CPHI

New in FY2025

• If the NMPA issues any notices to cease production, sale and use of any of our products, or request Helpson to recall any of our products we sold, we must comply with such requirements.
• We reported negative gross margins of -3.2% for the year ended December 31, 2025, a substantial deterioration from negative gross margins of -43.8.0% for the year ended December 31, 2024, indicating significant challenges in our cost structure and pricing environment.
• We would face enhanced competition if competitive products were added to the National Medical Insurance Program.
• Our inability to compete effectively could reduce sales or margins, which could have a material adverse effect on the results of our operations.
• Some of our competitors are actively engaging in research and development in areas in which we have products or in which we are developing new products or new indications for existing products.
• Our competitors may obtain approval for a competitive product before the product we are developing is approved.
• For the year ended December 31, 2025, no customer accounted for more than 10.0% of sales, and three customers accounted for 39.2%, 14.4% and 9.2% of accounts receivable.
• In the event certain distributors choose not to continue their relationship with us after completing their existing sales agreements, they can do so without breaching any contract or agreement, our financial results could be adversely affected if we cannot find substantially similar distributors in time under such circumstances.
• Our top five distributors in aggregate accounted for 23% and 24% of our net revenues in 2025 and 2024, respectively.
• For the year ended December 31, 2025, three suppliers accounted for 26.6%, 26.3% and 9.6% of raw material purchases and for the year ended December 31, 2024, three suppliers accounted for 22.9%, 21.3% and 14.6% of raw material purchases.
• These risks are greater for our products that receive regulatory approval for commercial sales.
• Even if a product is approved for commercial use by an appropriate governmental agency, there can be no assurance that users will not claim effects other than those intended resulting from the use of our products.
• Such lawsuits may divert the attention of our management from our business strategies, may be costly to defend and may negatively impact on our reputation and our Helpson brand’s reputation, and may harm the sales of our other branded products.
• In the event we or any of our directors or officers are sued under any proceedings or actions that could be covered by standard D&O insurance, we may incur substantial costs and expenses to defend such case.
• The rapid market growth of our pharmaceutical products may pose more requirements or more costs on employment management for managerial, operational, financial and other purposes.
• As of December 31, 2025, we had 221 employees.
• To keep up with the rapid development of the Chinese pharmaceutical industry, it will impose significant responsibilities upon the members of management to identify, recruit, maintain, integrate and motivate new and old employees.
• In addition, we may need to increase the salary, or the equity incentive plan for the employees to keep them in the Company.
• Aside from the increased difficulties and increased costs in the management of human resources, we may also encounter working capital issues, as we need increased liquidity to finance the purchases of raw materials and supplies, drug formulas for new products, investment in research and development, and acquisition of new businesses and technologies.
• Although there is currently no claim against us, we may be subject to claims that these employees or consultants have, inadvertently or otherwise, used or disclosed trade secrets or other proprietary information from their former employers.
• It may be necessary for us to litigate and defend against these claims.
• Even if we successfully defend ourselves against these claims, litigation could result in substantial costs and be a distraction to our management.
• Furthermore, an original action may be brought in the PRC against us, our directors, executive officers or managers only if the actions are not required to be arbitrated by PRC law under Helpson’s articles of association, and only if the facts alleged in the complaint give rise to the cause of action under PRC law.
• Onny acquired 100% of the ownership of Helpson on May 25, 2005, by entering into an Equity Transfer Agreement with Helpson’s three former shareholders.
• In August 2015, the PRC Government devalued its currency by approximately 3%, representing the largest yuan depreciation for 20 years.
• Our business’ profitability may be adversely affected if additional or modified environmental control regulations are imposed upon us.
• If the Company fails 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.
• The PRC Data Security Law provides data security and privacy obligations on entities and individuals carrying out data processing activities, introduces a data classification and hierarchical protection system based on the importance of data, and imposes export restrictions on certain data and information.
• If our PRC operating entities fail to comply with such measures, they may face legal liability under the PRC Personal Information Protection Law, including fines of up to RMB50 million or 5% of annual revenues and may be ordered to suspend related activities or have business licenses revoked.
• On February 14, 2025, CAC issued the Administration Measures for Personal Information Protection Compliance Audits, which became effective on May 1, 2025.
• These Measures impose requirements on personal information processing activities, including mandatory audits, appointment of responsible personnel, and compliance reporting.
• Failure to comply with such requirements, particularly in cases involving large-scale or sensitive personal information processing or data security incidents, may subject us and our PRC operating entities to legal liabilities, regulatory enforcement actions, and reputational harm, which could materially and adversely affect our business, financial condition, and results of operations.
• On June 11, 2025, CAC, in collaboration with multiple departments, issued the Regulations on the Management of the Use of Commercial Encryption in Critical Information Infrastructure, which became effective on August 1, 2025.
• These regulations impose requirements on critical information infrastructure operators regarding the use of certified commercial encryption products and services, protection of core, important, and personal data, and the conduct of regular security assessments and reporting obligations.
• Failure to comply with the applicable requirements may subject us and our PRC operating entities to legal liabilities and regulatory penalties, and could materially and adversely affect our business, financial condition, and results of operations.
• On June 26, 2025, CAC issued the Regulations on the Application of the Administrative Penalty Discretion Benchmarks of Cyberspace Administration Departments, which became effective on August 1, 2025.
• These regulations establish standardized frameworks for determining administrative penalties, including varying levels of punishment based on the nature, severity, and impact of violations, as well as mitigating or aggravating factors.
• Failure to comply may subject us and our PRC operating entities to regulatory penalties and enforcement actions, and could materially and adversely affect our business, financial condition, and results of operations.
• On June 27, 2025, CAC released the third version of the Guidance on the Application for Security Assessment of Cross-Border Transfers.
• The guidance provides more detailed and streamlined requirements for security assessment applications and clarifies the conditions under which the validity period of such assessments may be extended.

and 26 more.

Gone since FY2024

• If the NMPA issues any notices to cease the production, sale and use of any of our products, or request Helpson to recall any of our products we sold, we must comply with such requirements.
• We reported negative gross margins of -43.8% for the year ended December 31, 2024, a substantial deterioration from negative gross margins of -4.0% for the year ended December 31, 2023, indicating significant challenges in our cost structure and pricing environment.
• We would face enhanced competition if competitive products are added to the National Medical Insurance Program.
• Our inability to compete effectively could reduce sales or margins, which could have a material adverse effect on our results of our operations.
• Some of our competitors are actively engaging in research and development in areas in which we have products or in which we are developing new product or new indications for existing products.
• Our competitors may obtain approval for a competitive product before our product we are developing is approved.
• 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 the event certain distributors choose not to continue their relationship with us after completing their existing sales agreements, they can do so without breaching any contract or agreement, our financial results could be adversely affected if we cannot find the substantially similar distributors in time under such circumstances.
• Our top five distributors in aggregate accounted for 24% and 22% of our net revenues in 2024 and 2023, respectively.
• 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.
• These risks are greater for our products that receive regulatory approval for commercial sale.
• Even if a product is approved for commercial use by an appropriate governmental agency, there can be no assurance that users will not claim effects other than those intended resulted from the use of our products.
• Such lawsuits may divert the attention of our management from our business strategies, may be costly to defend and may negatively impact our reputation and our Helpson brand’s reputation, and may harm the sales of our other branded products.
• 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.
• 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.
• To keep up with the rapid development of the Chinese pharmaceutical industry, it will impose significant responsibilities upon the members of management to identify, recruit, maintain, integrate and motivate new and old employees In addition, we may need to increase the salary, or the equity incentive plan for the employees to keep them in the Company.
• Aside from the increased difficulties and increased costs in the management of human resources, we may also encounter working capital issues, as we need increased liquidity to finance the purchases of raw materials and supplies, drug formulas for new products, investment in research and development, acquisition of new businesses and technologies.
• Although there is currently no claim against us, we may be subject to claims that these employees or consultants have, inadvertently or otherwise, used or disclosed trade secrets or other proprietary information of their former employers.
• It may be necessary to for us to litigate and defend against these claims.
• Even if we successfully defend against these claims, litigation could result in substantial costs and be a distraction to our management.
• Furthermore, an original action may be brought in the PRC against us, our directors, executive officers or managers only if the actions are not required to be arbitrated by PRC law under Helpson’s articles of association, and only if the facts alleged in the complaint give rise to a cause of action under PRC law.
• Onny acquired 100% of the ownership in Helpson on May 25, 2005, by entering into an Equity Transfer Agreement with Helpson’s three former shareholders.
• In August 2015, the PRC Government devalued its currency by approximately 3%, represented the largest yuan depreciation for 20 years.
• Our business’s profitability may be adversely affected if additional or modified environmental control regulations are imposed upon us.
• 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.
• The PRC Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data processing activities, introduces a data classification and hierarchical protection system based on the importance of data, and imposes export restrictions on certain data and information.
• If our PRC operating entities failed to comply with such measures, they may face legal liability under the PRC Personal Information Protection Law, including fines of up to RMB50 million or 5% of annual revenues and may be ordered to suspend related activities or have business licenses revoked.
• Moreover, the Anti-Monopoly Law requires that transactions which involve the national security, the examination on the national security shall also be conducted according to the relevant provisions of the State.
• The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC regulatory authorities may be required under PRC law in connection with any future issuance of securities overseas, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.
• However, our future capital raising activities may be subject to the filing requirement.
• 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.
• As of the date of this annual report, Helpson plans to retain all the revenues and re-invest them into Helpson’s daily operation.
• Our bylaws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of us.
• 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.
• 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.
• The Company incurred recurring losses from operations, has net current liabilities and an accumulated deficit that raise substantial doubt about its ability to continue as a going concern.
• They are currently undergoing market operation, and are planned to be launched this year and are expected to generate sales revenue.
• While the current plans will allow the Company to fund its operations in the next twelve months, there can be no assurance that the Company will be able to achieve its future strategic alternatives raising substantial doubt about its ability to continue as a going concern.