United States securities and exchange commission logo
July 25, 2023
Zhilin Li
Interim Chief Financial Officer
China Pharma Holdings, Inc.
Second Floor, No. 17, Jinpan Road
Haikou, Hainan Province, China, 570216
Re: China Pharma
Holdings, Inc.
Form 10-K for
Fiscal Year Ended December 31, 2022
Filed March 30,
2023
File No. 001-34471
Dear Zhilin Li:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2022
Part I
Item 1. Business, page 1
1. At the onset of Part I,
please disclose prominently that you are not a Chinese operating
company but a Nevada
holding company with operations conducted by your subsidiaries.
2. Provide prominent
disclosure about the legal and operational risks associated with being
based in or having the
majority of the company s operations in China. Your disclosure
should make clear
whether these risks could result in a material change in your operations
and/or the value of
your securities or could significantly limit or completely hinder your
ability to offer or
continue to offer securities to investors and cause the value of such
securities to
significantly decline or be worthless. Your disclosure should address how
recent statements and
regulatory actions by China s government, such as those related to
data security or
anti-monopoly concerns, have or may impact the company s ability to
Zhilin Li
FirstName LastNameZhilin
China Pharma Holdings, Inc.Li
Comapany
July NameChina Pharma Holdings, Inc.
25, 2023
July 25,
Page 2 2023 Page 2
FirstName LastName
conduct its business, accept foreign investments, or list on a U.S. or
other foreign
exchange.
3. Please prominently disclose whether your auditor is subject to the
determinations
announced by the PCAOB on December 16, 2021 and whether and how the
Holding
Foreign Companies Accountable Act, as amended by the Consolidated
Appropriations
Act, 2023, and related regulations will affect your company.
4. Clearly disclose how you will refer to the holding company and
subsidiaries when
providing the disclosure throughout the document so that it is clear
to investors which
entity the disclosure is referencing and which subsidiaries or
entities are conducting the
business operations. For example, disclose, if true, that your
subsidiary conducts
operations in China.
5. Provide a clear description of how cash is transferred through your
organization. Disclose
your intentions to distribute earnings. Quantify any cash flows and
transfers of other
assets by type that have occurred between the holding company and its
subsidiaries, and
direction of transfer. Quantify any dividends or distributions that
subsidiaries have made
to the holding company and which entity made such transfer, and their
tax consequences.
Similarly quantify dividends or distributions made to U.S. investors,
the source, and their
tax consequences. Your disclosure should make clear if no transfers,
dividends, or
distributions have been made to date. Describe any restrictions on
foreign exchange and
your ability to transfer cash between entities, across borders, and to
U.S.
investors. Describe any restrictions and limitations on your ability
to distribute earnings
from the company, including your subsidiaries, to the parent company
and U.S. investors.
6. Disclose each permission or approval that you or your subsidiaries are
required to obtain
from Chinese authorities to operate your business and to offer
securities to foreign
investors. State whether you or your subsidiaries are covered by
permissions
requirements from the China Securities Regulatory Commission (CSRC),
Cyberspace
Administration of China (CAC) or any other governmental agency that is
required to
approve your operations, and state affirmatively whether you have
received all requisite
permissions or approvals and whether any permissions or approvals have
been denied.
Please also describe the consequences to you and your investors if you
or your
subsidiaries: (i) do not receive or maintain such permissions or
approvals, (ii)
inadvertently conclude that such permissions or approvals are not
required, or (iii)
applicable laws, regulations, or interpretations change and you are
required to obtain such
permissions or approvals in the future.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
46
7. Please address the following regarding your accounts receivable and
related allowance for
doubtful accounts:
Tell us and revise to clearly state your write-off policy.
Identify the point in time at
Zhilin Li
FirstName LastNameZhilin
China Pharma Holdings, Inc.Li
Comapany
July NameChina Pharma Holdings, Inc.
25, 2023
July 25,
Page 3 2023 Page 3
FirstName LastName
which you write off a receivable, including the extent to which
write-offs are made
on a specific versus general basis.
To the extent you do conduct write-offs of uncollectible
accounts receivables, explain
why write-offs are not separately quantified in your roll forward
of the allowance at
the top of page 50.
You provide an aging distribution breakdown at the bottom of
page 50 for four
different aging segments of your receivable portfolio by
percentage. Revise to
provide a similar aging distribution both for your gross accounts
receivables as well
as your allocated allowance for doubtful accounts in dollars.
You disclose on page 50 that deferred payments to
pharmaceutical companies by
state-owned hospitals and local medicine distributors are common.
Revise to discuss
the relative collectability of receivables separately from each
of these customer
classes and to discuss the extent to which your allowance
methodology differentiates
between these customers. Identify any other significant customer
classes.
To the extent state-owned hospitals reflect a different
collectability pattern from local
medicine distributors, consider breaking out your aging
distribution between these
two customer types, and provide a breakdown of revenue by
customer class.
To the extent you do not receive payments on receivables from
state-owned hospitals,
discuss the way you determine such payments are omitted due to
credit quality issues
versus other reasons such as pricing discounts, contractual
adjustments, or other
allowance adjustments to revenue.
Tell us the reasons for the fluctuations in your allowance as a
percentage of accounts
receivable and the reasons for the changes in your negative bad
debt expense for the
periods presented. Revise accordingly to more clearly address
such fluctuations.
General
8. Prominently disclose the risks that your corporate structure and being
based in or having
the majority of the company s operations in China poses to
investors. In particular,
describe the significant regulatory, liquidity, and enforcement risks.
For example,
specifically discuss risks arising from the legal system in China,
including risks and
uncertainties regarding the enforcement of laws and that rules and
regulations in China
can change quickly with little advance notice; and the risk that the
Chinese government
may intervene or influence your operations at any time, or may exert
more control over
offerings conducted overseas and/or foreign investment in China-based
issuers, which
could result in a material change in your operations and/or the value
of your securities.
Acknowledge any risks that any actions by the Chinese government to
exert more
oversight and control over offerings that are conducted overseas
and/or foreign investment
in China-based issuers could significantly limit or completely hinder
your ability to offer
or continue to offer securities to investors and cause the value of
your securities to
significantly decline or be worthless
9. Given the significant oversight and discretion of the government of
the People s Republic
of China (PRC) over the operations of your business, please describe
any material impact
Zhilin Li
China Pharma Holdings, Inc.
July 25, 2023
Page 4
that intervention or control by the PRC government has or may have on
your business or
on the value of your securities. We remind you that, pursuant to
federal securities rules,
the term control (including the terms controlling,
controlled by, and under
common control with ) means the possession, direct or indirect,
of the power to direct or
cause the direction of the management and policies of a person,
whether through the
ownership of voting securities, by contract, or otherwise."
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Tracie Mariner, Staff Accountant, at (202) 551-3744 or
Kevin Vaughn,
Accounting Branch Chief, at (202) 551-3494 if you have questions regarding
comments on the
financial statements and related matters. Please contact Dillon Hagius, Staff
Attorney, at (202)
551-7967 or Joe McCann, Legal Branch Chief, at (202) 551-6262 with any other
questions.
FirstName LastNameZhilin Li Sincerely,
Comapany NameChina Pharma Holdings, Inc.
Division of
Corporation Finance
July 25, 2023 Page 4 Office of Life
Sciences
FirstName LastName