CHINA PHARMA HOLDINGS, INC. Commitments Disclosure

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Current vulnerability due to certain concentrations

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

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

Nature of Operations

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

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