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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 6 – RELATED PARTY TRANSACTIONS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A member of the Company's board of
directors ("Board") had previously advanced to the Company an aggregate amount of $1,354,567 as of June 30, 2020 and
December 31, 2019 which are recorded as "Other payables – related parties" on the accompanying condensed consolidated
balance sheets. The advances bear interest at a rate of 1.0% per year.  Total interest expense for each of the three
months ended June 30, 2020 and 2019 was $3,386 and $3,386, respectively. Total interest expense for each of the three months ended
June 30, 2020 and 2019 was $6,773 and $6,773, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company received advances totaling
$90,551 during the six months ended June 30, 2020 from its Chairperson, Chief Executive Officer and Interim Chief Financial Officer.
Total amounts owed were $797,594 and $717,419 and are recorded as Other payables – related parties on the accompanying condensed
consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. On July 8, 2019 the Company entered into a
loan agreement in exchange for cash of RMB 4,770,000 ($674,405) with its Chairperson, Chief Executive Officer and Interim Chief
Financial Officer. The loan bears interest at a rate of 4.35% and is payable within one year of the loan agreement. The due date
of the loan agreement was extended to July 10, 2021. Total interest expense related to the loan for the three and six months ended
June 30, 2020 was $7,321 and $14,754. Compensation payable to the Chairperson, Chief Executive Officer and Interim Chief Financial
Officer is included in Other payables in the accompanying condensed consolidated balance sheets totaling $2,315,986 and $2,307,986
as of June 30, 2020 and December 31, 2019, respectively.</p>
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<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Year</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Lines of <br />
Credit</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Construction <br />
Loan Facility</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
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<td style="width: 64%; text-align: left">2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,200,650</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,118,794</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,319,444</td><td style="width: 1%; text-align: left"> </td></tr>
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<td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">706,264</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,977,541</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,683,805</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,906,914</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,096,335</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,003,249</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Organization and Nature of Operations
– </i></b>China Pharma Holdings, Inc., a Nevada corporation, owns 100% of Onny Investment Limited (Onny), a British
Virgin Islands corporation, which owns 100% of Hainan Helpson Medical & Biotechnology Co., Ltd (Helpson), a company organized
under the laws of the People’s Republic of China (the PRC). China Pharma Holdings, Inc. and its subsidiaries are referred
to herein as the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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. The transaction
was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for
Establishment of Enterprises with Foreign Investment in the PRC on the same day. Helpson received its business license evidencing
its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has acquired and continues to acquire well-accepted
medical formulas to add to its diverse portfolio of Western and Chinese medicines.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Consolidation and Basis of Presentation </i></b>–
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) and are expressed in United States dollars. They include the
accounts and operations of the Company including its wholly-owned subsidiaries. All significant intercompany balances and transactions
have been eliminated in the consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Helpson’s functional currency is
the Chinese Renminbi. Helpson’s revenue and expenses are translated into United States dollars at the average exchange rate
for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses
from translating Helpson’s financial statements are included in accumulated other comprehensive income, which is a component
of stockholders’ equity. Gains and losses arising from transactions denominated in a currency other than the functional currency
of the entity that is party to the transaction are included in the results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the opinion of management, the unaudited
interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for
a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are
eliminated on consolidation. However, the results of operations included in such financial statements may not necessary be indicative
of annual results. Such financial statements should be read in conjunction with the Company’s audited consolidated financial statements
and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and
Exchange Commission on March 30, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Accounting Estimates </i>- </b>The
methodology used to prepare the Company’s financial statements is in conformity with U.S. GAAP, which requires the management
of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. Therefore, actual results could differ from those estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company uses the same accounting policies
in preparing its quarterly and annual financial statements. Certain information and footnote disclosures normally included in the
annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Credit Risk</i></b> –
The carrying amount of accounts receivable included in the balance sheet represents the Company’s exposure to credit risk
in relation to its financial assets. No other financial asset carries a significant exposure to credit risk. The Company performs
ongoing credit evaluations of each customer’s financial condition. The Company maintains allowances for doubtful accounts
and such allowances in the aggregate have not exceeded management’s estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has its cash in bank deposits
primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy
of protecting depositors’ interests. The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which
contains provisions for the implementation of measures for the bankruptcy of PRC banks. Company bank accounts in China are not
subject to a certain insurance coverage and will follow the provisions set forth in the PRC Bankruptcy Law should any bank where
the Company has accounts declare bankruptcy.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 2 – INVENTORY</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Inventory consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
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<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
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<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
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<td style="width: 76%; text-align: left">Raw materials</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,798,405</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,113,994</td><td style="width: 1%; text-align: left"> </td></tr>
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<td style="text-align: left">Work in process</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">644,174</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">314,231</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,410,393</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,160,599</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 4pt; padding-left: 9pt">Total Inventory</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,852,972</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,588,824</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 3 – PROPERTY, PLANT AND EQUIPMENT</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Property, plant and equipment consisted of the following:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Permit of land use</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">397,864</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">403,755</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -0.1in; padding-left: 0.1in">Building</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,239,010</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,375,817</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Plant, machinery and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,757,799</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,309,262</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Motor vehicle</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">303,835</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">308,334</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Office equipment</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">216,264</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">217,058</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-indent: -0.1in; padding-left: 16.2pt">Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">36,914,772</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">36,614,226</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Less: accumulated depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(21,283,119</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(20,300,399</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -0.1in; padding-left: 0.1in">Property, Plant and Equipment, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">15,631,653</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16,313,827</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Depreciation is computed on a straight-line basis over the estimated
useful lives of the assets as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; white-space: nowrap; width: 86%; font-size: 10pt; text-align: left"><font style="font-size: 10pt"><b>Asset</b></font></td>
<td style="padding-bottom: 1.5pt; white-space: nowrap; width: 2%"> </td>
<td style="border-bottom: Black 1.5pt solid; white-space: nowrap; width: 12%; font-size: 10pt; text-align: center"><font style="font-size: 10pt"><b>Life - years</b></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Permit of land use</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">40 - 70</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Building</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">20 - 49</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Plant, machinery and equipment</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">5 - 10</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Motor vehicle</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">5 - 10</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Office equipment</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">3-5</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation relating to office equipment
was included in general and administrative expenses, while all other depreciation was included in cost of revenue. For the three
months ended June 30, 2020 and 2019, depreciation expense was $640,473 and $762,475, respectively and $1,287,586 and $1,535,336
for the six months ended June 30, 2020 and 2019, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 4 - INTANGIBLE ASSETS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets represent the cost of
medical formulas approved for production by the National Medical Products Administration (the "NMPA", formerly China
Food and Drug Administration, CFDA). The Company did not obtain NMPA production approval for any new medical formulas during the
six months ended June 30, 2020 and 2019 and no costs were reclassified from advances to intangible assets during the six months
ended June 30, 2020 and 2019, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Approved medical formulas are amortized
from the date NMPA approval is obtained over their individually identifiable estimated useful life, which range from ten to thirteen
years.  It is at least reasonably possible that a change in the estimated useful lives of the medical formulas could
occur in the near term due to changes in the demand for the drugs and medicines produced from these medical formulas. Amortization
expense relating to intangible assets was $8,676 and $17,912 for the three months ended June 30, 2020 and 2019, respectively, and
$17,484 and $40,534 for the six months ended June 30, 2020 and 2019, respectively, which was included in the general and administrative
expenses. Medical formulas typically do not have a residual value at the end of their amortization period.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company evaluates each approved medical
formula for impairment at the date of NMPA approval, when indications of impairment are present and also at the date of each financial
statement. The Company's evaluation is based on an estimated undiscounted net cash flow model, which considers currently
available market data for the related drug and the Company's estimated market share. If the carrying value of the medical
formula exceeds the estimated future net cash flows, an impairment loss is recognized for the excess of the carrying value over
the fair value of the medical formula, which is determined by the estimated discounted future net cash flows. No impairment loss
was recognized during the six months ended June 30, 2020 and 2019.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Intangible assets consisted solely of NMPA
approved medical formulas as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Gross carrying amount</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,768,507</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,839,117</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Accumulated amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,583,263</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,633,506</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Net carrying amount</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">185,244</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">205,611</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Raw materials</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,798,405</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,113,994</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Work in process</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">644,174</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">314,231</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,410,393</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,160,599</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 4pt; padding-left: 9pt">Total Inventory</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,852,972</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,588,824</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left; text-indent: -0.1in; padding-left: 0.1in">Permit of land use</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">397,864</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">403,755</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-indent: -0.1in; padding-left: 0.1in">Building</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,239,010</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,375,817</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Plant, machinery and equipment</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,757,799</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">26,309,262</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Motor vehicle</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">303,835</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">308,334</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Office equipment</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">216,264</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">217,058</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-indent: -0.1in; padding-left: 16.2pt">Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">36,914,772</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">36,614,226</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Less: accumulated depreciation</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(21,283,119</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(20,300,399</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -0.1in; padding-left: 0.1in">Property, Plant and Equipment, net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">15,631,653</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16,313,827</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; white-space: nowrap; width: 86%; font-size: 10pt; text-align: left"><font style="font-size: 10pt"><b>Asset</b></font></td>
<td style="padding-bottom: 1.5pt; white-space: nowrap; width: 2%"> </td>
<td style="border-bottom: Black 1.5pt solid; white-space: nowrap; width: 12%; font-size: 10pt; text-align: center"><font style="font-size: 10pt"><b>Life - years</b></font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Permit of land use</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">40 - 70</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Building</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">20 - 49</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Plant, machinery and equipment</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">5 - 10</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Motor vehicle</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">5 - 10</font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="white-space: nowrap; font-size: 10pt"><font style="font-size: 10pt">Office equipment</font></td>
<td style="white-space: nowrap"> </td>
<td style="white-space: nowrap; font-size: 10pt; text-align: center"><font style="font-size: 10pt">3-5</font></td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Gross carrying amount</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,768,507</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,839,117</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Accumulated amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,583,263</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,633,506</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Net carrying amount</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">185,244</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">205,611</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 5 – ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In order to expand the number of medicines
the Company manufactured and marketed, it entered into contracts with independent laboratories and others for the purchase of medical
formulas and assistance with the NMPA approval process.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the new regulations and policy environment,
the criteria for formulations' development are more stringent. The Company must supplement and improve the corresponding
processes and standards to meet the latest requirements of NMPA in accordance with the requirements of consistency evaluation.
As a result, the Company anticipates an extended timeline on the approval process of its current pipeline products.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If a medical product is not approved by
the NMPA, as evidenced by their issuance of a denial letter, or if the laboratory breaches the contract, the laboratory is required
under the contract to provide a refund to the Company of the full amount of the payments made to the laboratory for that formula,
or the Company can require the application of those payments to another medical formula with the same laboratory. As a result of
the refund right, the Company is ultimately purchasing an approved medical product. Accordingly, payments made prior to the issuance
of production approval by the NMPA are recorded as advances for purchases of intangible assets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To date, no formula has failed to receive
NMPA production approval nor has the Company been informed or been made aware of any formula that may fail to receive such approval.
However, there is no assurance that the medical products will receive production approval, and if the Company does not receive
such approval, it will enforce its contractual rights to receive a refund from the laboratory or have the payments applied to another
medical formula with the same laboratory.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The management determined to impair all
remaining advances at December 31, 2019, but may resume the development of these formulas in the future if sufficient funding and
other favorable conditions arise.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 7 – BANKER'S ACCEPTANCE NOTES
PAYABLE</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2016, the Company entered into
a Banker's Acceptance Note Agreement with a bank. Pursuant to the terms of the agreement, the Company can issue banker's acceptance
notes to any third party as payment of amounts owing to that third party. The Company is required to deposit with the bank an amount
equal to the amounts represented by the banker's acceptance notes issued to the third parties. The amount of these deposited balances
is shown as "Restricted cash" on the accompanying balance sheets as of June 30, 2020 and December 31, 2019. The maximum
amount that the Company can issue under this agreement is limited to the lesser of RMB30,000,000 (approximately $4.5 million) or
the amount of cash available to deposit against the banker's acceptance notes. In addition, the agreement calls for the payment
of fees equal to 0.05% of the note amount to the bank. As of June 30, 2020 and December 31, 2019, the Company had outstanding banker's
acceptance notes in the amount of $222,996 and $109,908, respectively.</p>
4500000
30000000
109908
222996
30759656
30455483
51700000
2025-12-31
0.25
45756
11251
45756
11251
45756
11251
45756
11251
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Recent Accounting Pronouncements</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2016, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, <i>Financial Instruments
– Credit Losses (Topic 326)</i>, which introduces new guidance for the accounting for credit losses on instruments within
its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial
instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting
model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective
for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December
15, 2019, including interim periods within those fiscal years. The Company does not anticipate the guidance will have a material
impact on its financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2019, the FASB issued ASU 2019-12,
<i>"Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". </i>The amendment simplifies the accounting
for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes. It also clarifies certain aspects
of the existing guidance to promote more consistent application, among other things. The guidance is effective for interim and
annual reporting periods beginning within 2021 with early adoption permitted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the FASB or other standards
setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through
issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be
adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption.</p>
26600000
1800000
2307986
2315986
717419
797594
2683805
706264
1977541
6003249
1906914
4096335
The loan bears interest at the rate of 4.05% per annum.
The loan bears interest based upon 110% of the PRC government’s eight-year term rate effective on the actual draw-down date, subject to annual adjustments based on 110% of the floating rate for the same type of loan on the anniversary from the draw-down date and its subsequent anniversary dates. The interest rate has remained at 5.39% on the anniversary dates which were July 10, 2017, 2018 and 2019, respectively. The loan required interest only payments for the first two years. Beginning July 11, 2015, the principal was due in at least two (2) annual installments with the first annual payment being due within six month period after July 10, 2015 and the second annual payment being due July 10, 2016 and each following year over the next five years through July 11, 2021 on the identical terms as described above for 2015.
The loan bears interest at a rate of 4.25% per annum.
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 9 - LEASES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has leases for certain office
and production facilities in the PRC which are classified as operating leases. The leases contain payment terms for fixed amounts.
Options to extend are recognized as part of the lease liabilities and recognized as right to use assets when management estimates
to renew the lease. There are no residual value guarantees, no variable lease payments, and no restrictions or covenants imposed
by leases. The discount rate used in measuring the lease liabilities and right of use assets was determined by reviewing the Company's
incremental borrowing rate at the initial measurement date. For the three months ended June 30, 2020 and 2019, operating lease
cost was $22,265 and $23,109, respectively and cash paid for amounts included in the measurement of lease liabilities for operating
cash flows from operating leases was $23,665 and $24,562, respectively. For the six months ended June 30, 2020 and 2019, operating
lease cost was $44,494 and $46,454, respectively and cash paid for amounts included in the measurement of lease liabilities for
operating cash flows from operating leases was $47,292 and $49,376, respectively. As of June 30, 2020 and December 31, 2019, the
Company reported operating lease right of use assets of $90,289 and $136,779, respectively and operating use liabilities of $93,510
and $140,007, respectively. As of June 30, 2020, its operating leases had a weighted average remaining lease term of 1.02 years
and a weighted average discount rate of 4.75%.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Minimum lease payments for the Company's operating lease
liabilities were as follows for the twelve month periods ended June 30:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: left">2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">94,585</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,384</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total undiscounted cash flows</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">95,969</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Less: Imputed interest</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,459</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">93,510</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Operating lease liabilities, current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(93,510</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 4pt">Operating lease liabilities, net of current portion</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has leases with terms of less than one year for
certain provincial sales offices that are not material.</p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: left">2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">94,585</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,384</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total undiscounted cash flows</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">95,969</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Less: Imputed interest</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,459</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">93,510</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: Operating lease liabilities, current portion</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(93,510</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 4pt">Operating lease liabilities, net of current portion</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
140007
93510
2459
95969
1384
94585
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 10 - INCOME TAXES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred income tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected
to be recovered or settled. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in
income in the period that includes the enactment date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Liabilities are established for uncertain
tax positions expected to be taken in income tax returns when such positions are judged to meet the "more-likely-than-not"
threshold based on the technical merits of the positions. Estimated interest and penalties related to uncertain tax positions are
included as a component of other expenses. Through December 31, 2019, the Company has not identified any uncertain tax positions
that it has taken. U.S. income tax returns for the years ended December 31, 2016 through December 31, 2019 and the Chinese income
tax return for the year ended December 31, 2019 are open for possible examination.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Under the current tax law in the PRC, the Company is and will
be subject to the enterprise income tax rate of 25%.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There was no provision for income taxes
for the three and six months ended June 30, 2020 and 2019 respectively due to continued net losses of the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June 30, 2020, the Company had net
operating loss carryforwards for PRC tax purposes of approximately $51.7 million which are available to offset any future taxable
income through 2025. Approximately $21.6 million of these carryforwards will expire in December 2020. The Company also has net
operating losses for United States federal income tax purposes of approximately $6.4 million of which $5.1 million are available
to offset future taxable income, if any, through 2039, and $1.3 million are available for carryforward indefinitely subject to
a limitation of 80% of taxable income for each tax year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Recent U.S. federal tax legislation, commonly
referred to as the Tax Cuts and Jobs Act (the "U.S. Tax Reform"), was signed into law on December 22, 2017. The
U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal
corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating
many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory
deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally
eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In assessing the realizability of deferred
tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not
be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those differences become deductible or tax loss carry forwards are utilized.  Management
considers projected future taxable income and tax planning strategies in making this assessment.  Based upon an assessment
of the level of historical taxable income and projections for future taxable income over the periods on which the deferred tax
assets are deductible or can be utilized, management believes it is not likely for the Company to realize all benefits of the deferred
tax assets as of June 30, 2020 and December 31, 2019.  Therefore, the Company provided for a valuation allowance against
its deferred tax assets of $30,455,483 and $30,759,656 as of June 30, 2020 and December 31, 2019, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company also incurred various other
taxes, comprised primarily of business taxes, value-added taxes, urban construction taxes, education surcharges and others. Any
unpaid amounts are reflected on the balance sheets as accrued taxes payable.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><b>NOTE 11 – FAIR VALUE MEASUREMENTS</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Fair value is
defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. To measure fair value, a hierarchy has been established which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and
liabilities as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable
inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other
observable inputs that can be corroborated by observable market data; and Level 3 – Unobservable inputs supported by little
or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies,
or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment
or estimation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company uses
fair value to measure the value of the banker's acceptance notes it holds at June 30, 2020 and December 31, 2019. The banker's
acceptance notes are recorded at cost which approximates fair value.  The Company held the following assets and liabilities
recorded at fair value:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="10" style="font-weight: bold; text-align: center">Fair Value Measurements at</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"><b>June 30,</b></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Reporting Date Using</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font-weight: bold">Description</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Banker's acceptance notes</td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">11,251</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">11,251</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 4pt; text-indent: -0.1in; padding-left: 0.1in">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">11,251</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">11,251</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="10" style="font-weight: bold; text-align: center">Fair Value Measurements at</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"><b>December 31,</b></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Reporting Date Using</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font-weight: bold">Description</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"> 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Banker's acceptance notes</td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">45,756</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">45,756</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 4pt; text-indent: -0.1in; padding-left: 0.1in">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45,756</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45,756</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="10" style="font-weight: bold; text-align: center">Fair Value Measurements at</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"><b>June 30,</b></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Reporting Date Using</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font-weight: bold">Description</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Banker's acceptance notes</td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">11,251</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">11,251</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 4pt; text-indent: -0.1in; padding-left: 0.1in">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">11,251</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">11,251</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="2"> </td><td> </td><td style="font-weight: bold"> </td>
<td colspan="10" style="font-weight: bold; text-align: center">Fair Value Measurements at</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"><b>December 31,</b></td><td style="padding-bottom: 1.5pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Reporting Date Using</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font-weight: bold">Description</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"> 2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 1</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 2</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Level 3</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left; padding-bottom: 1.5pt; text-indent: -0.1in; padding-left: 0.1in">Banker's acceptance notes</td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">45,756</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">45,756</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td><td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right">-</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 4pt; text-indent: -0.1in; padding-left: 0.1in">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45,756</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45,756</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 12 - STOCKHOLDERS' EQUITY</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is authorized to issue 95,000,000
shares of common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value. The preferred stock may be
issued in series with such designations, preferences, stated values, rights, qualifications or limitations as determined solely
by the Company's Board.</p>
0.10
0.497
0.107
0.307
0.498
0.107
0.308
0.214
0.139
0.339
0.210
0.161
0.390
0.186
0.277
0.247
0
1
2
2
2
2
48701
2150168
1977541
10045308
11340245
109908
222996
2150168
2118794
91306
93510
2071986
2152161
3560332
3753356
189880
180719
1366330
1025098
22235222
23165021
205611
185244
136779
90289
16313827
15631653
5579005
7257835
77120
397374
3588824
3852972
46643
86065
635371
595733
45756
11251
109908
222996
1074979
1813544
43579557
43579557
43579557
43579557
-0.01
-0.03
0
-0.02
-839080
-1231133
18849
-1649267
-647844
-1255834
13053
-838103
-123549
-168658
-61932
-85135
125147
184034
63144
97254
4953
0
0
1598
15376
1212
12119
-524295
-1087176
74985
-752968
1868532
1907254
1074813
916516
78863
135926
30044
66008
711004
763367
322445
334550
1053737
984557
727642
505866
1344237
820078
1149798
163548
4190441
4678603
2620925
2405860
5534678
5498681
3770723
2569408
3833570
5498681
2069615
2569408
1701108
1701108
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Reclassification</i></b> –
Certain amounts in the prior period presented have been reclassified to conform to the current year presentation. There was no
impact on previously reported assets, net income or total cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Organization and Nature of Operations
– </i></b>China Pharma Holdings, Inc., a Nevada corporation, owns 100% of Onny Investment Limited (Onny), a British
Virgin Islands corporation, which owns 100% of Hainan Helpson Medical & Biotechnology Co., Ltd (Helpson), a company organized
under the laws of the People’s Republic of China (the PRC). China Pharma Holdings, Inc. and its subsidiaries are referred
to herein as the Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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. The transaction
was approved by the Commercial Bureau of Hainan Province on June 12, 2005 and Helpson received the Certificate of Approval for
Establishment of Enterprises with Foreign Investment in the PRC on the same day. Helpson received its business license evidencing
its WFOE (Wholly Foreign Owned Enterprise) status on June 21, 2005.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has acquired and continues to acquire well-accepted
medical formulas to add to its diverse portfolio of Western and Chinese medicines.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Liquidity and Going Concern</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June 30, 2020, the Company had cash
and cash equivalents of $1.8 million and an accumulated deficit of $26.6 million. The Company’s Chairperson, Chief Executive
Officer and Interim Chief Financial Officer has advanced an aggregate of $0.8 million at June 30, 2020 to provide working capital
and enable the Company’s required payments related to its construction loan facility. Although the Company recorded a profit
in the three months ended June 30, 2020, operating losses are anticipated to continue for the foreseeable future due to, among
other things, costs related to the production of its existing products, debt service costs and costs of selling and administrative
organization. These conditions raise substantial doubt about its ability to continue as a going concern within one year after the
date that the financial statements are issued. To alleviate the conditions that raise substantial doubt about the Company’s
ability to continue as a going concern, management plans to enhance the sales model of advance payment, and further strengthen
its collection of accounts receivable. Further, the Company is currently exploring strategic alternatives to accelerate the launch
of nutrition products. In addition, management believes that the Company’s existing fixed assets can serve as collateral
to support additional bank loans. As discussed in Note 8, in April 2020 the Company obtained a line of credit from a bank for an
aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been
advanced to the Company. Also, in June 2020 the Company obtained an additional line of credit and received advances totaling RMB
8,500,000 (approximately $1.2 million). While the current plans and additional financing 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the requirements of Accounting
Standards Codification (ASC) 205-40, <i>Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern</i>
management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about
the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have
not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology,
management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s
ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both
(1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements
are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise
substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial
statements are issued.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under ASC 205-40, the strategic alternatives
being pursued by the Company cannot be considered probable at this time because none of the Company’s current plans have
been finalized at the time of the issuance of these financial statements and the implementation of any such plan is not probable
of being effectively implemented as none of the plans are entirely within the Company’s control. Accordingly, substantial
doubt is deemed to exist about the Company’s ability to continue as a going concern within one year after the date these
financial statements are issued.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying condensed consolidated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome
of the uncertainties described above.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Consolidation and Basis of Presentation </i></b>–
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) and are expressed in United States dollars. They include the
accounts and operations of the Company including its wholly-owned subsidiaries. All significant intercompany balances and transactions
have been eliminated in the consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Helpson’s functional currency is
the Chinese Renminbi. Helpson’s revenue and expenses are translated into United States dollars at the average exchange rate
for the period. Assets and liabilities are translated at the exchange rate as of the end of the reporting period. Gains or losses
from translating Helpson’s financial statements are included in accumulated other comprehensive income, which is a component
of stockholders’ equity. Gains and losses arising from transactions denominated in a currency other than the functional currency
of the entity that is party to the transaction are included in the results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In the opinion of management, the unaudited
interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for
a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are
eliminated on consolidation. However, the results of operations included in such financial statements may not necessary be indicative
of annual results. Such financial statements should be read in conjunction with the Company’s audited consolidated financial statements
and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and
Exchange Commission on March 30, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Accounting Estimates </i>- </b>The
methodology used to prepare the Company’s financial statements is in conformity with U.S. GAAP, which requires the management
of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. Therefore, actual results could differ from those estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company uses the same accounting policies
in preparing its quarterly and annual financial statements. Certain information and footnote disclosures normally included in the
annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Credit Risk</i></b> –
The carrying amount of accounts receivable included in the balance sheet represents the Company’s exposure to credit risk
in relation to its financial assets. No other financial asset carries a significant exposure to credit risk. The Company performs
ongoing credit evaluations of each customer’s financial condition. The Company maintains allowances for doubtful accounts
and such allowances in the aggregate have not exceeded management’s estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has its cash in bank deposits
primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy
of protecting depositors’ interests. The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which
contains provisions for the implementation of measures for the bankruptcy of PRC banks. Company bank accounts in China are not
subject to a certain insurance coverage and will follow the provisions set forth in the PRC Bankruptcy Law should any bank where
the Company has accounts declare bankruptcy.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Interest Rate Risk</i></b> –
The Company is exposed to the risk arising from changing interest rates, which may affect the ability of repayment of existing
debts and viability of securing future debt instruments within the PRC.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Reclassification</i></b> –
Certain amounts in the prior period presented have been reclassified to conform to the current year presentation. There was no
impact on previously reported assets, net income or total cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Recent Accounting Pronouncements</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2016, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, <i>Financial Instruments
– Credit Losses (Topic 326)</i>, which introduces new guidance for the accounting for credit losses on instruments within
its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial
instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting
model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective
for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December
15, 2019, including interim periods within those fiscal years. The Company does not anticipate the guidance will have a material
impact on its financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2019, the FASB issued ASU 2019-12,
<i>“Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. </i>The amendment simplifies the accounting
for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes. It also clarifies certain aspects
of the existing guidance to promote more consistent application, among other things. The guidance is effective for interim and
annual reporting periods beginning within 2021 with early adoption permitted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the FASB or other standards
setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through
issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be
adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Liquidity and Going Concern</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June 30, 2020, the Company had cash
and cash equivalents of $1.8 million and an accumulated deficit of $26.6 million. The Company’s Chairperson, Chief Executive
Officer and Interim Chief Financial Officer has advanced an aggregate of $0.8 million at June 30, 2020 to provide working capital
and enable the Company’s required payments related to its construction loan facility. Although the Company recorded a profit
in the three months ended June 30, 2020, operating losses are anticipated to continue for the foreseeable future due to, among
other things, costs related to the production of its existing products, debt service costs and costs of selling and administrative
organization. These conditions raise substantial doubt about its ability to continue as a going concern within one year after the
date that the financial statements are issued. To alleviate the conditions that raise substantial doubt about the Company’s
ability to continue as a going concern, management plans to enhance the sales model of advance payment, and further strengthen
its collection of accounts receivable. Further, the Company is currently exploring strategic alternatives to accelerate the launch
of nutrition products. In addition, management believes that the Company’s existing fixed assets can serve as collateral
to support additional bank loans. As discussed in Note 8, in April 2020 the Company obtained a line of credit from a bank for an
aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been
advanced to the Company. Also, in June 2020 the Company obtained an additional line of credit and received advances totaling RMB
8,500,000 (approximately $1.2 million). While the current plans and additional financing 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the requirements of Accounting
Standards Codification (ASC) 205-40, <i>Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern</i>
management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about
the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have
not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology,
management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s
ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both
(1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements
are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise
substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial
statements are issued.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under ASC 205-40, the strategic alternatives
being pursued by the Company cannot be considered probable at this time because none of the Company’s current plans have
been finalized at the time of the issuance of these financial statements and the implementation of any such plan is not probable
of being effectively implemented as none of the plans are entirely within the Company’s control. Accordingly, substantial
doubt is deemed to exist about the Company’s ability to continue as a going concern within one year after the date these
financial statements are issued.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accompanying condensed consolidated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome
of the uncertainties described above.</p>
0001106644
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Interest Rate Risk</i></b> –
The Company is exposed to the risk arising from changing interest rates, which may affect the ability of repayment of existing
debts and viability of securing future debt instruments within the PRC.</p>
800000
Line of credit from a bank for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced to the Company. Also, in June 2020 the Company obtained an additional line of credit and received advances totaling RMB 8,500,000 (approximately $1.2 million).
Additional RMB 3,000,000 (approximately $0.4 million) has been advanced under this line of credit. The Company has an additional RMB 2,000,000 (approximately $0.3 million) available under the line, subject to a risk review and approval by the third party guarantee company.
NMPA approval is obtained over their individually identifiable estimated useful life, which range from ten to thirteen years.
In addition, the agreement calls for the payment of fees equal to 0.05% of the note amount to the bank.
2000000
14000000
The line of credit is due in one year on the anniversary date of the line of credit.
Advances on the line of credit are due two years from the date of the advance.
44494
22265
23109
46454
47292
23665
24562
49376
Approximately $51.7 million which are available to offset any future taxable income through 2025. Approximately $21.6 million of these carryforwards will expire in December 2020. The Company also has net operating losses for United States federal income tax purposes of approximately $6.4 million of which $5.1 million are available to offset future taxable income, if any, through 2039, and $1.3 million are available for carryforward indefinitely subject to a limitation of 80% of taxable income for each tax year.
The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings.
43579557
1200650
706264
12997621
14766500
43580
43580
23590204
23590204
-25972402
-26620246
11576219
11384983
22235222
23165021
24928
23404
-5318
10092
233629
304520
399455
270453
378585
118374
178991
2036540
2159204
222996
503312
1813544
1655892
2036540
2159204
1184887
2460527
851653
-301323
-23318
768
90551
-231252
-840449
-73538
840449
73538
-152740
150174
323553
31309
115468
-781626
-79967
-369547
279748
-43632
-323470
223562
14136
-960946
305183
284126
1305070
1575870
111533
142209
147475
1919818
1868160
-378727
279380
10615
404
277900
753444
742450
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 8 – CONSTRUCTION LOAN FACILITY
AND LINES OF CREDIT</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Construction Loan Facility</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company obtained a construction loan
facility, dated June 21, 2013, in the aggregate amount of RMB 80,000,000 (approximately $13 million). The loan facility is for
an eight-year term, which commenced on July 11, 2013, the initial draw-down date. The proceeds of the loan were used for and
are collateralized by the construction of the Company's new production facility and the included production line equipment
and machinery. The loan bears interest based upon 110% of the PRC government's eight-year term rate effective on the actual
draw-down date, subject to annual adjustments based on 110% of the floating rate for the same type of loan on the anniversary from
the draw-down date and its subsequent anniversary dates.  The interest rate has remained at 5.39% on the anniversary
dates which were July 10, 2017, 2018 and 2019, respectively.  The loan required interest only payments for the first two years.
Beginning July 11, 2015, the principal was due in at least two (2) annual installments with the first annual payment being due
within six month period after July 10, 2015 and the second annual payment being due July 10, 2016 and each following year over
the next five years through July 11, 2021 on the identical terms as described above for 2015. The Company has made all required
payments due under the loan. As of June 30, 2020, the Company had no additional amounts available to it under this facility. During
the six months ended June 30, 2020, the Company made principal payments in the amount of $143,286 (RMB 1,000,000). The Company
made the required RMB 14,000,000 (approximately $2 million) payment due under the loan on July 10, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Lines of Credit</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2020, the Company obtained a line
of credit from Postal Savings Bank of China for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB
5,000,000 (approximately $0.7 million) have been advanced through June 30, 2020. The loan bears interest at a rate of 4.25% per
annum. Advances on the line of credit are due two years from the date of the advance. A third party company has guaranteed the
loan as being a second priority creditor in the collateral in certain land use rights and buildings next to the creditor of the
construction loan facility as discussed above. In addition, the Company's Chief Executive Officer and Chair of the Board
personally guaranteed the new line of credit. The Company has an additional RMB 5,000,000 (approximately $0.7 million) available
under the line, subject to a risk review and approval by the third party guarantee company. <font style="background-color: white">Total
interest expense under this facility for the three and six months ended June 30, 2020 was $4,953. In July 2020 an additional RMB
3,000,000 (approximately $0.4 million) has been advanced</font> under this line of credit. The Company has an additional RMB 2,000,000
(approximately $0.3 million) available under the line, subject to a risk review and approval by the third party guarantee company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 30, 2020 the Company obtained a line
of credit with Bank of Communications for an aggregate amount of RMB 8,500,000 (approximately $1.2 million), all of which has been
advanced. The loan bears interest at the rate of 4.05% per annum. The line of credit is due in one year on the anniversary date
of the line of credit. In addition, the Company's Chief Executive Officer and Chair of the Board personally guaranteed the
new line of credit and pledged personal assets as collateral for the loan. Total interest for the three and six months ended June
30, 2020 was $0.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Principal payments required for the remaining
terms of the loan facility and the lines of credit for the twelve month periods ended June 30, are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Year</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Lines of <br />
Credit</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Construction <br />
Loan Facility</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 64%; text-align: left">2021</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,200,650</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,118,794</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,319,444</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">706,264</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,977,541</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,683,805</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,906,914</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">4,096,335</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,003,249</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Fair Value of Construction Loan Facility
and Lines of Credit</i></b> – Based on the borrowing rates currently available to the Company for bank loans with similar
terms and maturities, the carrying amounts of the construction loan facility outstanding as of June 30, 2020 and December 31, 2019
approximated their fair value because the underlying instrument bears an interest rate that approximated current market rates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 14 – RISKS & UNCERTAINTIES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Current vulnerability due to certain
concentrations</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the six months ended June 30, 2020,
one customer accounted for 30.7% of sales and two customers respectively accounted for 49.8% and 10.7% of accounts receivable.
Two suppliers respectively accounted for 39.0% and 18.6% of raw material purchases, and three different products respectively accounted
for 30.8%, 21.4% and 13.9% of revenue.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the six months ended June 30, 2019,
no customer accounted for more than 10% of sales and two customers respectively accounted for 49.7% and 10.7% of accounts receivable. Two
suppliers respectively accounted for 27.7% and 24.7% of the Company's raw material purchases, and three different products
respectively accounted for 33.9%, 21.0% and 16.1% of revenue.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Nature of Operations</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Impact from the New Coronavirus Global
Pandemic ("COVID-19") </b>- The current outbreak of COVID-19 had a material and adverse effect on the Company's
business operations. These included, but are not limited to, disruptions or restrictions on its ability to travel or to distribute
its products, as well as temporary closures of its facilities or the facilities of the suppliers or customers. Company reopened
its facility and ramped up its operations in the first quarter 2020, there is a risk of a resurgence of the outbreak such as certain
cities witnesses including Hong Kong. Any disruption or delay of the Company's suppliers or customers would likely impact
its sales and operating results. In addition, COVID-19 has resulted in a widespread health crisis that could adversely affect the
economies and financial markets of China and many other countries, resulting in an economic downturn that could significantly impact
the Company operating results.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Economic environment - </b>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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 13 – REVENUE</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table summarizes the Company's
revenues disaggregated by revenue source and geography based on the Company's PRC based business locations:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">For the Three Months</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">For the Six Months</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">Domestic Pharmaceuticals</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,069,615</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,569,408</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,833,570</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,498,681</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Export Medical Test Kits</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,701,108</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,701,108</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,770,723</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,569,408</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,534,678</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,498,681</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were no sales of medical test kits
within the PRC. Medical test kits under this note is COVID-19 testers as referred to under Item 2 of this report.</p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"><tr style="vertical-align: bottom"><td></td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">For the Three Months</td><td style="font-weight: bold"> </td><td style="font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">For the Six Months</td><td style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Ended June 30,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">Domestic Pharmaceuticals</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,069,615</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,569,408</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,833,570</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,498,681</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt; text-align: left">Export Medical Test Kits</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,701,108</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,701,108</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 4pt"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,770,723</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,569,408</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,534,678</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,498,681</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
95579
31548
505398
592961