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What changed in CHINA PHARMA HOLDINGS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CHINA PHARMA HOLDINGS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+275 added−340 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-01)

Top changes in CHINA PHARMA HOLDINGS, INC.'s 2024 10-K

275 paragraphs added · 340 removed · 193 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+25 added−53 removed105 unchanged
Biggest changeThe NMPA promulgated Good Manufacturing Practices for Pharmaceutical Products (2010 revised version) on February 12, 2011 (effective as of March 1, 2011) (the “Year 2011 GMP Standards”). The Year 2011 GMP Standards outlines the basic principles and standards for the manufacturing of pharmaceutical products and the management of quality controls in the pharmaceutical products manufacturing industry in the PRC.
Biggest changeWe implement quality control procedures in this facility in compliance with the PRC’s Good Manufacturing Practices, or GMP standards, and applicable NMPA regulations to ensure consistent quality in our products. The NMPA promulgated Good Manufacturing Practices for Pharmaceutical Products (2010 revised version) on February 12, 2011 (effective as of March 1, 2011) (the “Year 2011 GMP Standards”).
Year of Commercial Product Indication Launch Central Nervous System (CNS) and Cerebral-Cardiovascular Diseases Cerebroprotein Hydroloysate Injection Memory decline and attention deficit disorder caused by the sequela of craniocerebral trauma and cerebrovascular diseases. 1996 Gastrodin Injection Tiredness, loss of concentration, poor sleep, and traumatic syndromes of the brain, including vertigo, neuralgia and headaches. 2005 Propylgallate for Injection Cerebral thrombosis, coronary heart disease and complications after surgery such as thrombus deep phlebitis. 2006 Ozagrel Sodium for Injection Acute thrombotic cerebral infarction and dyskinesia associated with cerebral infarction 2006 Alginic Sodium Diester Injection Ischemic heart disease, cerebrovascular diseases (cerebral thrombosis, cerebral embolism and coronary heart disease) and high lipoprotein blood disease. 2006 Bumetanide for Injection Various edema diseases (including those associated with heart failure, hepatic cirrhosis, nephropathy, and pulmonary edema), hypertension, acute renal failure, hyperkalemia, hypercalcemia and for the rescue from acute drug poisoning. 2007 Candesartan Hypertension 2013 8 Anti-infection and Respiratory Diseases Roxithromycin Dispersible Tablets Pharyngitis and tonsillitis caused by Streptococcus pyogenes; sinusitis, tympanitis, acute and chronic bronchitis caused by acute bacterial infection, Mycoplasma pneumonia and Chlamydia pneumoniae; urethritis and cervical infection caused by chlamydia trachomatis; skin soft tissue infection caused by sensitive bacteria. 1995 Cefaclor Dispersible Tablets Tympanitis, lower respiratory tract infection, urinary tract infections and skin/skin tissue infection. 2002 Cefalexin Capsules Acute tonsillitis caused by sensitive fungi, airway infections, such as pharyngitis, otitis media, nasal sinusitis and bronchitis; pneumonia, respiratory tract infection, urinary tract infections and skin soft tissue infections. 2002 Andrographolide Detoxification, antibacterial and anti-inflammatory.
Year of Commercial Product Indication Launch Central Nervous System (CNS) and Cerebral-Cardiovascular Diseases Cerebroprotein Hydroloysate Injection Memory decline and attention deficit disorder caused by the sequela of craniocerebral trauma and cerebrovascular diseases. 1996 Gastrodin Injection Tiredness, loss of concentration, poor sleep, and traumatic syndromes of the brain, including vertigo, neuralgia and headaches. 2005 Propylgallate for Injection Cerebral thrombosis, coronary heart disease and complications after surgery such as thrombus deep phlebitis. 2006 Ozagrel Sodium for Injection Acute thrombotic cerebral infarction and dyskinesia associated with cerebral infarction 2006 Alginic Sodium Diester Injection Ischemic heart disease, cerebrovascular diseases (cerebral thrombosis, cerebral embolism and coronary heart disease) and high lipoprotein blood disease. 2006 Bumetanide for Injection Various edema diseases (including those associated with heart failure, hepatic cirrhosis, nephropathy, and pulmonary edema), hypertension, acute renal failure, hyperkalemia, hypercalcemia and for the rescue from acute drug poisoning. 2007 Candesartan Hypertension 2013 9 Anti-infection and Respiratory Diseases Roxithromycin Dispersible Tablets Pharyngitis and tonsillitis caused by Streptococcus pyogenes; sinusitis, tympanitis, acute and chronic bronchitis caused by acute bacterial infection, Mycoplasma pneumonia and Chlamydia pneumoniae; urethritis and cervical infection caused by chlamydia trachomatis; skin soft tissue infection caused by sensitive bacteria. 1995 Cefaclor Dispersible Tablets Tympanitis, lower respiratory tract infection, urinary tract infections and skin/skin tissue infection. 2002 Cefalexin Capsules Acute tonsillitis caused by sensitive fungi, airway infections, such as pharyngitis, otitis media, nasal sinusitis and bronchitis; pneumonia, respiratory tract infection, urinary tract infections and skin soft tissue infections. 2002 Andrographolide Detoxification, antibacterial and anti-inflammatory.
Capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from the SAFE or its local counterpart for conversion of Renminbi into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC. Payments for transactions that take place within the PRC must be made in Renminbi.
Capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from the SAFE or its local counterpart for conversion of Renminbi into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC. 19 Payments for transactions that take place within the PRC must be made in Renminbi.
We will proactively adjust our business focus and allocate resources to meet market development preferences, provide a more convenient user experience, better standard treatment plans, and bring higher patient satisfaction. Our objective is to leverage our expertise in the PRC for the development, manufacture and commercialization of pharmaceutical products.
We will proactively adjust our business focus and allocate resources to meet market development preferences, provide a more convenient user experience, better standard treatment plans, and bring higher patient satisfaction. 7 Our objective is to leverage our expertise in the PRC for the development, manufacture and commercialization of pharmaceutical products.
The Company has not identified any strategic acquisition opportunities as of the date of this report on Form 10-K. Products Helpson currently has a product portfolio of 22 products, including 19 pharmaceutical products that address a wide variety of diseases and medical indications, and the remaining are comprehensive healthcare and protective products.
The Company has not identified any strategic acquisition opportunities as of the date of this report on Form 10-K. 8 Products Helpson currently has a product portfolio of 22 products, including 19 pharmaceutical products that address a wide variety of diseases and medical indications, and the remaining are comprehensive healthcare and protective products.
As a result of these regulations, the holder of a new medicine certificate has the exclusive right to manufacture it during the monitoring period. We currently have the new medicine certificates for our Pusenouke, Cefaclor dispersible tablets and Roxithromycin dispersible tablets and Bumetanide for injection products. 13 National Production Standard and Provisional Standard .
As a result of these regulations, the holder of a new medicine certificate has the exclusive right to manufacture it during the monitoring period. We currently have the new medicine certificates for our Pusenouke, Cefaclor dispersible tablets and Roxithromycin dispersible tablets and Bumetanide for injection products. National Production Standard and Provisional Standard .
The NMPA has a variety of enforcement actions available to enforce its regulations and rules, including fines and injunctions, recall or seizure of products, imposition of operating restrictions, partial suspension or complete shutdown of production and criminal prosecution. Pharmaceutical Product Manufacturing Permits and Licenses for Pharmaceutical Manufacturers.
The NMPA has a variety of enforcement actions available to enforce its regulations and rules, including fines and injunctions, recall or seizure of products, imposition of operating restrictions, partial suspension or complete shutdown of production and criminal prosecution. 17 Pharmaceutical Product Manufacturing Permits and Licenses for Pharmaceutical Manufacturers.
New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. 4 The PRC government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and requiring actions necessary for compliance.
New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. The PRC government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and requiring actions necessary for compliance.
However, the PRC regulatory authorities may in the future promulgate laws, regulations, or implementing rules that require us, or Helpson, to obtain additional permissions or approvals to operate business. Upon that time, we cannot assure we are able to receive such additional permissions and approvals on time.
However, the PRC regulatory authorities may in the future promulgate laws, regulations, or implementing rules that require us, or Helpson, to obtain additional permissions or approvals to operate our business. Upon that time, we cannot assure we are able to receive such additional permissions and approvals on time.
As of December 31, 2023, China Pharma, through Helpson, manufactured 19 pharmaceutical products for a wide variety of diseases and medical indications, each of which may be classified into one of three general categories: ● Basic generic drugs, which are common drugs in the PRC for which there is a very large market demand; ● First-to-market generic drugs, which are generic drugs that are new to the PRC marketplace; or ● Modern Traditional Chinese Medicines (“TCMs”), which are generally comprised of non-synthetic, plant-based medicinal compounds that have been widely used in the PRC for thousands of years.
As of December 31, 2024, China Pharma, through Helpson, manufactured 19 pharmaceutical products for a wide variety of diseases and medical indications, each of which may be classified into one of three general categories: ● Basic generic drugs, which are common drugs in the PRC for which there is a very large market demand; ● First-to-market generic drugs, which are generic drugs that are new to the PRC marketplace; or ● Modern Traditional Chinese Medicines (“TCMs”), which are generally comprised of non-synthetic, plant-based medicinal compounds that have been widely used in the PRC for thousands of years.
If a manufacturer chooses to manufacture a post-clinical medicine, it only needs to go through the clinical trials. In both cases, a manufacturer needs to file clinical data with the NMPA for approval to manufacture after clinical trials are completed. New Medicine .
If a manufacturer chooses to manufacture a post-clinical medicine, it only needs to go through the clinical trials. In both cases, a manufacturer needs to file clinical data with the NMPA for approval to manufacture after clinical trials are completed. 16 New Medicine .
Since China ended its zero-case policy and no longer requires shutdown or quarantine in December 2022, the market demand for prevention materials, such as masks has surged. 10 Distribution and Customers Helpson has a well-established sales network. As its current pharmaceutical product portfolio is comprised mainly of prescription drugs, its major sales targets are hospitals.
Since China ended its zero-case policy and no longer requires shutdown or quarantine in December 2022, the market demand for prevention materials, such as masks has surged. 12 Distribution and Customers Helpson has a well-established sales network. As its current pharmaceutical product portfolio is comprised mainly of prescription drugs, its major sales targets are hospitals.
ITEM 1. BUSINESS. Overview China Pharma Holdings Inc. (the “Company”, “China Pharma”, “we”, “us”, or “our”) is a Nevada holding company. China Pharma is not a Chinese operating company and all the operations are all conducted by our wholly owned subsidiary, Hainan Helpson Medical and Biotechnology Co., Ltd. (“Helpson”) and its subsidiaries in China.
ITEM 1. BUSINESS. Overview China Pharma Holdings Inc. (the “Company”, “China Pharma”, “we”, “us”, or “our”) is a Nevada holding company. China Pharma is not a Chinese operating company and all the operations are conducted by our wholly owned subsidiary, Hainan Helpson Medical and Biotechnology Co., Ltd. (“Helpson”) and Helpson’s subsidiaries in China.
Based on a foundation established by a number of our widely-recognized prescription products, such as Cefaclor and Roxithromycin, Helpson has launched and will continue to launch a variety of pharmaceuticals. The core criteria for Helpson’s selection of potential pipeline products is strong market demand, proven efficacy, and safety.
Based on a foundation established by a number of our widely-recognized prescription products, such as Cefaclor and Roxithromycin, Helpson has launched and will continue to launch a variety of pharmaceuticals. The core criteria for Helpson’s selection of potential pipeline products are strong market demand, proven efficacy, and safety.
In November 2008, Helpson purchased the patented medical formula and the manufacturing processes for a cerebral/cardio-vascular indication from a third party laboratory. In connection with that acquisition, we obtained the title of the patent. This patent expires in 2025. 12 In 2012, Helpson acquired another patent related to a medical formula for the treatment of cerebral/cardio-vascular diseases.
In November 2008, Helpson purchased the patented medical formula and the manufacturing processes for a cerebral/cardio-vascular indication from a third-party laboratory. In connection with that acquisition, we obtained the title of the patent. This patent expires in 2025. 15 In 2012, Helpson acquired another patent related to a medical formula for the treatment of cerebral/cardio-vascular diseases.
Helpson has actively promoted the consistency evaluation process of several important products in 2023; and its flagship product, Candesartan, has passed the evaluation of consistency in August 2023. The PRC Legal System Legal and Operational Risks Associated with Having the Majority of the Company’s Operations in China The PRC legal system is based on written statutes.
Helpson has actively promoted the consistency evaluation process of several important products in 2024; and its flagship product, Candesartan, has passed the evaluation of consistency in August 2023. 4 The PRC Legal System Legal and Operational Risks Associated with Having the Majority of the Company’s Operations in China The PRC legal system is based on written statutes.
China has entered a post epidemic era with the end of the dynamic zero-COVID policy since December 2022, and the burden of being protected from the COVID and other epidemics has fallen on each individuals, which we believe will boost the sales of Helpson’s products.
China has entered a post epidemic era with the end of the dynamic zero-COVID policy since December 2022, and the burden of being protected from the COVID and other epidemics has fallen on each individual, which we believe will boost the sales of Helpson’s products.
Transfer from Transfer to Approximate value ($) Note 1 Helpson (via Onny) China Pharma 30,000 For the payment of the agent service fees of China Pharma 3 For the year ended December 31, 2022 No.
Transfer from Transfer to Approximate value ($) Note 1 Helpson (via Onny) China Pharma 30,000 For the payment of the agent service fees of China Pharma For the year ended December 31, 2023 No.
We have updated our employment contracts and employee handbook and are in compliance with such law. 16
We have updated our employment contracts and employee handbook and are in compliance with such law. 20
As of December 31, 2023, Helpson owns 15 registered trademarks, including marks for eight of the 19 pharmaceutical products Helpson manufactures, including the tradenamesFukexing, Beisha, Shiduotai, Xinuo, Pusenlitai, Pusenouke, Shuchang, Shenkaineng, XERONINE, and Aronino, as well as marks for the HPS logo, two HELPSON logos and two other logos.
As of December 31, 2024, Helpson owns 15 registered trademarks, including marks for eight of the 19 pharmaceutical products Helpson manufactures, including the tradenames Fukexing, Beisha, Shiduotai, Xinuo, Pusenlitai, Pusenouke, Shuchang, Shenkaineng, XERONINE, and Aronino, as well as marks for the HPS logo, two HELPSON logos and two other logos.
For sore throat caused by upper respiratory tract infection 2003 Clarithromycin Granules and Capsules Nasopharynx infection, lower respiratory tract infection, skin tissue infection, acute tympanitis and mycoplasma pneumonia caused by clarithromycin susceptible organisms; urethritis and cervical infection caused by chlamydia trachomatis; and the treatment of legionella infection, mycobacterium avium complex (MAC) infection and helicobacter pylori infection. 2004 Naproxen Sodium and PseudophedrineHydrochlorida Sustained Release Tablet Relieves cold, sinus and flu symptoms, blocked nose caused by anaphylaxis rhinitis, runny nose, fever, sore throat, symptoms of myalgia in the limbs and pain around the joints. 2005 Digestive Diseases Hepatocyte Growth-promoting Factor for Injection Serious viral hepatitis symptoms caused by various viral hepatitis types (acute, subnormal temperature, chronic serious disease early or middle period of hepatitis). 2005 Tiopronin Acute and chronic Hepatitis B, and for the relief of drug-induced liver injury. 2009 Compound Ammonium Glycyrrhetate S for Injection Liver dysfunction caused by acute and chronic hepatitis; supplemental treatment to toxic/trauma hepatitis, liver cancer; also for the indication of food/drug poisoning, and drug allergy. 2009 Omeparzole Gastroesophageal reflux disease, and other conditions caused by excess acidic formulations in the stomach, including gastric ulcers, recurrent duodenal ulcers and Zollinger-Ellison Syndrome. 2009 Others Vitamin B6 for Injection Vitamin supplement. 2005 Granisetron Hydrochloride Injection Nausea and vomiting caused by radiotherapy and chemotherapy during the treatment of malignant tumors. 2006 Comprehensive Healthcare and Protective Products Noni Enzyme natural, healthy and nutritionrich a natural, healthy and nutrition-rich food supplement 2018 Sanitizer 75% alcohol wash-free sanitizer 2020 Masks KN95 Particulate Respirator, Disposable Medical Mask, Particle Filtering Mask, N95 Medical Protective Mask 2020 to 2023 9 Set forth below are our revenues by product category in millions (USD) for the years ended December 31, 2023 and 2022: Twelve Months Ended December 31, Net Product Category 2023 2022 Change % Change CNS Cerebral & Cardio Vascular 1.62 1.70 -0.08 -5 % Anti-Viral/ Infection & Respiratory 3.57 4.94 -1.37 -28 % Digestive Diseases 1.09 0.41 0.68 166 % Other 0.73 1.06 -0.33 -31 % Due to the nature of the pharmaceutical industry, Helpson continually strives to change our product portfolio to respond to changes in market demand.
For sore throat caused by upper respiratory tract infection 2003 Clarithromycin Granules and Capsules Nasopharynx infection, lower respiratory tract infection, skin tissue infection, acute tympanitis and mycoplasma pneumonia caused by clarithromycin susceptible organisms; urethritis and cervical infection caused by chlamydia trachomatis; and the treatment of legionella infection, mycobacterium avium complex (MAC) infection and helicobacter pylori infection. 2004 Naproxen Sodium and Pseudophedrine Hydrochlorida Sustained Release Tablet Relieves cold, sinus and flu symptoms, blocked nose caused by anaphylaxis rhinitis, runny nose, fever, sore throat, symptoms of myalgia in the limbs and pain around the joints. 2005 10 Digestive Diseases Hepatocyte Growth-promoting Factor for Injection Serious viral hepatitis symptoms caused by various viral hepatitis types (acute, subnormal temperature, chronic serious disease early or middle period of hepatitis). 2005 Tiopronin Acute and chronic Hepatitis B, and for the relief of drug-induced liver injury. 2009 Compound Ammonium Glycyrrhetate S for Injection Liver dysfunction caused by acute and chronic hepatitis; supplemental treatment to toxic/trauma hepatitis, liver cancer; also for the indication of food/drug poisoning, and drug allergy. 2009 Omeparzole Gastroesophageal reflux disease, and other conditions caused by excess acidic formulations in the stomach, including gastric ulcers, recurrent duodenal ulcers and Zollinger-Ellison Syndrome. 2009 Others Vitamin B6 for Injection Vitamin supplement. 2005 Granisetron Hydrochloride Injection Nausea and vomiting caused by radiotherapy and chemotherapy during the treatment of malignant tumors. 2006 Comprehensive Healthcare and Protective Products Noni Enzyme natural, healthy and nutrition-rich a natural, healthy and nutrition-rich food supplement 2018 Sanitizer 75% alcohol wash-free sanitizer 2020 Masks KN95 Particulate Respirator, Disposable Medical Mask, Particle Filtering Mask, N95 Medical Protective Mask 2020 to 2023 11 Set forth below are our revenues by product category in millions (USD) for the years ended December 31, 2024 and 2023: Twelve Months Ended December 31, Net Product Category 2024 2023 Change % Change CNS Cerebral & Cardio Vascular 1.35 1.62 -0.27 -17 % Anti-Viral/ Infection & Respiratory 2.75 3.57 -0.82 -23 % Digestive Diseases 0.20 1.09 -0.89 -82 % Other 0.18 0.73 -0.55 -75 % Due to the nature of the pharmaceutical industry, Helpson continually strives to change our product portfolio to respond to changes in market demand.
While sales of the pharmaceutical products to hospitals are made through the distributors, Helpson believes it has established long-term cooperation relationships with leading hospitals and healthcare clinics throughout China resulting from its long-term promotional efforts and periodic physician seminars, so that to improve the perception of the products in the marketplace and help identify and select high-volume drugs to develop into new generic products relatively early in the process.
While sales of the pharmaceutical products to hospitals are made through the distributors, Helpson believes it has established long-term cooperation relationships with leading hospitals and healthcare clinics throughout China resulting from its long-term promotional efforts and periodic physician seminars, so that to improve the perception of the products in the marketplace and help identify and select high-volume drugs to develop into new generic products relatively early in the process. 14 Notwithstanding such favorable positioning, Helpson is subject to intense competition.
Its diversified GMP-certified manufacturing facility includes various production lines targeting a variety of delivery mechanisms, such as tablets, capsules, cephalosprine tablets, cephalosprine capsules, liquid-injectables and dry powder injectables, which enables it to effectively manufacture a broad range of new drugs; other than that, it also has production lines for health care products and various types of masks that meet national standards. 11 We have product diversification to target specific sub-markets.
Its diversified GMP-certified manufacturing facility includes various production lines targeting a variety of delivery mechanisms, such as tablets, capsules, cephalosprine tablets, cephalosprine capsules, liquid-injectables and dry powder injectables, which enables it to effectively manufacture a broad range of new drugs; other than that, it also has production lines for health care products and various types of masks that meet national standards.
Employees As of December 31, 2023, we had 239 employees, among which 231 employees were full-time employees and 8 employees were temporary employees. None of our employees is represented by a labor union and, in general, we consider our relationship with our employees to be good.
Employees As of December 31, 2024, we had 231 employees, among which 224 employees were full-time employees and 7 employees were temporary employees. None of our employees is represented by a labor union and, in general, we consider our relationship with our employees to be good.
These reserves are not distributable as cash dividends. 15 PCAOB Regulations As auditors of companies that are traded publicly in the United States and a firm registered with the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by the PCAOB.
PCAOB Regulations As auditors of companies that are traded publicly in the United States and a firm registered with the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by the PCAOB.
Additionally, these foreign-invested enterprises are required to set aside certain amounts of their accumulated profits each year, if any, to fund certain reserve funds.
Additionally, these foreign-invested enterprises are required to set aside certain amounts of their accumulated profits each year, if any, to fund certain reserve funds. These reserves are not distributable as cash dividends.
Helpson has production lines conforming with the 2011 version of GMP certificates for different forms of its products including: tablets, capsules, dry power, liquid injectables, solid oral solution Cephalosporins (specifically designated); other than that, it also has production lines for health care products and various types of masks that meet national standards.
Helpson maintains production lines that conform to the 2011 GMP standards for various product forms including: tablets, capsules, dry power, liquid injectables, solid oral solution Cephalosporins (specifically designated); other than that, it also has production lines for health care products and various types of masks that meet national standards.
Notwithstanding such favorable positioning, Helpson is subject to intense competition. There are both local and overseas pharmaceutical enterprises that are engaged in the manufacture and sale of potential substitute or similar pharmaceutical products in the PRC. These competitors may have more capital, better research and development resources, better manufacturing and marketing capability, and more experience than we do.
There are both local and overseas pharmaceutical enterprises that are engaged in the manufacture and sale of potential substitute or similar pharmaceutical products in the PRC. These competitors may have more capital, better research and development resources, better manufacturing and marketing capability, and more experience than we do.
If we do not receive or maintain the approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, and these risks could result in a material adverse change in our operations and the value of our common stock, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless. 5 The PRC’s Medical Insurance System National Healthcare Security Administration (“NHSA”) issued the Statistical Bulletin on the Development of National Medical Security in 2022 (the “Bulletin”) on July 11, 2023.
If we do not receive or maintain the approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, and these risks could result in a material adverse change in our operations and the value of our common stock, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
CSRC Filing Requirements and Cybersecurity Review As China Pharma is already publicly listed in the U.S., the Trial Measures (as defined below) do not impose additional regulatory burden on us beyond the obligation to report to the CSRC any future offerings of our securities, or material events such as a change of control or delisting.
An inability to obtain, or the incurrence of substantial costs in obtaining, such permits, authorizations and approvals may have a material adverse effect on our business, financial condition and results of operations. 5 CSRC Filing Requirements and Cybersecurity Review As China Pharma is already publicly listed in the U.S., the Trial Measures (as defined below) do not impose additional regulatory burden on us beyond the obligation to report to the CSRC any future offerings of our securities, or material events such as a change of control or delisting.
Competition We believe we have established a commercially competitive position in the highly-fragmented pharmaceutical industry in China through our core competitive advantages, as described below: Helpson has a highly-efficient commercialization process for new products, including significant experience with the NMPA registration process.
For the year ended December 31, 2023 three top suppliers accounted for 17.7%, 13.8%, and 8.9%, respectively. 13 Competition We believe we have established a commercially competitive position in the highly-fragmented pharmaceutical industry in China through our core competitive advantages, as described below: Helpson has a highly-efficient commercialization process for new products, including significant experience with the NMPA registration process.
The New Law cancelled the GMP certification but impose the pilot inspection mechanism in the event that if any production line(s) does not satisfy any pilot inspection under the New Law, the production on such production line(s) could be suspended.
A newly revised Drug Administration Law (the “New Law”) came into effect on December 1, 2019. The New Law cancelled the GMP certification but impose the pilot inspection mechanism in the event that if any production line(s) does not satisfy any pilot inspection under the New Law, the production on such production line(s) could be suspended.
For the year ended December 31, 2023, the purchases of raw material purchases from its three top suppliers accounted for 17.7%, 13.8%, and 8.9%, respectively. For the year ended December 31, 2022 suppliers accounted for 21.7%, 9.1%, and 8.9%, respectively.
For the year ended December 31, 2024, the purchases of raw material purchases from its three top suppliers accounted for 22.9%, 21.3%, and 14.6%, respectively.
The tables below present cash flow transfer between China Pharma and Helpson, through China Pharma’s wholly owned subsidiary Onny Investment Limited (“Onny”) for the year ended December 31, 2023 and 2022. The Company’s management understands that there is no tax consequences for cash flow transfers between China Pharma and Helpson through Onny. For the year ended December 31, 2023 No.
The Company’s management understands that there are no tax consequences for cash flow transfers between China Pharma and Helpson through Onny. For the year ended December 31, 2024 No.
Product Liability and Consumers Protection Product liability claims may arise if any of our pharmaceutical products have a harmful effect on a consumer, who may make a claim for damages or compensation as an injured party.
We believe that GMP inspection only switches to another form, which includes flight inspection, drug production license inspection (for on-site management and quality system), as well as product inspection. 18 Product Liability and Consumers Protection Product liability claims may arise if any of our pharmaceutical products have a harmful effect on a consumer, who may make a claim for damages or compensation as an injured party.
We believe that generic drugs we have always been selecting to manufacture have large addressable markets and higher profit margins relative to other generic drugs manufactured and distributed in the PRC. In addition, China Pharma, through Helpson, manufactured comprehensive healthcare products and protective products. China Pharma, through Helpson, currently own and operate two production facilities in Haikou, Hainan Province, PRC.
We believe that generic drugs we have always been selecting to manufacture have large addressable markets and higher profit margins relative to other generic drugs manufactured and distributed in the PRC.
Due to the nature of Helpson’s products and current governmental regulations, all of its customers are located in the PRC. Helpson has established long-standing relationships with key customers. Production Facilities China Pharma, through Helpson, manufacture and package our products at our manufacturing facility in the Haikou Free Trade Zone in Haikou, Hainan Province.
Production Facilities China Pharma, through Helpson, manufacture and package our products at our manufacturing facility in the Haikou Free Trade Zone in Haikou, Hainan Province.
We attempt to differentiate our products from those of our competitors by changing, and, in many cases, improving certain physical aspects of our products to market under different market segments. For example, to make our Cefaclor product more patient friendly to children and patients with swallowing problems, we added an enteric coating to make our tablets easier to swallow.
We have product diversification to target specific sub-markets. We attempt to differentiate our products from those of our competitors by changing, and, in many cases, improving certain physical aspects of our products to market under different market segments.
All of Helpson’s production lines: tablets, capsules, dry powder, liquid injectables, solid oral solution Cephalosporins (specifically designated), are in full compliance with the Year 2011 GMP Standards. A newly revised Drug Administration Law (the “New Law”) came into effect on December 1, 2019.
The Year 2011 GMP Standards outlines the basic principles and standards for the manufacturing of pharmaceutical products and the management of quality controls in the pharmaceutical products manufacturing industry in the PRC. All of Helpson’s production lines: tablets, capsules, dry powder, liquid injectables, solid oral solution Cephalosporins (specifically designated), are in full compliance with the Year 2011 GMP Standards.
Helpson has a national sales network and a highly-trained marketing team. Helpson’s experienced sales team has industry knowledge and know-how to synergistically combine its strong market insight with successful commercialization platforms. Helpson has developed high-quality relationships with leading hospital and clinic administrators and physicians.
For example, to make our Cefaclor product more patient friendly to children and patients with swallowing problems, we added an enteric coating to make our tablets easier to swallow. Helpson has a national sales network and a highly-trained marketing team. Helpson’s experienced sales team has industry knowledge and know-how to synergistically combine its strong market insight with successful commercialization platforms.
As of the date of this annual report, Helpson’s production lines are in full compliance with the New Law. 1 Helpson markets and sells its products through 16 sales offices covering all major cities and provinces in the PRC.
As of the date of this annual report, Helpson’s production lines are in full compliance with the New Law. Helpson has established a comprehensive sales network and compliance system while conducting business and selling its products in the Chinese market.
Intercompany activities between the holding company and our subsidiaries As of the date of this report, none of our subsidiaries has distributed any dividends to China Pharma, nor has China Pharma distributed any dividends to the investors. The Company currently has no intention to distribute earnings to the shareholders and investors.
By 2050, with over 30% of China’s population elderly, demand for premium healthcare products and services will likely sustain stable industry growth. 3 Intercompany activities between the holding company and our subsidiaries As of the date of this report, none of our subsidiaries has distributed any dividends to China Pharma, nor has China Pharma distributed any dividends to the investors.
One has a construction area of 663.94 square meters, the other factory has two buildings with production area of 20,282.42 square meters and 6,593.20 square meters. We implement quality control procedures in this facility in compliance with the PRC’s Good Manufacturing Practices, or GMP standards, and applicable NMPA regulations to ensure consistent quality in our products.
In addition, China Pharma, through Helpson, manufactured comprehensive healthcare products and protective products. 1 China Pharma, through Helpson, currently own and operate two production facilities in Haikou, Hainan Province, PRC. One has a construction area of 663.94 square meters, the other factory has two buildings with production area of 20,282.42 square meters and 6,593.20 square meters.
We believe that under the background of national medical insurance cost control, centralized procurement of drugs and medical insurance negotiation should be the new norm. Our Strategy We believe that the pursuit of innovation is imperative for providing the basic medical solutions needed by the majority of patients.
The tenth CP batch (December 2024) procured 62 drugs, with 385 products from 234 firms selected, covering 435 drugs across 10 batches, creating RMB 500 billion (approximately $70 billion) in fund space for new drugs and technologies. Our Strategy We believe that the pursuit of innovation is imperative for providing the basic medical solutions needed by the majority of patients.
Removed
To comply with applicable Chinese laws relating to sales of prescription drugs to certain hospitals and clinics, Helpson also uses a distribution system comprised of over 1,000 independent provincial-level, city-level, and county-level distributors.
Added
Helpson directly supplies products to hospital and OTC pharmacies through provincial and municipal pharmaceutical logistic companies with legal qualifications (such as the "Drug Supply License" and GSP certification), covering the primary healthcare institution market.
Removed
Helpson’s sales system has further developed and expanded with the expansion of Chinese healthcare reform, and its 16 provincial offices deliver the products to basic health care institutions as well as tier two and tier three hospitals through the above mentioned distributors. Our corporate organizational chart is set forth below.
Added
Leveraging our professional team's academic-driven promotion model, we provide tailored services to medical institutions, offering evidence-based medical support to build a value chain from clinical medication to patient health improvement outcomes, thereby achieving sales targets. We strive to maintain sustained growth amidst a stringent regulatory environment.
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Industry Background and Market Opportunities According to the relevant data of the pharmaceutical manufacturing industry released by the National Bureau of Statistics of the People’s Republic of China (“NBS”), as of the first half of 2023, the cumulative value of the operating revenue of the pharmaceutical manufacturing industry in China was RMB1,250 billion, down 2.9% from the same period last year; the accumulated value of profit was RMB179 billion, down 17.1% from the same period last year.
Added
Our corporate organizational chart is set forth below. 2 Industry Background and Market Opportunities China’s pharmaceutical industry is heavily policy-driven. Policies like the generic drug consistency evaluation and centralized volume-based procurement (CP) significantly shape the market.
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While fully enjoying the expansion of the industry out of rigid demand, the development of the pharmaceutical industry is also under the pressure of medical insurance fee control. According to the data of NBS, the proportion of China’s population over the age of 65 has reached 15.4% by the end of 2023.
Added
According to the National Bureau of Statistics of China, in the first half of 2024, pharmaceutical enterprises above a designated size reported operating income of RMB 1.47 trillion (approximately $205 billion), a 1.4% year-on-year decline, and profits of RMB 211.2 billion (approximately $29.5 billion), down 1.2%.
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With the gradual deepening of population aging, the demand continues to be strong, but the ensuing medical insurance pressure has also become the main theme of industrial policy changes in recent years. On one hand, more and more people use medical insurance funds; on the other hand, fewer and fewer people pay premiums.
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Unlike Western markets, China’s pharmaceutical sector features numerous small-scale manufacturers, low industry concentration, and intense competition over homogeneous products. As of August 2024, there were 9,679 pharmaceutical firms, up 267 from year-end 2023. Recent healthcare reforms promote consolidation, but the longstanding issue of fragmentation persists.
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Under this circumstance, population aging has become one of the main factors aggravating the imbalance of medical insurance fund.
Added
An aging population and rising healthcare demand fuel industry growth, tempered by medical insurance cost controls. In 2024, China’s population aged 60 and above reached 310.31 million (22.0% of the total), up from 296.97 million (21.1%) in 2023.
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According to the latest Statistical Bulletin on the Development of National Medical Insurance in 2022 issued by NBS, the number of people participating in national basic medical insurance reached 1.35 billion in 2022, and the participation rate remained stable at more than 95%.
Added
Professor Chen Youhua of Nanjing University notes that pension coverage has driven the retiree proportion from 9.26% in 2010 to 15.8% in 2020, projected to exceed 23% by 2030.
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According to the national medical security plan for the 14 th five-year-plan issued by the General Office of the State Council of China on September 29, 2021, personal health expenditure only occupied 27.7% of the total health expenditure in 2020, and it is expected to remain to be at around 27% by 2025.
Added
With 1.334 billion people enrolled in basic medical insurance (95% coverage) by 2023, personal health expenditures remain low (27.7% of total health costs in 2020, expected to hold near 27% by 2025), shifting the burden to government and social funds. This pressures the medical insurance system, with fewer premium payers supporting more beneficiaries, exacerbating fund imbalances.
Removed
This means that the vast majority of medical and health expenditure is being borne by the government and society. Under the background of medical insurance adjustment, domestic drug sales have also experienced great changes.
Added
The National Healthcare Security Administration (NHSA) has expanded CP nationwide, slashing drug prices to secure bids. Since 2018, ten batches of national drug procurement have occurred, with the tenth batch in October 2024 covering 62 products and 263 specifications (e.g., cardiovascular, anti-infection drugs). The NHSA plans an eleventh batch in 2025, targeting 700 varieties.
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The use of adjuvant drugs has gradually fallen out of favor, giving up the share of medical insurance funds for specialized drugs and tumor drugs with more clinical efficacy.
Added
This has favored specialized and oncology drugs over adjuvant therapies, pushing generic manufacturers to innovate. In 2024’s first 11 months, the basic medical insurance fund recorded RMB 3.11 trillion (approximately $434 billion) in revenue and RMB 2.63 trillion (approximately $367 billion) in expenditure, with a cumulative balance of RMB 3.86 trillion (approximately $539 billion).
Removed
Under such policies, pharmaceutical enterprises have to carry out innovation and transform, and the overall environment of deepening medical reform has greatly reduced the profits of generic pharmaceutical enterprises in China. 2 China National Healthcare Security Administration (“NHSA”) has gradually promoted volume-based procurement for the entire national market, therefore, pharmaceutical manufacturers have greatly reduced the price in order to win the bid.
Added
Rising medical demand and consumption levels highlight the value of innovative, high-quality drugs. The State Council’s 2023 TCM revitalization plan positions Traditional Chinese Medicine as a key health pillar. The TCM market neared RMB 720 billion (approximately $101 billion) in 2023, with a 1.75% five-year CAGR, and is estimated to exceed RMB 750 billion (approximately $105 billion) in 2024.
Removed
Since 2018, the National Medical Insurance Bureau of China (“NMIB”) has organized nine batches of national organized drug procurement, including a total of 374 drugs, with an average price reduction of over 50%.
Added
The Company currently has no intention to distribute earnings to the shareholders and investors. The tables below present cash flow transfer between China Pharma and Helpson, through China Pharma’s wholly owned subsidiary Onny Investment Limited (“Onny”) for the year ended December 31, 2024 and 2023.
Removed
The ninth batch of China’s state-organized centralized drug procurement was announced in Shanghai on November 6, 2023, of which 41 drugs were successfully purchased, and the average price of selected drugs was reduced by 58%.
Added
Consistency Evaluation for Generic Drugs Generic drugs replicate the active ingredients, dosage, administration route, form, and indications of original patented drugs, matching them in safety, efficacy, and quality. However, differences in non-active ingredients may cause slight therapeutic variations. China’s generic drug industry is advancing toward higher quality.
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The collection covers infections, tumors, cardiovascular and cerebrovascular diseases, gastrointestinal diseases, mental diseases and other common diseases, chronic drugs, as well as emergency drugs, drugs in short supply and other key drugs to improve the sense of gain of the masses.
Added
The NMPA enforces lifecycle oversight to ensure safety and efficacy, with consistency evaluations enhancing generic substitutability for originals, offering affordable, high-quality options. Generics account for approximately 77.8% of drug sales, vital for chronic and common disease treatment. In the first half of 2024, 875 product specifications passed consistency evaluations, with injectables comprising 47.9%, covering 387 unique drug varieties.
Removed
The National Medical Insurance Bureau is working with relevant departments to guide selected enterprises in the implementation of the marketing of the selected products, and in March 2024, patients across the country have been able to purchase products selected in the ninth batch with reduced price.
Added
The NMPA’s September 2023 draft Guidelines limit applications for identical products to three years post-initial approval, fostering innovation. Post-2019 peak, the generic market dropped to below RMB 850 billion (approximately $118 billion) in 2020 due to the pandemic, stabilizing near RMB 900 billion (approximately $125 billion) from 2021–2023.
Removed
We also have observed the continuous improvement in medical demand and consumption level in recent years, and the value of high-quality medicine with innovation and consumption attributes has become prominent.
Added
Since 2015, consistency evaluations and CP have elevated quality and market share, with R&D focusing on advanced generics (e.g., insoluble drug delivery, controlled-release formulations). Helpson actively pursues evaluations, with its flagship Candesartan passing in August 2023.
Removed
In addition, in February 2023, the Implementation Plan of the Major Project for the Revitalization and Development of Traditional Chinese Medicine issued by The General Office of the State Council of China made it clear that traditional Chinese medicine will become an important supporting force for the construction of a healthy China.
Added
The PRC’s Medical Insurance System Since its inception, the NHSA has adjusted the drug catalog annually, adding 835 drugs (530 via negotiation, 38 via bidding) and removing 438 outdated or replaceable ones. By October 2024, negotiated drug payments exceeded RMB 350 billion (approximately $49 billion), aiding 830 million patients.
Removed
In the future, with the advancement of medical insurance and centralized procurement policies, TCM treatment and conditioning will be favored by more patients. The market size of TCM has been rising year by year, reaching RMB 697 billion in 2022, an increase of 2.63% year-on-year.
Added
The 2024 catalog, effective January 1, 2025, added 91 drugs (89 negotiated/bid, 2 CP-selected) and removed 43, totaling 3,159 drugs, reducing patient costs by over RMB 50 billion (approximately $7 billion) in 2025. Cost control drives policy. The medical insurance fund, covering ~40% of healthcare costs, dictates industry cash flow.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

92 edited+32 added−82 removed229 unchanged
Biggest changeProduct recalls could impose significant costs on us and adversely affect our ability to generate revenue; o If we fail to develop new products with high profit margins and our high-profit-margin products are replaced by competitors’ products, then our gross will be adversely affected; o Most of our products are off-patent branded generics that can be manufactured and sold by other pharmaceutical manufacturers in the PRC which may increase the competition we face; o If we are not able to maintain and enhance our brand recognition to maintain our competitive advantage, our reputation, business and operating results may be harmed; o Reimbursement may not be available for our products, which could diminish our sales; o The growth and success of our business depend on our ability to successfully market our principal products to hospitals and their selection for medicine purchases; o Our future research and development projects may not be successful; o We cooperate with research institutions and universities in the PRC for the research and development of certain new products and any failure of such research institutions to meet our timing and quality standards may pose impairment loss on our financial results and our failure to continue such collaborative arrangement could adversely affect our ability to develop new pharmaceuticals and our overall business prospects; o We may not be able to obtain regulatory approval for any of the new products and failure to obtain these approvals could materially harm our business; o New product development in the pharmaceutical industry is time-consuming and costly and has a low rate of successful commercialization; o We may not be able to successfully identify and acquire new products or businesses; o We rely on distributors for all of our revenues and failure to maintain relationships or to otherwise expand our distribution network would materially and adversely affect our business; 17 o We rely on a limited number of distributors for the majority of sales of our products; o Our operations may be affected if we could not pass the Consistency Evaluation requirement issued by the State Council for any of our current existing products; o We face risks related to health pandemics that could impact our sales and operating results; o Our operations may be affected if we could not obtain raw materials from our current key suppliers on acceptable terms; o We may not be able to effectively manage our employees and distribution network, and our reputation, business, prospects and brand may be materially and adversely affected by actions taken by our distributors and third party marketing firms; o We have limited insurance coverage and may incur losses resulting from product liability claims, business interruptions or claims that could be covered by D&O Insurance; o Our future liquidity needs are uncertain and we may need to raise additional funds in the future. ● Risks Related to Doing Business in China o Adverse changes in political and economic policies of the PRC government could have a material and adverse effect on the overall economic growth of China, which could reduce the demand for our services and materially and adversely affect our competitive position; o The Chinese government may intervene with or influence our business at any time.
Biggest changeRisks Related to our Business and our Industry ● Our products’ commercial success depends on market acceptance among the medical community; low acceptance would adversely affect operations and profitability ● Failure to meet Drug Administration Law standards could lead to production line suspensions, adversely affecting operations and profitability ● Product cessations or recalls initiated by us or the NMPA could impose significant costs and affect our revenue generation ● Failure to develop high-profit-margin products while existing high-margin products face competition could adversely affect our gross and net profit margins ● Our products face substantial competition; competitors may develop, acquire or commercialize products earlier or more successfully ● Most of our products are off-patent branded generics that can be manufactured and sold by other pharmaceutical manufacturers, increasing competition and reducing profitability ● Our business depends on our Helpson brand name; failure to maintain and enhance brand recognition could harm our reputation, business and operating results ● Lack of reimbursement for our products could diminish sales or affect our ability to sell profitably ● Our growth and success depend on successfully marketing our principal products to hospitals and their selection in tender processes ● Our future research and development projects may not be successful for various reasons including regulatory approvals ● We cooperate with research institutions and universities for R&D; any failure in these collaborations could adversely affect our business ● Regulatory approval for new products is uncertain; failure to obtain approvals could materially harm our business ● New product development is time-consuming, costly and has a low rate of successful commercialization ● We may not be able to successfully identify and acquire new products or businesses ● We rely on distributors for all revenues; failure to maintain these relationships would materially affect our business ● We rely on a limited number of distributors for the majority of sales ● Our operations may be affected if we cannot pass the Consistency Evaluation requirement for our existing products ● Our operations may be affected if we cannot obtain raw materials from current key suppliers on acceptable terms ● We may not be able to effectively manage our employees and distribution network, affecting our reputation, business, and brand ● We have limited insurance coverage and may incur losses from product liability claims, business interruptions, or claims covered by D&O Insurance ● Our future liquidity needs are uncertain and we may need to raise additional funds ● Failure to manage growth effectively could adversely affect our business, financial condition and results ● We depend on key employees and consultants in a competitive market; inability to attract and retain key personnel could affect our ability to develop and market products 21 ● Power shortages, natural disasters, terrorist acts or other calamities could disrupt production and have a material adverse effect ● We cannot guarantee protection of our intellectual property rights; infringement or counterfeiting of our IP could affect our reputation and business Risks Related to Doing Business in China ● Adverse changes in political and economic policies of the PRC government could affect economic growth and our competitive position ● The Chinese government may intervene with or influence our business at any time, negatively affecting our operations, listing status, and share value ● The PRC legal system has inherent uncertainties that could limit legal protections available to us ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC ● As a Foreign Invested Company in China, Helpson’s ownership structure may be impacted by foreign investment regulations ● Receiving substantially all revenue in Renminbi, which is not freely convertible, subjects us to changes in the PRC’s political and economic decisions ● We are subject to PRC environmental protection laws that may be costly to comply with and may affect manufacturing operations ● Failure to comply with PRC regulations regarding employee equity incentive plans may subject our PRC employees or us to fines and sanctions ● U.S. regulatory bodies may be limited in conducting investigations or inspections of our operations in China ● PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay use of offering proceeds ● Complying with evolving cybersecurity, information security, privacy and data protection laws may be expensive and force adverse business changes ● The Holding Foreign Companies Accountable Act and related regulations could pose regulatory risks and restrictions ● PRC regulations on offshore special purpose companies by PRC residents may subject our PRC resident owners or our PRC subsidiary to liability ● Our ability to distribute dividends largely depends on dividends from our PRC operating entity, which may be limited by PRC laws ● Dividends payable to foreign investors and gain on sale of our shares may become subject to PRC taxes ● We face uncertainty regarding indirect transfers of equity interests in PRC resident enterprises by non-PRC holding companies ● The market price for our common stock may be volatile, potentially resulting in complete investment loss ● We may issue additional shares of capital stock to raise cash, diluting existing stockholders’ percentage ownership ● We are likely to remain subject to “penny stock” regulations with additional sales practice requirements and SEC warnings ● We are responsible for indemnifying officers and directors under certain circumstances, potentially resulting in substantial unrecoverable expenditures ● We have identified material weaknesses in internal control over financial reporting, affecting reliable reporting and investor confidence ● There is substantial doubt about our ability to continue as a going concern ● We do not anticipate paying cash dividends on our common stock 22 Risks Related to our Business and our Industry The commercial success of our products depends upon the degree of their market acceptance among the medical community.
Any disclosure of documents or information located in China by foreign agencies may be subject to jurisdiction constraints and must comply with China’s state secrecy laws, which broadly define the scope of “state secrets” to include matters involving economic interests and technologies.
Any disclosure of documents or information located in China by foreign agencies may be subject to jurisdiction constraints and must comply with China’s state secrecy laws, which broadly define the scope of “state secrets” to include matters involving economic interests and technologies.
A product candidate that appears promising in the early phases of development may fail to reach the market for a number of reasons, such as: ● the failure to demonstrate safety and efficacy in preclinical and clinical trials; ● the failure to obtain approvals for intended use from relevant regulatory bodies, such as the NMPA; ● our inability to manufacture and commercialize sufficient quantities of the product economically; and ● proprietary rights, such as patent rights, held by others to our product candidates and their refusal to sell or license such rights to us on reasonable terms, or at all.
A product candidate that appears promising in the early phases of development may fail to reach the market for a number of reasons, such as: ● the failure to demonstrate safety and efficacy in preclinical and clinical trials; ● the failure to obtain approvals for intended use from relevant regulatory bodies, such as the NMPA; 28 ● our inability to manufacture and commercialize sufficient quantities of the product economically; and ● proprietary rights, such as patent rights, held by others to our product candidates and their refusal to sell or license such rights to us on reasonable terms, or at all.
The market price for our common stock is highly volatile and subject to wide fluctuations in response to factors including the following: ● actual or anticipated fluctuations in our quarterly operating results; ● announcements of new products by us or our competitors; ● changes in financial estimates by securities analysts; ● conditions in the pharmaceutical market; ● changes in the economic performance or market valuations of other companies involved in pharmaceutical production; ● announcements by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● economic, regulatory and political developments; ● addition or departure of key personnel, or ● potential litigation.
The market price for our common stock is highly volatile and subject to wide fluctuations in response to factors including the following: ● actual or anticipated fluctuations in our quarterly operating results; ● announcements of new products by us or our competitors; ● changes in financial estimates by securities analysts; ● conditions in the pharmaceutical market; ● changes in the economic performance or market valuations of other companies involved in pharmaceutical production; 50 ● announcements by our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● economic, regulatory and political developments; ● addition or departure of key personnel, or ● potential litigation.
If we fail to complete the consistency evaluations for our generic drugs per the government’s requirements, our business and operation will be negatively impacted. Our operations may be affected if we could not obtain raw materials from our current key suppliers on acceptable terms. We need a supply of a wide variety of raw materials to manufacture our products.
If we fail to complete the consistency evaluations for our generic drugs per the government’s requirements, our business and operation will be negatively impacted. 30 Our operations may be affected if we could not obtain raw materials from our current key suppliers on acceptable terms. We need a supply of a wide variety of raw materials to manufacture our products.
The NMPA has the authority to revoke drug approvals previously granted and remove previously approved products from the market for various reasons. If we fail to develop new products with profit margins and our high-profit-margin products are replaced by competitors’ products, then our gross and net profits margins will be adversely affected.
The NMPA has the authority to revoke drug approvals previously granted and remove previously approved products from the market for various reasons. 23 If we fail to develop new products with high profit margins and our high-profit-margin products are replaced by competitors’ products, then our gross and net profits margins will be adversely affected.
Alliances may develop among competitors, and these alliances may rapidly acquire significant market share. Furthermore, in order to gain market share in China, competitors may significantly increase their advertising expenditures and promotional activities or even engage in irrational or predatory pricing behavior. In addition, our competitors may engage in inappropriate competition or illegal acts, such as bribery.
Alliances may develop among competitors, and these alliances may rapidly acquire significant market share. 24 Furthermore, in order to gain market share in China, competitors may significantly increase their advertising expenditures and promotional activities or even engage in irrational or predatory pricing behavior. In addition, our competitors may engage in inappropriate competition or illegal acts, such as bribery.
Our inability to enter into such agreements or our failure to maintain such arrangements could limit the number of new products that we develop and ultimately decrease our sources of future revenue. We may not be able to obtain regulatory approval for any of the new products and failure to obtain these approvals could materially harm our business.
Our inability to enter into such agreements or our failure to maintain such arrangements could limit the number of new products that we develop and ultimately decrease our sources of future revenue. 27 We may not be able to obtain regulatory approval for any of the new products and failure to obtain these approvals could materially harm our business.
Our business’s profitability may be adversely affected if additional or modified environmental control regulations are imposed upon us. Failure to comply with PRC regulations regarding the registration requirements for employee equity incentive plans may subject our PRC citizen employees or us to fines and other legal or administrative sanctions.
Our business’s profitability may be adversely affected if additional or modified environmental control regulations are imposed upon us. 41 Failure to comply with PRC regulations regarding the registration requirements for employee equity incentive plans may subject our PRC citizen employees or us to fines and other legal or administrative sanctions.
Therefore, our gross profit margin and net profit margins could be adversely affected notwithstanding any increase in our revenues. 20 Our products face substantial competition. Other companies may discover, develop, acquire or commercialize products earlier or more successfully than we do. We operate in a highly competitive environment.
Therefore, our gross profit margin and net profit margins could be adversely affected notwithstanding any increase in our revenues. Our products face substantial competition. Other companies may discover, develop, acquire or commercialize products earlier or more successfully than we do. We operate in a highly competitive environment.
If we are unable to attract and retain key personnel, it could adversely affect our ability to develop and market our products. We are highly dependent upon the principal members of our management team, especially Ms. Zhilin Li, our Chairperson, President and Chief Executive Officer. We cannot not guarantee that Ms.
If we are unable to attract and retain key personnel, it could adversely affect our ability to develop and market our products. We are highly dependent upon the principal members of our management team, especially Ms. Zhilin Li, our Chairperson, President and Chief Executive Officer. We cannot guarantee that Ms.
As a result, we may find it difficult to maintain the existing level of sales of our products, and our revenues and profitability may decline. Our future research and development projects may not be successful. The successful development of pharmaceutical products can be influenced by many factors.
As a result, we may find it difficult to maintain the existing level of sales of our products, and our revenues and profitability may decline. 26 Our future research and development projects may not be successful. The successful development of pharmaceutical products can be influenced by many factors.
If the Company fail to complete such registrations, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business. 33 On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect as of June 1, 2015.
If the Company fail to complete such registrations, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business. 42 On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect as of June 1, 2015.
As set forth in such report, our management has concluded that our internal controls over financial reporting were not effective as of December 31, 2023, and there existed a material weakness in our internal control over financial reporting as of December 31, 2023. 43 We are taking appropriate actions to internally training related personnel, such as Chief Financial Officer, to remediate such material weakness; however, such measures may not be sufficient to address the material weaknesses identified or ensure that our controls and procedures are effective.
As set forth in such report, our management has concluded that our internal controls over financial reporting were not effective as of December 31, 2023, and there existed a material weakness in our internal control over financial reporting as of December 31, 2023. 52 We are taking appropriate actions to internally training related personnel, such as Chief Financial Officer, to remediate such material weakness; however, such measures may not be sufficient to address the material weaknesses identified or ensure that our controls and procedures are effective.
However, in the event the 2021 Negative List is amended in the future to include any of the business Helpson is operating, our ownership structure could be subject to change to the extent our structure is not given any “grandfather” protection. 31 Because we receive substantially all of our revenue in Renminbi, which currently is not a freely convertible currency, and the PRC government controls the currency conversion and the fluctuation of the Renminbi, we are subject to changes in the PRC’s political and economic decisions.
However, in the event the 2021 Negative List is amended in the future to include any of the business Helpson is operating, our ownership structure could be subject to change to the extent our structure is not given any “grandfather” protection. 39 Because we receive substantially all of our revenue in Renminbi, which currently is not a freely convertible currency, and the PRC government controls the currency conversion and the fluctuation of the Renminbi, we are subject to changes in the PRC’s political and economic decisions.
Furthermore, our sales and results of operations could be adversely affected if the Helpson brand or our reputation is impaired by recalls or negative publicity for one of our branded products, or certain actions taken by our distributors, competitors, third-party marketing firms or relevant regulatory authorities. 21 Reimbursement may not be available for our products, which could diminish our sales or affect our ability to sell our products profitably.
Furthermore, our sales and results of operations could be adversely affected if the Helpson brand or our reputation is impaired by recalls or negative publicity for one of our branded products, or certain actions taken by our distributors, competitors, third-party marketing firms or relevant regulatory authorities. 25 Reimbursement may not be available for our products, which could diminish our sales or affect our ability to sell our products profitably.
The PRC legal infrastructure, however, is significantly different in operation from its United States counterpart, and may present a significant impediment to the operation of a foreign invested enterprise. 30 You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC against our company or our management based on U.S. or other foreign laws.
The PRC legal infrastructure, however, is significantly different in operation from its United States counterpart, and may present a significant impediment to the operation of a foreign invested enterprise. 38 You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC against our company or our management based on U.S. or other foreign laws.
While all of our existing product lines are in full compliance with the GMP standards issued in 2011, in the event we fail to continually meet the requirements of the GMP and receive the deficiency feedback from any pilot inspection under the New Law, the production on such production line(s) could be suspended and our operations and profitability could be adversely affected.
While all of our existing product lines are in full compliance with the GMP standards issued in 2011, in the event we fail to continually meet the requirements of the GMP and receive the deficiency feedback from any pilot inspection under the 2019 Law, the production on such production line(s) could be suspended and our operations and profitability could be adversely affected.
In the event we or any of our directors or officers are sued under any proceedings or actions that could be covered by a standard D&O insurance, we may incur substantial costs and expenses to defend such case. 26 Our future liquidity needs are uncertain and we may need to raise additional funds in the future.
In the event we or any of our directors or officers are sued under any proceedings or actions that could be covered by a standard D&O insurance, we may incur substantial costs and expenses to defend such case. 32 Our future liquidity needs are uncertain and we may need to raise additional funds in the future.
Any disruption of our distribution network, including our failure to renew our existing distribution agreements with our desired distributors, could negatively affect our ability to effectively sell our products and would materially and adversely affect our business, financial condition and results of operations. 24 We rely on a limited number of distributors for the majority of sales of our products .
Any disruption of our distribution network, including our failure to renew our existing distribution agreements with our desired distributors, could negatively affect our ability to effectively sell our products and would materially and adversely affect our business, financial condition and results of operations. 29 We rely on a limited number of distributors for the majority of sales of our products .
There is substantial doubt about our ability to continue as a going concern. Our auditors have indicated in their report on our financial statements for the years ended December 31, 2023 and 2022 that conditions exist that raise substantial doubt about our ability to continue as a going concern as discussed in Note 1 to the financial statements.
There is substantial doubt about our ability to continue as a going concern. Our auditors have indicated in their report on our financial statements for the years ended December 31, 2024 and 2023 that conditions exist that raise substantial doubt about our ability to continue as a going concern as discussed in Note 1 to the financial statements.
Therefore, the Company does not intend to have any dividend distribution in the future. 40 Dividends payable by us to our foreign investors and gain on the sale of our shares may become subject to taxes under PRC tax laws.
Therefore, the Company does not intend to have any dividend distribution in the future. 48 Dividends payable by us to our foreign investors and gain on the sale of our shares may become subject to taxes under PRC tax laws.
We rely on a limited number of distributors for most of our net revenue. Our top five distributors in aggregate accounted for 22% and 20% of our net revenues in 2023 and 2022, respectively. We expect that a relatively small number of distributors will continue to account for a major portion of our net revenue in the near future.
We rely on a limited number of distributors for most of our net revenue. Our top five distributors in aggregate accounted for 24% and 22% of our net revenues in 2024 and 2023, respectively. We expect that a relatively small number of distributors will continue to account for a major portion of our net revenue in the near future.
We may issue additional shares of our capital stock to raise additional cash for working capital. There is no anti-dilution protection or preemptive rights in connection with our common stock. Thus, the percentage ownership of existing holders of common stock may be diluted in their respective percentage ownership in us if we issue additional shares of our capital stock.
There is no anti-dilution protection or preemptive rights in connection with our common stock. Thus, the percentage ownership of existing holders of common stock may be diluted in their respective percentage ownership in us if we issue additional shares of our capital stock.
Any adverse change in the economic conditions or government policies in China could have a material and adverse effect on overall economic growth and the level of investments in health industries in China, which in turn could lead to a reduction in demand for our products and consequently have a material and adverse effect on our business. 29 The Chinese government may intervene with or influence our business at any time.
Any adverse change in the economic conditions or government policies in China could have a material and adverse effect on overall economic growth and the level of investments in health industries in China, which in turn could lead to a reduction in demand for our products and consequently have a material and adverse effect on our business.
For the year ended December 31, 2023, three suppliers accounted for 17.7%, 13.8% and 9.1% of raw material purchases and for the year ended December 31, 2022, three suppliers accounted for 21.7%, 11.1% and 8.9% of raw material purchases. Historically, we have not had difficulty obtaining raw materials from suppliers.
For the year ended December 31, 2024, three suppliers accounted for 22.9%, 21.3% and 14.6% of raw material purchases and for the year ended December 31, 2023, three suppliers accounted for 17.7%, 13.8% and 9.1% of raw material purchases. Historically, we have not had difficulty obtaining raw materials from suppliers.
While the HFCAA and AHFCAA are not currently applicable to the Company because the Company’s current auditors are subject to PCAOB review, if this changes in the future for any reason, the Company may be subject to the HFCAA and AHFCAA. The implications of this regulation if the Company were to become subject to it are uncertain.
While the HFCAA and AHFCAA are not currently applicable to the Company because the Company’s current auditors are subject to PCAOB review, if this changes in the future for any reason, the Company may be subject to the HFCAA and AHFCAA.
If the U.S. securities regulatory agencies are unable to conduct such investigations, there exists a risk that they may determine to suspend or de-register our registration with the SEC and may also delist our securities from NYSE American exchange or other applicable trading market within the US. 37 The Holding Foreign Companies Accountable Act, or the HFCAA, and the related regulations continue to evolve.
If the U.S. securities regulatory agencies are unable to conduct such investigations, there exists a risk that they may determine to suspend or de-register our registration with the SEC and may also delist our securities from NYSE American exchange or other applicable trading market within the US.
That may negatively influence our operation, our ability to continue listing on U.S. exchange and the value of our shares may significantly decline or be worthless, which would materially affect the interest of our stockholders.
The Chinese government may intervene with or influence our business at any time. That may negatively influence our operation, our ability to continue listing on U.S. exchange and the value of our shares may significantly decline or be worthless, which would materially affect the interest of our stockholders.
If the PCAOB is unable to inspect the Company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national securities exchange or in the over the counter trading market in the U.S. On December 18, 2020, the HFCAA was signed into law. The HFCAA has since then been subject to amendments by the U.S.
If the PCAOB is unable to inspect the Company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national securities exchange or in the over the counter trading market in the U.S. On December 18, 2020, the HFCAA was signed into law. 46 On June 22, 2021, the U.S.
We have business relationships with over 1,000 distributors in the PRC. For the year ended December 31, 2023, no customer accounted for more than 10.0% of sales, and three customers accounted for 62.5%, 13.5% and 6.2% of accounts receivable. In line with industry practices in the PRC, we enter into written sales agreements with our distributors.
We have business relationships with certified distributors in the PRC. For the year ended December 31, 2024, no customer accounted for more than 10.0% of sales, and three customers accounted for 63.7%, 13.7% and 6.3% of accounts receivable. In line with industry practices in the PRC, we enter into written sales agreements with our distributors.
Failure to adequately manage our employees, distribution network or third-party marketing firms, or their non-compliance with employment, distribution or marketing agreements could harm our corporate image among hospitals and end users of our products and disrupt our sales, resulting in a failure to meet our sales goals.
Such violations could have a material adverse effect on our reputation, business, prospects and brand. 31 Failure to adequately manage our employees, distribution network or third-party marketing firms, or their non-compliance with employment, distribution or marketing agreements could harm our corporate image among hospitals and end users of our products and disrupt our sales, resulting in a failure to meet our sales goals.
We cannot guarantee that our future research and development projects will be successful or completed within their anticipated time frames or budgets, or that we will receive the necessary approvals from the relevant authorities for the production of these products, or that these newly-developed products will achieve commercial success. 22 Our competitors may obtain approval for a competitive product before our product we are developing is approved.
We cannot guarantee that our future research and development projects will be successful or completed within their anticipated time frames or budgets, or that we will receive the necessary approvals from the relevant authorities for the production of these products, or that these newly-developed products will achieve commercial success.
The acceptance and use of our products among the medical community will depend upon a number of factors, including: ● perception of physicians, patients and others in the medical community as to the safety and effectiveness of our products; ● the prevalence and severity of any side effects; ● the pharmacological benefit of our products relative to competing products and products under development; ● the efficacy and potential advantages of our products relative to competing products and products under development; ● the relative convenience and ease of administration of our products; ● the methods by which our pharmaceutical products may be delivered to patients; ● the effectiveness of our education, marketing and distribution efforts and those of our distributors; ● publicity concerning our products or competing products and treatments; and ● the price of our products and competing products. 19 If we fail to meet standards pursuant to the newly revised Drug Administration Law, the production at certain of our production lines will be suspended and our operations and profitability would be adversely affected.
The acceptance and use of our products among the medical community will depend upon a number of factors, including: ● perception of physicians, patients and others in the medical community as to the safety and effectiveness of our products; ● the prevalence and severity of any side effects; ● the pharmacological benefit of our products relative to competing products and products under development; ● the efficacy and potential advantages of our products relative to competing products and products under development; ● the relative convenience and ease of administration of our products; ● the methods by which our pharmaceutical products may be delivered to patients; ● the effectiveness of our education, marketing and distribution efforts and those of our distributors; ● publicity concerning our products or competing products and treatments; and ● the price of our products and competing products.
Litigation may be necessary in the future to enforce our intellectual property rights or to determine the validity and scope of the intellectual property rights of others. However, because the validity, enforceability and scope of protection of intellectual property rights in the PRC are uncertain and still evolving, we may not be successful in prosecuting these cases.
However, because the validity, enforceability and scope of protection of intellectual property rights in the PRC are uncertain and still evolving, we may not be successful in prosecuting these cases.
Our ability to raise additional funds in the future is subject to a variety of uncertainties, including: ● our future financial condition, results of operations and cash flows; ● general market conditions for capital-raising activities by pharmaceutical companies; and ● economic, political and other conditions in China and elsewhere.
Our ability to raise additional funds in the future is subject to a variety of uncertainties, including: ● our future financial condition, results of operations and cash flows; ● general market conditions for capital-raising activities by pharmaceutical companies; and ● economic, political and other conditions in China and elsewhere. 33 We cannot assure you that our revenues will be sufficient to meet our operational needs and capital requirements.
Accordingly, investors must rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies.
Accordingly, investors must rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. 53
On December 16, 2021, PCAOB announced the PCAOB HFCAA determinations relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.
On December 16, 2021, PCAOB announced HFCAA determinations relating to its inability to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong because of positions taken by authorities in the PRC or Hong Kong.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 39 Our China-sourced income is subject to PRC withholding tax under the new Enterprise Income Tax Law of the PRC, and we may be subject to PRC enterprise income tax at the rate of 25% when more detailed rules or precedents are promulgated.
Our China-sourced income is subject to PRC withholding tax under the new Enterprise Income Tax Law of the PRC, and we may be subject to PRC enterprise income tax at the rate of 25% when more detailed rules or precedents are promulgated.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
These market fluctuations may also materially and adversely affect the market price of our common stock. 42 We may issue additional shares of our capital stock to raise additional cash for working capital; if we issue additional shares of our capital stock, our stockholders will experience dilution in their respective percentage ownership in the company.
We may issue additional shares of our capital stock to raise additional cash for working capital; if we issue additional shares of our capital stock, our stockholders will experience dilution in their respective percentage ownership in the company. We may issue additional shares of our capital stock to raise additional cash for working capital.
We may also incur significant expenses and substantial amounts of time and effort to protect our intellectual property rights in the future. Such diversion of our resources may adversely affect our existing business and future expansion plans.
We may also incur significant expenses and substantial amounts of time and effort to protect our intellectual property rights in the future.
To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations.
The income statements of our operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations.
PRC accounting laws require that an annual “statutory audit” be performed in accordance with PRC accounting standards and that the account books of a foreign invested enterprise be maintained in accordance with PRC accounting laws.
Similarly, PRC accounting laws mandate accounting practices that may not be consistent with the U.S. generally accepted accounting principles. PRC accounting laws require that an annual “statutory audit” be performed in accordance with PRC accounting standards and that the account books of a foreign invested enterprise be maintained in accordance with PRC accounting laws.
The NMPA and other regulatory authorities may not approve the products that we develop and even if we do obtain regulatory approvals, such regulatory approvals may be subject to limitations on the indicated uses for which we may market a product, which may limit the size of the market for such product. 23 New product development in the pharmaceutical industry is time-consuming and costly and has a low rate of successful commercialization .
The NMPA and other regulatory authorities may not approve the products that we develop and even if we do obtain regulatory approvals, such regulatory approvals may be subject to limitations on the indicated uses for which we may market a product, which may limit the size of the market for such product.
Therefore, our future success will largely depend on our development capability, including our ability to improve our existing products, diversify our product range and develop new and competitively-priced products that meet the requirements of the changing market.
Future technological improvements and continual product developments in the pharmaceutical market may render our existing products obsolete or affect their viability and competitiveness. Therefore, our future success will largely depend on our development capability, including our ability to improve our existing products, diversify our product range and develop new and competitively-priced products that meet the requirements of the changing market.
A significant disruption at that facility, even on a short-term basis, could impair our ability to timely produce and ship products, which could have a material adverse effect on our business, financial position and results of operations.
All of our products are produced at our manufacturing facility in Hainan, China, which is exposed to certain natural disasters such as typhoons. A significant disruption at that facility, even on a short-term basis, could impair our ability to timely produce and ship products, which could have a material adverse effect on our business, financial position and results of operations.
As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations. 41 Risks Related to our Common Stock We may be held in default on our convertible note, which could trigger penalties that worsen our financial condition and potentially disqualify us from listing on the stock exchange where we are currently listed.
As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
Our success depends in part on our ability to improve our existing products and to develop new products. The development process for pharmaceutical products is complex and uncertain, as well as time-consuming and costly. Relatively few research and development programs can finally develop a commercial product.
New product development in the pharmaceutical industry is time-consuming and costly and has a low rate of successful commercialization . Our success depends in part on our ability to improve our existing products and to develop new products. The development process for pharmaceutical products is complex and uncertain, as well as time-consuming and costly.
The rapid market growth of our pharmaceutical products may pose more requirements or more costs on the employment management for managerial, operational, financial and other purposes. As of December 31, 2023, we had 239 employees.
The failure to manage growth effectively could have an adverse effect on our business, financial condition and results of our operations. The rapid market growth of our pharmaceutical products may pose more requirements or more costs on the employment management for managerial, operational, financial and other purposes. As of December 31, 2023, we had 231 employees.
The Chinese economy differs from the economies of most developed countries in many respects, including: ● the degree of government involvement; ● the level of development; ● the growth rate; ● the control of foreign exchange; ● access to financing; and ● the allocation of resources.
The Chinese economy differs from the economies of most developed countries in many respects, including: ● the degree of government involvement; ● the level of development; ● the growth rate; ● the control of foreign exchange; ● access to financing; and ● the allocation of resources. 36 While the Chinese economy has experienced significant growth in the past 30 years, growth has been uneven, both geographically and among various sectors of the economy.
Risks Related to our Business and our Industry The commercial success of our products depends upon the degree of their market acceptance among the medical community. If our products do not attain market acceptance among the medical community, our operations and profitability would be adversely affected.
If our products do not attain market acceptance among the medical community, our operations and profitability would be adversely affected. The commercial success of our products depends upon the degree of market acceptance they achieve within the medical community, particularly among physicians and hospital administrators.
As a result, we cannot assure you that our employees will not violate the anticorruption laws of the PRC, the United States and other countries. Such violations could have a material adverse effect on our reputation, business, prospects and brand.
As a result, we cannot assure you that our employees will not violate the anticorruption laws of the PRC, the United States and other countries.
Although we believe we have alternative sources of supply for the raw materials used in our business, termination of our relationships with any of our key suppliers could have a material adverse effect on our business, financial condition or results of operations in the unlikely event that we are unable to obtain adequate raw materials from other sources in a timely manner or at all. 25 We may not be able to effectively manage our employees and distribution network, and our reputation, business, prospects and brand may be materially and adversely affected by actions taken by our distributors and third party marketing firms.
Although we believe we have alternative sources of supply for the raw materials used in our business, termination of our relationships with any of our key suppliers could have a material adverse effect on our business, financial condition or results of operations in the unlikely event that we are unable to obtain adequate raw materials from other sources in a timely manner or at all.
We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments.
Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes. 49 We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments.
While we attempt to provide competitive compensation packages to attract and retain key personnel, many of our competitors are likely to have greater resources and more experience than we have, making it difficult for us to compete successfully for key personnel. 27 Certain of our employees and consultants were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors, or at universities or other research institutions.
While we attempt to provide competitive compensation packages to attract and retain key personnel, many of our competitors are likely to have greater resources and more experience than we have, making it difficult for us to compete successfully for key personnel.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 43 Complying with evolving laws, regulations and other obligations regarding cybersecurity, information security, privacy and data protection, and other related laws, regulations and obligations may be expensive and may force us to make adverse changes to our business.
If we are unable to protect our trade names, trade secrets and other propriety information from infringement, our business, financial condition and results of operations may be materially and adversely affected. 28 Risks Related to Doing Business in China Adverse changes in political and economic policies of the PRC government could have a material and adverse effect on the overall economic growth of China, which could reduce the demand for our services and materially and adversely affect our competitive position.
Risks Related to Doing Business in China Adverse changes in political and economic policies of the PRC government could have a material and adverse effect on the overall economic growth of China, which could reduce the demand for our services and materially and adversely affect our competitive position.
On December 29, 2022, the Consolidated Appropriations Act, 2023 (the “CAA”), which AHFCAA constituted a part, was signed into law, which officially reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two, thus, reducing the time before an applicable issuer’s securities may be prohibited from trading or delisted.
On December 29, 2022, the Consolidated Appropriations Act, 2023 was signed into law, which officially reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.
The Enterprise Income Tax Law of the PRC imposes a uniform enterprise income tax rate of 25% on all domestic enterprises, including foreign-invested enterprises unless they qualify for certain exceptions, and terminates most of the tax exemptions, reductions and preferential treatments available under previous tax laws and regulations.
The Enterprise Income Tax Law of the PRC imposes a uniform enterprise income tax rate of 25% on all domestic enterprises, including foreign-invested enterprises unless they qualify for certain exceptions, and terminates most of the tax exemptions, reductions and preferential treatments available under previous tax laws and regulations. 47 Moreover, under the Enterprise Income Tax Law of the PRC, enterprises organized under the laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered PRC resident enterprises and therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income.
Even if we successfully defend against these claims, litigation could result in substantial costs and be a distraction to our management. If we fail to defend such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
Even if we successfully defend against these claims, litigation could result in substantial costs and be a distraction to our management.
We had gross loss margins of -4.0% for the year ended December 31, 2023, compared to gross loss margins of -6.1% for the year ended December 31, 2022. The pharmaceutical market in the PRC remains very competitive, and there may be pressure to reduce sale prices of products without a corresponding decrease in the cost of sold products.
The pharmaceutical market in the PRC remains very competitive, and there may be pressure to reduce sale prices of products without a corresponding decrease in the cost of sold products.
Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which proposes to reduce the period of time for foreign companies to comply with PCAOB audits from three to two consecutive years, thus reducing the time period before the securities of such foreign companies may be prohibited from trading or delisted.
Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which reduced the period for foreign companies to comply with PCAOB audits from three to two consecutive years.
On December 15, 2022, the PCAOB announced in its 2022 HFCAA Determination Report (the “2022 Report”) its determination that the PCAOB was able to secure complete access to inspect and investigate audit firms in the People’s Republic of China (PRC), and the PCAOB Board voted to vacate previous determinations to the contrary.
On December 15, 2022, the PCAOB announced in its 2022 HFCAA Determination Report that it was able to secure complete access to inspect and investigate audit firms in the PRC, and vacated previous determinations to the contrary. The PCAOB may reassess its determinations and issue new determinations consistent with the HFCAA at any time.
Restrictions contained in Chinese law on the ability of overseas securities regulators to collect information in China may deny investors in our Company the benefits of U.S. securities regulation.
If the controlling shareholder or actual controller organizes the breach, they will be fined between RMB1 million and RMB10 million. 45 Restrictions contained in Chinese law on the ability of overseas securities regulators to collect information in China may deny investors in our Company the benefits of U.S. securities regulation.
The commercial success of our products depends upon the degree of market acceptance they achieve within the medical community, particularly among physicians and hospital administrators. Physicians may not prescribe or recommend our products to patients and procurement departments of hospitals may not purchase our products if physicians or hospital pharmacists do not find our products attractive.
Physicians may not prescribe or recommend our products to patients and procurement departments of hospitals may not purchase our products if physicians or hospital pharmacists do not find our products attractive.
While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. 32 We are subject to the environmental protection laws of the PRC that may be costly to comply with and may adversely affect our manufacturing operations.
To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all.
Our manufacturing process may produce by-products, such as effluent, gases and noise, which are harmful to the environment.
We are subject to the environmental protection laws of the PRC that may be costly to comply with and may adversely affect our manufacturing operations. Our manufacturing process may produce by-products, such as effluent, gases and noise, which are harmful to the environment.
We cannot assure you that our revenues will be sufficient to meet our operational needs and capital requirements. If we need to obtain external financing, we cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
If we need to obtain external financing, we cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Our future liquidity needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility.
Furthermore, the degree of future protection of our proprietary rights is uncertain and may not adequately protect our rights or permit us to gain or keep our competitive advantage.
Furthermore, the degree of future protection of our proprietary rights is uncertain and may not adequately protect our rights or permit us to gain or keep our competitive advantage. If we are unable to protect our trade names, trade secrets and other propriety information from infringement, our business, financial condition and results of operations may be materially and adversely affected.
While the Chinese economy has experienced significant growth in the past 30 years, growth has been uneven, both geographically and among various sectors of the economy. The Chinese economy has also experienced certain adverse effects due to the recent global financial crisis. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources.
The Chinese economy has also experienced certain adverse effects due to the recent global financial crisis. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us.
Our auditor is headquartered in Colorado, and is subject to inspection by the PCAOB on a regular basis with the last inspection in 2023. On August 26, 2022, the PCAOB announced and signed a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China (together, the “PRC Authorities”).
On August 26, 2022, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China.
The incurrence of additional indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. The failure to manage growth effectively could have an adverse effect on our business, financial condition and results of our operations.
The sale of additional equity or equity-linked securities could result in additional dilution to our stockholders. The incurrence of additional indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations.
The PRC legal system has inherent uncertainties that could limit the legal protections available to us. The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which legal cases have little precedential value.
The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which legal cases have little precedential value. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing commercial matters.
The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Chinese government may intervene with or influence our operations at any time with little advance notice, which could result in a material change in our operations and in the value of our shares.
The Chinese government may intervene with or influence our operations at any time with little advance notice, which could result in a material change in our operations and in the value of our shares. 37 The PRC legal system has inherent uncertainties that could limit the legal protections available to us.
Our auditor, BF Borgers CPA PC, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards.
Our auditor, BF Borgers CPA PC, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, is headquartered in Colorado, and is subject to inspection by the PCAOB on a regular basis with the last inspection in 2023.
If this occurs, we may be precluded from getting approval until the competitor’s monitoring period expires and realize little to no benefit from our research and development investment. Even if such products can be successfully commercialized, they may not achieve the level of market acceptance that we expect.
Our competitors may obtain approval for a competitive product before our product we are developing is approved. If this occurs, we may be precluded from getting approval until the competitor’s monitoring period expires and realize little to no benefit from our research and development investment.
However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to foreign investors. The practical effect of the PRC legal system on our business operations in China can be viewed as two separate but intertwined considerations.
The overall effect of legislation enacted over the past 20 years has significantly enhanced the protections afforded to foreign-invested enterprises in China. However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to foreign investors.
The inability of the PCAOB to conduct inspections of auditors in China made it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors in issuers operating in China to lose confidence in such issuers’ procedures and reported financial information and the quality of financial statements.
The inability of the PCAOB to conduct inspections of auditors in China made it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures compared to auditors subject to PCAOB inspections.
There can be no assurance that our common stock will qualify for exemption from the “penny stock” rules.
These additional burdens imposed on broker-dealers may restrict the ability of broker-dealers to sell the common stock and may affect a stockholder’s ability to resell the common stock. 51 There can be no assurance that our common stock will qualify for exemption from the “penny stock” rules.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed9 unchanged
Biggest changeIf such disclosure is determined to be necessary, such disclosure material will be prepared and reviewed by our Board before it is disseminated to the public. 45
Biggest changeIf such disclosure is determined to be necessary, such disclosure material will be prepared and reviewed by our Board before it is disseminated to the public. 54

Item 2. Properties

Properties — owned and leased real estate

2 edited+3 added−1 removed7 unchanged
Biggest changeIn addition, the Company’s Chief Executive Officer and Chair of the Board personally guaranteed the new line of credit. Total interest paid on this loan was $11,225 for the years ended December 31, 2023.
Biggest changeTotal interest paid on this loan was $47,418 for the years ended December 31, 2024.
The loans referred to above are set forth in the table below: Total Amount of the Line of Credit Lending Institution Contract Period Interest Rate Properties under Mortgage RMB 10 million (Approximately $1.41 million) Bank of China September 25, 2023 to September 26, 2024 3.35 % Helpson’s new factory: 20,282.42 square meters (Certificate #: HK477872) Production line equipment and machinery included in the facility
The loans referred to above are set forth in the table below: Total Amount of the Line of Credit Lending Institution Contract Period Interest Rate Properties under Mortgage RMB 10 million (Approximately $1.41 million) Bank of China September 21, 2024 to September 20, 2025 3.25% Helpson’s new factory: 20,282.42 square meters (Certificate #: HK477872) Production line equipment and machinery included in the facility
Removed
Mortgaged Property On September 25, 2023 the Company received a line of credit for RMB 10 million (approximately $1.41 million) from Bank of China. The loan bears interest at the rate of 3.35% and is due September 26, 2024. The loan is collateralized by the Company’s new production facility and the production line equipment and machinery contained therein.
Added
Mortgaged Property On September 25, 2023 the Company entered into a three-year revolving loan and received proceeds of RMB 10,000,000 (approximately $1.4 million).
Added
The interest rate for the loan is 3.35% for the first twelve months of the loan, which covers September 25, 2023 to September 20, 2024 and adjusts based on the latest one-year loan market quotation rate less 10 basis points as published by the China National Interbank Funding Center on the working day prior to each twelve-month anniversary of the loan.
Added
The interest rate is 3.25% for the second twelve months of the loan, which covers September 21, 2024 to September 20, 2025. The loan is collateralized by the Company’s new production facility and the included production line equipment and machinery. In addition, the Company’s Chief Executive Officer and Chair of the Board personally guaranteed the new line of credit.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeHowever, we are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 46 PART II
Biggest changeHowever, we are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 55 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+10 added−1 removed2 unchanged
Biggest changePrior to September 30, 2009, our shares traded on the OTC Bulletin Board under the symbol “CPHI.OB.” Holders As of March 24, 2024, there were approximately 133 stockholders of record of our common stock and an indeterminate number of beneficial holders who held our common stock in street name.
Biggest changePrior to September 30, 2009, our shares traded on the OTC Bulletin Board under the symbol “CPHI.OB.” Holders As of March 24, 2025, there were approximately 137 stockholders of record of our common stock and an indeterminate number of beneficial holders who held our common stock in street name. 56 Transfer Agent and Registrar The transfer agent and registrar for our common stock is Equinity Trust Company, with offices located at 3200 Cherry Creek South Drive, Suite 430, Denver, Colorado 80209.
Securities Authorized for Issuance under Equity Compensation Plans Equity Compensation Plan Information Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) * (a) (b) (c) Equity compensation plans not approved by security holders - - - Equity compensation plans approved by security holders - - 482,000 Totals - - 482,000 * All shares have been retroactively restated to reflect the effect of the 1-for-5 reverse stock split effective March 6, 2024.
Securities Authorized for Issuance under Equity Compensation Plans Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))* Plan category (a) (b) (c) Equity compensation plans not approved by security holders - - - Equity compensation plans approved by security holders - - 482,000 Totals - - 482,000 * All shares have been retroactively restated to reflect the effect of the 1-for-5 reverse stock split effective March 6, 2024 and the 1-for-10 reverse stock split effective March 6, 2023.
Dividend Policy We have never paid or declared any dividend on our common stock and we do not anticipate paying cash dividends in the foreseeable future.
Their telephone number is (303) 282-4800 and fax number is (303) 282-5800. Dividend Policy We have never paid or declared any dividend on our common stock and we do not anticipate paying cash dividends in the foreseeable future.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our shares began trading on the NYSE American (Formerly known as NYSE Amex, NYSE MKT) on September 30, 2009 under the symbol “CPHI”.
All share and per share amounts have been retroactively restated for all periods presented in the accompanying consolidated financial statements. Market Information Our shares began trading on the NYSE American (Formerly known as NYSE Amex, NYSE MKT) on September 30, 2009 under the symbol “CPHI”.
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Transfer Agent and Registrar The transfer agent and registrar for our common stock is Equinity Trust Company, with offices located at 1110 Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120. Their telephone number is (651)306-2920.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $4,290,693 as of June 30, 2024, based on the closing price of $0.25 of the Company’s common stock on such date.
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The number of outstanding shares of the registrant’s common stock on March 24, 2025, was 14,816,865. The number of outstanding shares reflects the impact of two reverse stock splits implemented in 2023 and 2024, as described below: Effective March 6, 2024, the Company implemented a 1-for-5 reverse split of its common stock.
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The reverse stock split was approved by the Company’s Board of Directors through unanimous written consent and the Company’s stockholders at its Annual Meeting for the fiscal year ended on December 31, 2022, which was held on December 17, 2023.
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Upon the effectiveness of the reverse stock split, every 5 shares of the Company’s issued and outstanding common stock were automatically converted into one share of issued and outstanding common stock. No fractional shares were issued as a result of the reverse stock split.
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Instead, any fractional shares that resulted from the split were rounded up to the next whole number. The reverse stock split affects all stockholders uniformly and does not alter any stockholder’s percentage interest in the Company’s outstanding common stock, except for adjustments that may result from the treatment of fractional shares.
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All share and per share amounts have been retroactively restated for all periods presented in the accompanying consolidated financial statements. Effective March 6, 2023 China Pharma implemented a 1-for-10 reverse split of its common stock.
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The reverse stock split was approved by the Company’s Board of Directors through unanimous written consent and China Pharma’s stockholders at its Annual Meeting for the fiscal year ended on December 31, 2021, which was held on December 27, 2022.
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Upon the effectiveness of the reverse stock split, every 10 shares of China Pharma’s issued and outstanding common stock were automatically converted into one share of issued and outstanding common stock. No fractional shares were issued as a result of the reverse stock split.
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Instead, any fractional shares that resulted from the split were rounded up to the next whole number. The reverse stock split affects all stockholders uniformly and does not alter any stockholder’s percentage interest in China Pharma’s outstanding common stock, except for adjustments that may result from the treatment of fractional shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

49 edited+12 added−10 removed26 unchanged
Biggest changeThe decrease in cost is mainly due to the difference in the proportion of different products to total revenue this year and last year. Gross Loss and Gross Loss Margin Gross loss for the year ended December 31, 2023 was $0.3 million, compared to $0.5 million in 2022.
Biggest changeThe decrease in the dollar value of cost of revenues in the twelve months ended December 31, 2024 was mainly because that the decrease in revenue; and the increase in ratio of costs to revenue was mainly due to the increase in idle equipment costs due to reduced production, as well as the increased inventory impairments. 59 Gross Loss and Loss Margin Gross loss for the year ended December 31, 2024 was $2.0 million, compared to $0.3 million for the year ended December 31, 2023.
As a result, Helpson needs to balance between the market access brought by CP, the investment of financial resources and time to obtain the qualification of CP, and the sharp decline in the price of drugs included in CP before making decisions regarding CP for any products. 48 In addition, Helpson continues to explore the field of comprehensive healthcare.
As a result, Helpson needs to balance between the market access brought by CP, the investment of financial resources and time to obtain the qualification of CP, and the sharp decline in the price of drugs included in CP before making decisions regarding CP for any products. In addition, Helpson continues to explore the field of comprehensive healthcare.
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 (“GAAP”). Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments.
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.
Due to the restriction on dividend distribution to overseas shareholders, the amount of Helpson’s net assets that was designated for general and statutory capital reserves, and thus could not be transferred to our parent company as cash dividends, was 50% of Helpson’s registered capital, which was both $8,145,000 as of December 31, 2023 and December 31, 2022, respectively.
Due to the restriction on dividend distribution to overseas shareholders, the amount of Helpson’s net assets that was designated for general and statutory capital reserves, and thus could not be transferred to our parent company as cash dividends, was 50% of Helpson’s registered capital, which was both $8,145,000 as of December 31, 2024 and December 31, 2023, respectively.
In 2018, relevant Chinese authorities decided to implement trial Centralized Procurement (“CP”) activities in 11 selected pilot cities (including 4 municipalities and 7 other cities), since then, nine rounds of CP activities have been carried out as of November 6, 2023, which significantly reduced the price of the drugs that won the bids.
In 2018, relevant Chinese authorities decided to implement trial Centralized Procurement (“CP”) activities in 11 selected pilot cities (including 4 municipalities and 7 other cities), since then, nine rounds of CP activities have been carried out as of November 13, 2024, which significantly reduced the price of the drugs that won the bids.
China Pharma issued a convertible note to an institutional accredited investor as disclosed in Note 8 to the audited condensed consolidated financial statements contained in this report which is incorporated by reference herein.
China Pharma issued a convertible note to an institutional accredited investor as disclosed in Note 9 to the audited consolidated financial statements contained in this report which is incorporated by reference herein.
To the extent that our current allowance for doubtful accounts is higher than that of the previous period, we recognize a bad debt expense for the difference during the current period, and when the current allowance is lower than that of the previous period, we recognize a bad debt credit for the difference.
To the extent that our current allowance for credit losses is higher than that of the previous period, we recognize a bad debt expense for the difference during the current period, and when the current allowance is lower than that of the previous period, we recognize a bad debt credit for the difference.
As Chinese government officially terminated its zero-case policy, now the responsibility to protect people from the impact of COVID-19 falls more to the citizens themselves, and masks and sanitizers have been more and more popular due to increasing demand.
As Chinese government officially terminated its zero-case policy, now the responsibility to protect people from the impact of COVID-19 falls more to the citizens themselves, and masks and sanitizers have been popular since COVID-19.
This decline was mainly due to an increasing number of drugs from other medicine providers being included in national CP, while Helpson’s related products have not passed consistency evaluation. As Helpson’s related products are not qualified to participate in CP, the resulting sales has decreased.
This decline was mainly due to an increasing number of drugs from other medicine providers being included in national CP, while Helpson’s peer products have not passed consistency evaluation. As a result, they are not qualified to participate in CP, the resulting sales has decreased.
In the event the length of collection term is deviated from any of the past pattern of any particular customer, the Company will adjust its credit term. 51 The amount of net accounts receivable that was past due (or the amount of accounts receivable that was more than 180 days old) was $0.01 million and $0.03 million as of December 31, 2023 and 2022, respectively.
In the event the length of collection term is deviated from any of the past pattern of any particular customer, the Company will adjust its credit term. 60 The amount of net accounts receivable that was past due (or the amount of accounts receivable that was more than 180 days old) was $0.06 million and $0.01 million as of December 31, 2024 and 2023, respectively.
The Company obtained various lines of credit in details described under Note 7 to its audited condensed consolidated financial statements contained in this annual report which is incorporated by reference herein.
The Company obtained various lines of credit in details described under Note 8 to its audited consolidated financial statements contained in this report which is incorporated by reference herein.
The currency exchange control procedures imposed by Chinese government authorities may restrict the ability of Helpson, our Chinese subsidiary, to transfer its net assets to our parent company through loans, advances or cash dividends. Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements.
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 December 31, 2024, we did not have any off-balance sheet arrangements.
All of the $1.42 million of cash and cash equivalents as of December 31, 2023 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.
All of the $0.63 million of cash and cash equivalents as of December 31, 2024 are considered to be reinvested indefinitely in the Company’s Chinese subsidiary, Helpson and are not expected to be available for payment of dividends or for other payments to its parent company or to its shareholders.
Twelve Months Ended December 31, Product Category 2023 2022 CNS Cerebral & Cardio Vascular 23 % 21 % Anti-Viral/ Infection & Respiratory 51 % 61 % Digestive Diseases 16 % 5 % Other 10 % 13 % For the year ended December 31, 2023, revenue breakdown by product category experienced certain variances compared with that of the prior year.
Product Category Twelve Months Ended December 31, 2024 2023 CNS Cerebral & Cardio Vascular 30 % 23 % Anti-Viral/ Infection & Respiratory 61 % 51 % Digestive Diseases 4 % 16 % Other 4 % 10 % For the year ended December 31, 2024, revenue breakdown by product category experienced certain variances compared with that of the prior year.
Liquidity and Capital Resources Our principal source of liquidity is cash generated from operations, bank lines of credit and the convertible note payable. Currently the Company has not witnessed or expected to encounter any difficulties to refinance those lines of credit this year. As of December 31, 2023, the aggregated advance from our CEO was $1,133,809 for use in operations.
Liquidity and Capital Resources Our principal source of liquidity is cash generated from operations and bank lines of credit. Currently the Company has not witnessed or expected to encounter any difficulties to refinance those lines of credit this year. As of December 31, 2024, the aggregated advance from our CEO was$1,144,985 for use in operations.
Although the Company obtained additional lines of credit in 2023, there can be no assurance that the Company will be able to achieve its future strategic goals, including the launch of new products. This raises substantial doubt about the Company’s ability to continue as a going concern.
Although the Company obtained additional lines of credit for the year ended December 31, 2024, there can be no assurance that the Company will be able to achieve its future strategic goals, including the launch of new products. This raises substantial doubt about the Company’s ability to continue as a going concern.
There can be no assurance that any additional financing will be available on acceptable terms, if at all. 53 Operating Activities Net cash used in operating activities was $0.70 million in the year ended December 31, 2023, compared to $0.41 million in 2022.
There can be no assurance that any additional financing will be available on acceptable terms, if at all. 63 Operating Activities Net cash used in operating activities was $0.47million in the year ended December 31, 2024, compared to $0.70 million in the same period in 2023.
Although our Chairperson and Chief Executive Officer had advanced funds for working capital in 2023, there can be no assurances that this will continue in the future.
Although our Chairperson and Chief Executive Officer had advanced funds for working capital for the year ended December 31, 2024, there can be no assurances that this will continue in the future.
Allocations to these reserves and funds can only be used for specific purposes and are not transferrable to the parent company in the form of loans, advances or cash dividends. As of December 31, 2023 and December 31, 2022, Helpson’s net assets totaled $(2,289,000) and $(190,000), respectively.
Allocations to these reserves and funds can only be used for specific purposes and are not transferrable to the parent company in the form of loans, advances or cash dividends. As of December 31, 2024 and December 31, 2023, Helpson’s net assets totaled ($6,197,000) and ($5,273,000), respectively.
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 in 2023.
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.
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. 52 We recognize bad debt expenses per actual write-offs as well as changes of allowance for doubtful accounts.
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.
Our cash and cash equivalents were $1.42 million, representing 8.6% of our total assets, as of December 31, 2023, as compared to $2.03 million, representing 11.4% of our total assets as of December 31, 2022.
Our cash and cash equivalents were $0.63 million, representing 4.2% of our total assets, as of December 31, 2024, as compared to $1.42 million, representing 8.6% of our total assets as of December 31, 2023.
Loss per basic and diluted common share was $0.91 for the year ended December 31, 2023 and $3.78 for the year ended December 31, 2022, respectively. The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 3,383,573 for 2023, as compared to 1,051,371 for 2022.
Loss per basic and diluted common share was $0.27 for the year ended December 31, 2024 and $0.91 for the year ended December 31, 2023, respectively. The number of basic and diluted weighted-average outstanding shares used to calculate loss per share was 17,463,723 for 2024, as compared to 3,383,573 for 2023.
Sales in the “Anti-Viral/Infection & Respiratory” product category represented 51% and 61% of total sales in the years ended December 31, 2023 and 2022, respectively. The “CNS Cerebral & Cardio Vascular” category represented 23% of total revenue in 2023, compared to 21% in 2022. The “Digestive Diseases” category represented 16% and 5% of total revenue in 2023 and 2022, respectively.
Sales in the “Anti-Viral/Infection & Respiratory” product category represented 61% and 51% of total sales in the years ended December 31, 2024 and 2023, respectively. The “CNS Cerebral & Cardio Vascular” category represented 30% of total revenue for the year ended December 31, 2024, compared to 23% for the year ended December 31, 2023.
Net Loss Net loss for the year ended December 31, 2023 was $3.1 million, compared to net loss of $3.9 million for the year ended December 31, 2022. The decrease in net loss was mainly a result of the decline in expenses more than the decline in revenue.
Net Loss Net loss for the year ended December 31, 2024 was $4.74 million, compared to net loss of $3.08 million for the year ended December 31, 2023. The increase in net loss was mainly a result of the decline in expenses more than the decline in revenue.
Helpson has sufficient production capacity for medical masks, surgical masks, KN95 masks, and N95 masks, which meets the personal needs for protection against the epidemic outbreak. Helpson’s N95 medical protective mask has received registration certificate by the end of 2022 and right now has been selling in the mainland China nationwide.
Helpson has sufficient production capacity for medical masks, surgical masks, KN95 masks, and N95 masks, which also meets the personal needs for protection against other respiratory infectious diseases. Helpson’s N95 medical protective mask has received registration certificate at the end of 2022 and has been on the market in the mainland China nationwide.
Bad Debt Benefit Our bad debt benefit for the year ended December 31, 2023 was $15,757, as compared to $93,851 in 2022. In general, our normal customer credit or payment terms are 90 days. This has not changed in recent years.
Bad Debt Expense (reversal of allowance for credit losses) Our allowance for credit losses for the year ended December 31, 2024 was $5,702, as compared to reversal of bad debt expense of $15,757 for the same period in 2023. In general, our normal customer credit or payment terms are 90 days. This has not changed in recent years.
Loss from Operations Our operating loss for the year ended December 31, 2023 was $2.8 million, compared to $3.5 million in 2022. Net Interest Expense Net interest expense was $0.33 million for the year ended December 31, 2023 and $0.42 million for the year ended December 31, 2022.
Loss from Operations Our operating loss for the year ended December 31, 2024 was $4.59 million, compared to $2.75 million in 2023. 62 Net Interest Expense Net interest expense was $0.15 million for the year ended December 31, 2024 and $0.33 million for the year ended December 31, 2023.
The amount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets at December 31, 2023 and 2022. There were no allocations to the statutory surplus reserve accounts during the twelve months ended December 31, 2023.
The amount that Helpson must set aside for the statutory surplus fund accounts exceeds its total net assets at December 31, 2024 and December 31, 2023.
The “Other” category represented 10% and 13% of revenues in 2023 and 2022, respectively. 50 Cost of Revenue For the year ended December 31, 2023, our cost of revenue was $7.3 million, or 104.0% of total revenue, which represented a decrease of $1.3 million from $8.6 million, or 106.1% of total revenue, in 2022.
Cost of Revenue For the year ended December 31, 2024, our cost of revenue was $6.5 million, or 143.8% of total revenue, which represented a decrease of $0.78 million from $7.3 million, or 104.0% of total revenue, in 2023.
This decrease was mainly due to a decrease in sales of Helpson’s Roxithromycin Dispersible Tablet due to the inclusion of this product in the seventh round of CP, and the Roxithromycin produced by Helpson not passing the consistency evaluation, therefore not eligible to participate in CP.
This decrease was mainly due to a decrease in sales of Helpson not passing the consistency evaluation of Roxithromycin and therefore not being able to participate in CP.
The changes in the allowances for doubtful accounts during the years ended December 31, 2023 and 2022 were as follows: For the Fiscal Years Ended December 31, 2023 2022 Balance, Beginning of Period $ 16,739,527 $ 18,312,707 Bad debt benefit (15,757 ) (93,851 ) Bad debt write-offs (2,671,896 ) 0 Foreign currency translation adjustment (265,800 ) (1,479,329 ) Balance, End of Period $ 13,786,074 $ 16,739,527 Our bad debt benefit for the year ended December 31, 2023 was $15,757, as compared to $93,851 in 2022.
The changes in the allowances for credit losses of trade accounts receivable during the years ended December 31, 2024 and 2023 were as follows: For the Fiscal Years Ended December 31, 2024 2023 Balance, Beginning of Year $ 13,786,074 $ 16,739,527 Bad debt expense 5,702 (15,757 ) Bad debt write-offs - (2,671,896 ) Foreign currency translation adjustment (204,594 ) (265,800 ) Balance, End of Year $ 13,587,182 $ 13,786,074 Our bad debt expense for the year ended December 31, 2024 was $5,702, as compared to reversal of allowance for credit losses of $15,757 in 2023.
The allowance for doubtful account balances were $13.8 million and $16.7 million as of December 31, 2023 and December 31, 2022, respectively.
The allowance for credit losses balances were $13.6 million and $13.8 million as of December 31, 2024 and December 31, 2023, respectively.
Helpson has always taken the task of promoting the consistency evaluation as a top priority, and worked on them actively.
China’s consistency evaluation of generic drugs continues to proceed for the year ended December 31, 2024. Helpson has always taken the task of promoting the consistency evaluation as a top priority, and worked on them actively.
Financing Activities Cash flow provided by financing activities was $0.07 million in the year ended December 31, 2023; compared to cash flow used in financing activities of $1.77 million in the year ended December 31, 2022.
Financing Activities Cash flow provided by financing activities was $0.03 million in the twelve months ended December 31, 2024; compared to $0.07 million for the same period for the year ended December 31, 2023.
We account for the following respective percentage as bad debt allowance based on age of the accounts receivables: 10% of accounts receivable that are between 180 days and 365 days old, 70% of accounts receivable that are between 365 days and 720 days old, and 100% of accounts receivable that are greater than 720 days old.
We account for the following respective percentage as credit loss allowance based on age of the accounts receivables: 10% of accounts receivable that are between 180 days and 365 days old, 70% of accounts receivable that are between 365 days and 720 days old, and 100% of accounts receivable that are greater than 720 days old. 61 Our allowance for credit losses as a percentage of accounts receivable of trade accounts receivable was 98.3% and 96.5% as of December 31, 2024 and 2023, respectively.
Investing Activities During the year ended December 31, 2023, net cash used in investing activities was $0.01 million, compared to $0.40 million for the year ended December 31, 2022.
Investing Activities During the year ended December 31, 2024, net cash used in investing activities was $0.29 million, compared to $0.01 million for the year ended December 31, 2023. This was mainly due to the investment in the development of a medicine formula.
General and Administrative Expenses Our general and administrative expenses for the year ended December 31, 2023 were $1.2 million, a decrease of $0.7 million compared to $1.9 million for the year ended December 31, 2022. General and administrative expenses accounted for 17.0% and 23.4% of our total revenues in 2023 and 2022, respectively.
General and Administrative Expenses Our general and administrative expenses for the year ended December 31, 2024 were $1.78 million, an increase of $0.32 million compared to $1.47 million for the year ended December 31, 2023. General and administrative expenses accounted for 39.4% and 20.9% of our total revenues for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, our net accounts receivable was $0.50 million, an increase of $0.08 million from $0.42 million as of December 31, 2022. As of December 31, 2023, total inventory was $3.7 million, compared to $2.9 million as of December 31, 2022.
As of December 31, 2024, our net trade accounts receivable was $0.23 million, a decrease of $0.27 million from $0.50 million as of December 31, 2023. As of December 31, 2024, total inventory was $2.27 million, compared to $3.73 million as of December 31, 2023.
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.
There were no allocations to the statutory surplus reserve accounts during the twelve months ended December 31, 2024. 64 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.
Set forth below are our revenues by product category in millions (USD) for the years ended December 31, 2023 and 2022: Twelve Months Ended December 31, Product Category 2023 2022 Net Change % Change CNS Cerebral & Cardio Vascular 1.62 1.70 -0.08 -5 % Anti-Viral/ Infection & Respiratory 3.57 4.94 -1.37 -28 % Digestive Diseases 1.09 0.41 0.68 166 % Other 0.73 1.06 -0.33 -31 % The most significant revenue decrease in terms of dollar amount was in the “Anti-Viral/ Infection & Respiratory” product category, it generated $3.57 million in 2023, compared to $4.94 million in 2022, which represented a decrease of $1.37 million.
Set forth below are our revenues by product category in millions (USD) for the years ended December 31, 2024 and 2023: Twelve Months Ended December 31, Product Category 2024 2023 Net Change % Change CNS Cerebral & Cardio Vascular 1.35 1.62 -0.27 -17 % Anti-Viral/ Infection & Respiratory 2.75 3.57 -0.82 -23 % Digestive Diseases 0.20 1.09 -0.89 -82 % Other 0.18 0.73 -0.55 -75 % The most significant revenue decrease in terms of dollar amount was in the “Digestive Diseases” category.
Our gross loss margin in 2023 was 4.0%, compared to 6.1% in 2022. Selling Expenses Our selling expenses for the year ended December 31, 2023 were $0.8 million, a decrease of $0.3 million compared to $1.1 million for the year ended December 31, 2022. Selling expenses accounted for 11.1% of the total revenue in 2023 compared to 13.2% in 2022.
Selling Expenses Our selling expenses for the year ended December 31, 2024 were $0.53 million, a decrease of $0.25 million compared to $0.78 million for the year ended December 31, 2023. Selling expenses accounted for 11.7% of the total revenue for the year ended December 31, 2024 compared to 11.1% for the year ended December 31, 2023.
Our allowance for doubtful accounts as a percentage of accounts receivable was 96.5% and 97.5% as of December 31, 2023 and 2022, respectively. The 1% decrease is due to the write-off of accounts receivable in 2023. We conduct analysis and review on accounts receivables for customers on a specific, per-customer basis in the fourth fiscal quarter of each fiscal year.
We conduct analysis and review on accounts receivables for customers on a specific, per-customer basis in the fourth fiscal quarter of each fiscal year.
Sales revenue in the “Other” product category was $0.73 million in 2023, compared to $1.06 million in 2022, which represented a decrease of $0.33 million. This decrease was mainly due to a decrease in sales of the Vitamin B6 for Injection due to market fluctuation, and change in foreign exchange rate.
“Others” product category generated $0.18 million in sales revenue for the year ended December 31, 2024, compared to $0.73 million for the same period last year, which represented a decrease of $0.55 million. This decrease was mainly due to the decrease in sales of Vitamin B6 for Injection due to market volatility.
The following table illustrates our 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 doubtful accounts as of December 31, 2023 and 2022: December 31, 2023 2022 1 - 180 Days 3.45 % 2.28 % 180 - 365 Days 0.06 % 0.16 % 365 - 720 Days 0.09 % 0.13 % > 720 Days 96.40 % 97.44 % Total 100.00 % 100.01 % Gross Accounts Receivable Amount Allocated Allowance for Doubtful Accounts December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 1-180 Days 495,366.30 391,046.24 - 180-365 Days 8,341.73 26,662.04 834.17 2,666.20 365-720 Days 13,825.83 21,628.33 9,678.08 15,139.83 Over 720 Days 13,845,897.46 16,721,720.98 13,845,897.46 16,721,720.98 Total 14,363,431.33 17,161,057.58 13,856,409.72 16,739,527.01 Our bad debt allowance estimate practice is that we consider accounts receivable balances aged within 180 days current, except for any individual uncollectible account assessed by management.
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 December 31, 2024 and 2023: December 31, December 31, 2024 2023 1 - 180 Days 1.24 % 3.45 % 180 - 365 Days 0.48 % 0.06 % 365 - 720 Days 0.01 % 0.09 % > 720 Days 98.27 % 96.40 % Total 100.00 % 100.00 % Gross Accounts Receivable Amount Allocated Allowance for Doubtful Accounts December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 1-180 Days 171,988 492,852 - - 180-365 Days 66,602 8,299 6,660 830 365-720 Days 700 13,756 490 9,629 Over 720 Days 13,580,031 13,775,615 13,580,031 13,775,615 Total 13,819,322 14,290,522 13,587,182 13,786,074 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.
Research and development expenses accounted for 3.4% and 2.3% of our total revenues in 2023 and 2022, respectively. These increased research and development expenditures in 2023 was mainly due to the fact that as the contract progressed, the expenditure for Candesartan consistency evaluation was higher in 2023 as compared to 2022.
Research and development expenses accounted for 6.3% and 3.4% of our total revenues for the years ended December 31, 2024 and 2023, respectively. These expenditures were mainly spent on the consistency evaluation of the existing products.
Please refer to Note 1 to our consolidated financial statements, “Organization and Significant Accounting Policies” for the discussion of our critical accounting policies. 54
The discussion of our critical accounting policies contained in Note 1 to our consolidated financial statements, “Organization and Significant Accounting Policies”, included in the Company’s annual report on Form 10-K for fiscal year ended December 31, 2024, which is incorporated herein by reference.
The decrease in administrative expenses was mainly due to the higher exchange rate of the RMB against the US dollar in 2023 and the higher government subsidies obtained in 2023. Research and Development Expenses Our research and development expenses for the year ended December 31, 2023 was $0.24 million, compared to $0.19 million in 2022.
Reason for this increase was the amortization expenses related to the purchased patent technology in 2024. Research and Development Expenses Our research and development expenses for the year ended December 31, 2024 was $0.28 million, compared to $0.24 million for the year ended December 31, 2023.
Sales revenue in the “CNS Cerebral & Cardio Vascular” category was $1.62 million in 2023, which represented a decrease of $0.08 million compared to $1.70 million in 2022. The sales revenue of this category in 2023 is similar to that in 2022, because the increase and decrease in sales of various products due to market fluctuations offset each other.
Our “CNS Cerebral & Cardio Vascular” product category generated $1.35 million in sales revenue for the year ended December 31, 2024, compared to $1.62 million for the same period last year, which represented a decrease of $0.27 million. This decrease was mainly due to the decrease in sales of Ozagrel Sodium for Injection due to market fluctuation.
Removed
Helpson will continue to optimize its product structure and actively respond to the current health needs of human beings. Market Trends As a generic drug company, Helpson is presented with a huge domestic market.
Added
In April 2024, Helpson began serving as a Contract Manufacturing Organization (CMO) for a project, undertaking its R&D and post-market commercial production. This initiative generated approximately $50,000 in revenue within the year. Under the contract terms, once the product is launched, the company will continue providing production services, further boosting sales revenue and ensuring sustained cash inflows.
Removed
Helpson believes that through further upgrades and better conformity with Chinese consistency evaluations, which are based on European and American production standards, it will be able to export the products to overseas markets. In China’s market, Helpson believes that in the future, cost management and control ability will gradually become important factors in determining the competitiveness of generic pharmaceutical enterprises.
Added
This project successfully completed process verification in January 2025 and is currently undergoing stability testing. Registration with the National Medical Products Administration (NMPA) is expected in the third quarter of 2025.
Removed
Although price control leads to a decline in the profitability, enterprises who win the CP have a good chance of achieving bulk pricing to increase their market share and support their continuous innovation and transformation. On a separate note, growing and advancing consumer demand in China drives the increase of discretionary consumption.
Added
Moving forward, we will leverage our competitive advantages as a CMO, including our highly skilled technical team, state-of-the-art facilities, multiple production lines, ample capacity, extensive manufacturing expertise, and a robust quality management system. 58 Results of Operations for the Fiscal Year ended December 31, 2024 Revenue Revenue was $4.5 million for the year ended December 31, 2024, which represented a decrease of $2.5 million, as compared to $7.0 million for the year ended December 31, 2023.
Removed
With the improvement of residents’ quality of life, the healthcare demand is also changing. Helpson believes that there is a large number of unmet demands in comprehensive healthcare and internet healthcare sectors.
Added
It generated $0.20 million for the year ended December 31, 2024, compared to $1.09 million for the year ended December 31, 2023, which represented a decrease of $0.89 million.
Removed
In addition, the Office of the State Council issued “ Pilot Plan for Marketing Authorization Holders ” on May 24, 2016, allowing eligible drug research and development institutions and scientific researchers to become Marketing Authorization Holders (“MAH”) by obtaining drug marketing authorization and drug approval numbers from the State Council.
Added
This decrease was mainly due to the decrease in sales of the Omeprazole due to market fluctuation, as the market demand returned to normal after the demand spiked in the same period of 2023.
Removed
This policy uses a management model of separating drug marketing authorization and drug production licenses, thereby allowing MAHs to produce pharmaceuticals themselves or to consign production to other pharmaceutical manufacturers.
Added
The “Anti-Viral/ Infection & Respiratory” product category generated $2.75 million for the year ended December 31, 2024, compared to $3.57 million for the year ended December 31, 2023, which represented a decrease of $0.82 million.
Removed
This policy not only transitions the production practices to meet the European and United States standards by separating drug approval and production qualifications, thereby changing the existing model of bundling drug approval codes to pharmaceutical manufacturers in China, but also serves as a supplement to the ongoing consistency evaluations policy.
Added
The “Digestive Diseases” category represented 4% and 16% of total revenue for the years ended December 31, 2024 and 2023, respectively. The “Other” category represented 4% and 10% of revenues for the years ended December 31, 2024 and 2023, respectively.
Removed
In general, demand for pharmaceutical products continues its steady growth in China. Helpson believes the ongoing generic drug consistency evaluations and reform of China’s drug production registration and review policies will have major effects on the future development of our industry and may change its business patterns.
Added
Notably, during the year ended December 31, 2024, the company generated an OEM income of $53,338, accounting for 1% of our total revenue.
Removed
Helpson will continue to actively adapt to the national policy guidance and further evaluate market conditions for the existing products then adjust accordingly, and compete in the market in order to optimize the development strategy. 49 Results of Operations for the Fiscal Year ended December 31, 2023 Revenue Revenue was $7.0 million for the year ended December 31, 2023, which represented a decrease of $1.1 million, as compared to $8.1 million for the year ended December 31, 2022.
Added
Our gross loss margin for the year ended December 31, 2024 was 43.8%, compared to 4.0% for the year ended December 31, 2023.
Removed
Sales revenues in the “Digestive Diseases” category was $1.09 million of sales revenue in 2023, which represented an increase of $0.68 million compared to $0.41 million in 2022. This increase was mainly due to an increase in sales of the Omeprazole due to market fluctuation.
Added
The main reasons for the increase in the gross loss rate were: the rise in idle equipment costs of approximately $0.66 million, the increase in inventory impairment provisions of approximately $0.86 million, and the significant decline in product sales.
Added
We recognize credit losses per actual write-offs as well as changes of allowance for credit losses.
Added
The change in weighted-average shares and per-share amounts reflects the impact of two reverse stock splits: a 1-for-10 split effective March 6, 2023, and a 1-for-5 split effective March 6, 2024. These splits reduced the number of outstanding shares, with all share and per-share amounts retroactively restated for all periods presented in the accompanying consolidated financial statements.

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