Diana Huang – Investor Relations Manager Zhilin Li – President, Chief Executive Officer and Interim Chief Financial Officer Sam Hsing – Corporate Vice President

Ladies and gentlemen, thank you all for standing-by and welcome to the Quarter One 2015 China Pharma Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a discussion followed by a question-and-answer session. [Operator Instructions]. I must advise you that this conference is being recorded today, 12th of May, 2015. I would now like to hand the conference over to your speaker today Ms. Diana Huang. Thank you. Please go ahead ma’am. Thank you.

Thank you, operator. Good morning ladies and gentlemen and good evening to those of you joining us from China. Welcome to China Pharma Holdings’ first quarter 2015 earnings conference call. I am Diana Huang, the Company’s Investor Relations Manager. Speaking on the call today are China Pharma’s President and CEO and Interim CFO, Ms. Zhilin Li and Corporate Vice President, Mr. Sam Hsing. In addition, I will provide translation during the Q&A session of the call. The Company’s earnings press release issued earlier this morning is available on our website at www.chinapharmaholdings.com. I would like to remind our listeners that on this call management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the Company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today due to such risks as market and customer acceptance and demand for our products, our ability to market our product, the impact of competitive products and pricing, the ability to develop and launch new products on a timely basis, the regulatory environment including government regulation in the PRC, our ability to obtain the requisite regulatory approvals to commercialize our products, fluctuations in operating results including spending for R&D and sales and marketing activities, and other risks detailed from time-to-time in our filings with the SEC. In addition, any projections as to the Company's future performance represent management's estimates as of today, May the 12th, 2015. China Pharma assumes no obligation to update those projections in the future as market conditions change. Now, it is my pleasure to turn the call over to China Pharma's CEO and Interim CFO, Ms. Li to make her opening remarks in Chinese, which will be then translated by Sam. Afterwards, Sam will continue translating Ms. Li's detailed discussion of the Company's first quarter 2015 financial results.

[Foreign Language]

Thank you, Diana and good morning, everyone. I would like to thank each of you for joining us today, and for your continued support of China Pharma. We experienced a wave of challenges in 2014. We have experienced some market-loss in the first quarter of 2015 due to production-suspension of our injectable product lines in 2014. We continued controlling our marketing by limiting our credit sales and executed a prudent marketing strategy, specifically by screening our existing and potential distributors and hospital customers based on their payment speed in order to gradually improve our trade turnover, especially in terms of the collection of our accounts receivable. This strategy has temporarily impacted our sales in the current period by limiting our credit sales. We received new GMP certificates for the new injectable production lines in our new factory and initiated the production on those lines in November 2014. In January 2015, we also received new GMP certificates for the tablet and capsule production lines in our old facilities. We plan to upgrade the dry powder injectable production line, granule production line, and cephalosporin production line in our old facility -- our old factory in 2015. I will now read the rest of Ms. LI's prepared remarks in English. Revenue for the three months ended March 31, 2015 were $5.7 million, a decrease of 20% from revenue of $7.1 million for the same period of 2014. This decrease primarily resulted from the decreases in sales throughout all our production categories, especially our Anti-Viro/Infection & Respiratory products, decreased by roughly $1 million. For the three months ended March 31, 2015, our cost of revenue was $4.4 million, or 78% of total revenue, while it remained flat in terms of the dollar amount as compared to $4.4 million in the same period last year, or 63% of the total revenue, in the first quarter of 2014. The decrease in cost of revenue as a percentage of the revenues was mainly due to the outsourced production costs for certain products incurred during 2014 when our injectable production lines were suspended. These outsourced finished goods were sold during the three months ended March 31, 2015. There were no outsourced production costs for the three months ended March 31, 2014. In addition, we believe our new production lines have not yet reached their optimal efficiency resulting in higher costs for the three months ended March 31, 2015. There was $0.2 million inventory obsolescence recorded for the three months ended March 31, 2015, and no inventory obsolescence for the three months ended March 31, 2014. We started recording inventory obsolescence allowance on a quarterly basis from this period as we believe it may result in material modification in our financial statements; while previously, we tested and recorded inventory obsolescence allowance on an annual basis. Gross profit for the three months ended March 31, 2015 was $1.1 million, a decrease of $1.6 million, from gross profit of $2.7 million in the same period of 2014. Our gross profit margin in the first quarter of 2015 was 19% compared to 37% in the same period of 2014. Selling, general and administrative expenses in the first quarter of 2015 were $1.5 million, or 25.7% of sales, compared to $1.2 million, or 17.5% of sales, in the same period of 2014. For the three months ended March 31, 2015, the Company's research and development expenses was $0.2 million, compared to $0.4 million in the same period of 2014. The change in the research and development expenses was mainly due to the cost related to the reduction of the costs related to the upgrading new production line compared to the three months ended March 31, 2014. Our bad debt expenses for the three months ended March 31, 2015 were $7.1 million, which represented an increase of $3.8 million from $3.3 million in the same period last year. The increases in bad debt expenses was mainly due to the increased amount in the accounts receivable with older age. We continued the marketing strategy of priority supply to customers with high-quality accounts receivable payment history, which in turn affected our relationship with customers with poor accounts receivable payment performance, and their payment has been further slowed down. Nevertheless, even if the aging of the accounts receivable remains old, the management endeavors to facilitate and incentivize the repayment from such customers and may consider favored policies for that purpose. Net loss for three months ended March 31, 2015 was $8 million, or $0.18 per basic and diluted common share, compared to net loss of $2.4 million, or $0.05 per basic and diluted share in the same period of 2014. The increase of the net loss was primarily due to the decrease in the revenue and the bad debt expense recognized for the three months ended March 31, 2015. Turning to the balance sheet. As of March 31, 2015, the Company had cash and cash equivalents of $5.3 million, stayed flat $5.3 million as of December 31, 2014. Our accounts receivable balance decreased to $18.8 million at March 31, 2015 from $24.9 million at December 31, 2014. Our receivables decreased due to our enhanced collection efforts, decrease in sales, and increase in the bad debt allowance. Overall, we will continue focussing on our business development and believe that this will support the fair evaluation of our shareholder’s interest in the future. With that, we will now open the call up to the question. Operator?

Thank you. [Operator Instructions] There are no questions at this time. I would now like to hand the conference over to Ms. Diana Huang, please continue.

On behalf of the entire China Pharma team, we would like to thank you for your interest in the Company and the participation on this call. For any of you traveling to China, we always welcome and encourage any visits from our shareholders, potential investors and analysts. This concludes the China Pharma’s first quarter 2015 earnings call. Operator?

Hello, operator? We conclude today's call.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect. Thank you.