 2025, representing a decrease of $0.53 million. This decrease was primarily due to lower sales of Roxithromycin Dispersible Tablets and Cefaclor Dispersible Tablets caused by market fluctuations.
The “Other” product category generated $0.02 million for the six months ended June 30, 2026, compared to $0.04 million for the same period in 2025, which represented a decrease of $0.02 million. This decrease was mainly due to the decrease in sales of Vitamin B6 for Injection due to market fluctuation.
| Six Months Ended June 30, | ||||||||
| Product Category | 2026 | 2025 | ||||||
| CNS Cerebral & Cardio Vascular | 53 | % | 35 | % | ||||
| Anti-Viral/ Infection & Respiratory | 37 | % | 58 | % | ||||
| Digestive Diseases | 9 | % | 5 | % | ||||
| Other | 1 | % | 2 | % | ||||
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.
Core cardiovascular and cerebrovascular products achieved higher sales during the period supported by policy benefits such as successful bids in multi-regional centralized procurement programs and renewal of national centralized procurement, which contributed to changes in our product mix. In contrast, the shrinking proportion of respiratory and anti-infection products was primarily attributable to changes in market demand and increased competition. Going forward, we expect to focus on the cardiovascular and cerebrovascular sectors, optimize its product portfolio, and manage weaker product lines, with the objective of steadily enhancing overall profitability and operational resilience.
Cost of Revenue
For the six months ended June 30, 2026, our cost of revenue was $1.56 million, or 80.9% of total revenue, compared to $2.39 million, or 110.3% of total revenue, for the same period in 2025. The decrease in the cost of revenue in this period was mainly due to the decrease in amortization of our PP&E and the decrease in the allowance of inventory obsolescence.
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Gross Profit/ (Loss) and Gross Profit/ (Loss) Margin
Gross profit for the six months ended June 30, 2026 was $0.37 million, compared to a gross loss of $0.22 million for the same period of 2025. The gross profit margin was 19.1% for the six months ended June 30, 2026, compared to a gross loss margin of 10.3% for the same period in 2025.
The increase in gross margin was mainly attributable to certain machinery and equipment reaching the end of their estimated useful lives and being fully depreciated, which reduced product costs and contributed to the shift from gross loss to gross profit.
Selling Expenses
Our selling expenses for the six months ended June 30, 2026 and 2025 were $0.21 million and $0.19 million, respectively. Selling expenses accounted for 10.8% of the total revenue in the six months ended June 30, 2026 compared to 8.7% for the same period in 2025.
General and Administrative Expenses
Our general and administrative expenses for the six months ended June 30, 2026 were $2.60 million, as compared to $0.95 million in the same period in 2025. Our general and administrative expenses accounted for 134.8% and 43.8% of our total revenues in the six 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.
Research and Development Expenses
Our research and development expenses for the six months ended June 30, 2026 and 2025 were $0.10 million and $0.05 million, respectively.
Loss from Operations
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.
Net Interest Expense
Net interest expense for the six months ended June 30, 2026 was $0.05 million, compared to $0.05 million for the same period in 2025.
Net Loss
Net loss for the six months ended June 30, 2026 was $2.60 million, as compared to net loss of $1.31 million for the same period in 2025. The increase in net loss was primarily driven by an increase in amortization of intangible assets.
For the six months ended June 30, 2026, loss per basic and diluted common share was $0.08, compared to loss per basic and diluted common share of $0.4 for the same period in 2025.
The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 34,087,748 for the six months ended June 30, 2026, compared to 3,261,956 for the same period in 2025.
Liquidity and Capital Resources
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.
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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.
As discussed in Note 15, on July 22, 2026, the Company entered into a Securities Purchase Agreement, with an institutional investor to purchase an aggregate of 2,500,000 shares of common stock of the Company, par value of $0.001 per share, at the purchase price of $2.00 per share. The Company received net proceeds of $4,425,000 from the transaction on July 23, 2026.
Operating Activities
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.
Investing Activities
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.
Financing Activities
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.
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.
The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China. Our businesses and assets are primarily denominated in RMB. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires the submission of a payment application form together with certain invoices and executed contracts. The currency exchange control procedures imposed by Chinese government authorities may restrict Helpson, our Chinese subsidiary, from transferring its net assets to our parent company through loans, advances or cash dividends.
Off-Balance Sheet Arrangements
As of June 30, 2026, we did not have any off-balance sheet arrangements.
Critical Accounting Policies
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.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and interim Chief Financial Officer evaluated the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this quarterly report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (b) is accumulated and communicated to management, including our Chief Executive Officer and interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as described above. Based on this evaluation, our Chief Executive Officer and interim Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2026 to satisfy the objectives for which they are intended. This was due to the material weakness in our internal control over financial reporting, with respect to our lack of accounting financial reporting personnel who were knowledgeable in U.S. GAAP, as disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on April 1, 2026. Notwithstanding the aforementioned material weakness, management has concluded that our condensed consolidated financial statements included in this report are fairly stated in all material respects in accordance with U.S. GAAP for each period presented herein.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
Item 6. Exhibits
The exhibits required by this item are set forth in the Exhibit Index attached hereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CHINA PHARMA HOLDINGS, INC. | |||
| Date: August 14, 2026 | By: | /s/ Zhilin Li | |
| Name: | Zhilin Li | ||
| Title: | President and Chief Executive Officer | ||
| (principal executive officer) | |||
| Date: August 14, 2026 | By: | /s/ Zhilin Li | |
| Name: | Zhilin Li | ||
| Title: | Interim Chief Financial Officer | ||
| (principal financial officer and principal accounting officer) | |||
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EXHIBIT INDEX
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