CN Healthy Food Tech Group Corp.

Current report

The Nasdaq trading halt imposed on October 1, 2025 in connection with the CSRC’s review of our U.S. listing remained in effect as of the filing date of this Quarterly Report. As disclosed in our current report on Form 8-K filed with the SEC on April 29, 2026, on April 24, 2026, Heilongjiang Zhongneng Liangke Agricultural Technology Co., Ltd. (“Zhongneng Liangke”), a wholly-owned PRC operating subsidiary of the Company, received an Advance Notice of Administrative Penalty (the “Notice”) from the Heilongjiang Regulatory Bureau of the China Securities Regulatory Commission (the “CSRC”) in connection with the Company’s overseas listing filing process. The Notice proposes administrative fines of RMB 3,000,000 on Zhongneng Liangke and RMB 1,500,000 on Mr. Zhenjun Jiang, the Company’s Chairman and Chief Executive Officer, in his capacity as the directly responsible executive. On May 7, 2026, Zhongneng Liangke received the final Administrative Penalty Decision (the “Decision”) from the CSRC whereby the CSRC affirmed and formally imposed the fines proposed in the Notice. As of the date of this Quarterly Report, neither the Company nor Mr. Jiang has paid any fines. See Note 11 to the condensed consolidated financial statements.

Current report

As of the filing date of this Quarterly Report, the September 2025 Note Payable, the Assumed Note Payable, and the Sponsor Note Payable each remained in default of their payment obligations, and we continue to be in discussions with the respective note holders to extend their respective maturity dates. No amendments, repayments, conversions, or lender enforcement actions occurred with respect to these notes during the three months ended March 31, 2026 or subsequent to March 31, 2026 through the filing date of this Quarterly Report.

Current report

Our historical results of operations for the three months ended March 31, 2025 reflect the operations of Legacy CFI, the accounting acquirer in the Business Combination, prior to the consummation of the Business Combination on September 30, 2025, and accordingly do not include the costs of operating as a U.S. public company or the effects of the Business Combination, including the amortization of shares issued for management advisory services described in Note 8 to the condensed consolidated financial statements. Our results of operations for periods following the Business Combination may not be directly comparable to our historical results of operations for periods preceding the Business Combination.

Current report

Results of Operations — Three Months Ended March 31, 2026 compared to Three Months Ended March 31, 2025

Current report

Revenue, net for the three months ended March 31, 2026 was $5,828,544, an increase of $1,005,096, or 20.8%, compared to $4,823,448 for the three months ended March 31, 2025. The increase was driven by continued expansion of our wholesale distribution network and growing contribution from our live-stream sales segment. As described in Note 1 to the condensed consolidated financial statements, the comparative period reflects the historical operating results of Legacy CFI as the accounting acquirer in the September 30, 2025 reverse recapitalization.

Current report

Cost of revenue for the three months ended March 31, 2026 was $1,463,696, a decrease of $1,002,406, or 40.6%, compared to $2,466,102 for the three months ended March 31, 2025. Gross profit accordingly increased $2,007,502, or 85.2%, to $4,364,848 from $2,357,346 in the prior period, and gross profit margin expanded to 74.9% from 48.9%. The improvement in gross profit margin reflects a combination of factors, the principal drivers of which include: (i) the commencement of operations of our own production base in Taikang Industrial Park, Heilongjiang Province in October 2025, with the three months ended March 31, 2026 being the first full quarter during which the Company’s core products were predominantly self-produced rather than sourced from third-party OEM partners, materially lowering per-unit production cost; (ii) a shift in revenue mix toward higher-margin live-stream platform sales of digital coupons (which carry materially lower cost of revenue than physical product sales through the wholesale distribution network); and (iii) operating leverage on relatively fixed production-related costs as the wholesale distribution network expanded.

Current report

Total operating expenses for the three months ended March 31, 2026 were $3,634,232, an increase of $2,082,084, or 134.1%, compared to $1,552,148 for the three months ended March 31, 2025. The increase was primarily attributable to $2,071,857 of amortization expense associated with 1,000,000 restricted common shares issued to officers of Iron Horse in September 2025 for management advisory services to be rendered over a six-month period ending March 30, 2026 (see Note 8 to the condensed consolidated financial statements). This amortization is recorded within general and administrative expenses and was not present in the comparative period. The six-month service period concluded on March 30, 2026 and no further amortization of these shares-issued-for-services will be recorded in subsequent periods. Excluding this non-recurring item, total operating expenses for the three months ended March 31, 2026 would have been $1,562,375, broadly consistent with the comparative period. Selling expenses decreased $579,691, or 52.3%, primarily reflecting a shift in the mix of selling and distribution activity, while research and development expenses remained relatively stable at $38,370 (March 31, 2025: $27,483).

Current report

Other Income (Expense), net

Current report

Total other income (expense), net for the three months ended March 31, 2026 was an expense of $189,076, compared to income of $93,597 for the three months ended March 31, 2025, a decrease of $282,673. The principal driver of this swing was the recognition of $206,021 of default interest expense on three promissory notes that have been in default since the fourth quarter of 2025 (see Note 6 and Note 7 to the condensed consolidated financial statements). The default interest accrues at the contractual rate of 15.0% per annum, and no portion was paid in cash during the three months ended March 31, 2026. Interest income for the three months ended March 31, 2026 was $16,564, compared to $38,777 for the comparative period, reflecting the prevailing interest rate environment on cash holdings, the substantial majority of which are held in PRC bank accounts.

Current report

Provision for income tax for the three months ended March 31, 2026 was $850,537, compared to $125,112 for the three months ended March 31, 2025. The Company’s effective tax rate was 157.1% for the three months ended March 31, 2026, compared to 13.9% for the three months ended March 31, 2025. The effective tax rate for the current quarter differs significantly from both the comparative period and the PRC statutory rate of 25.0% principally because (i) the $2,071,857 of amortization of shares-issued-for-services described above is a non-deductible permanent difference recorded at the U.S. parent level, (ii) default interest of $206,021 on the three U.S.-side promissory notes is also recorded at the U.S. parent level and is non-deductible, and (iii) the Company maintains a full valuation allowance against its U.S. deferred tax assets, with the result that the loss-making U.S. parent generates no offsetting tax benefit. Together, these items compressed consolidated pre-tax income to $541,540 while the underlying PRC operating entities continued to generate taxable income subject to PRC income tax. The Company expects its effective tax rate to normalize toward the PRC statutory rate in subsequent periods following the conclusion of the shares-issued-for-services amortization on March 30, 2026.

Current report

We believe our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for our PRC operating subsidiaries over at least the next twelve months. However, three promissory notes issued in connection with the September 30, 2025 Business Combination — the September 2025 Note Payable, the Assumed Note Payable, and the Sponsor Note Payable (which together had aggregate outstanding principal of $3,473,190 as of March 31, 2026) — are obligations of CN Healthy Food Tech Group Corp., the U.S. holding company, rather than of our PRC operating subsidiaries, and each of these notes was in default of its payment obligations as of March 31, 2026. As discussed below, the substantial majority of our cash and cash equivalents is held by our PRC operating subsidiaries and is not readily available to satisfy obligations of the U.S. holding company without first being repatriated to the United States. We are currently in discussions with each of the note holders to extend the respective maturity dates and to address the defaults rather than to make immediate cash repayment, but there can be no assurance that these discussions will result in favorable terms or any agreement at all. If conversions of any of these notes were to be effected pursuant to their respective terms, such conversions could result in dilution to our existing stockholders. We may require additional capital resources in the future, the availability of which on acceptable terms cannot be assured.

Current report

We are a Delaware holding company that conducts substantially all of our business operations through our PRC operating subsidiaries. Substantially all of our cash and cash equivalents are held in PRC bank accounts by these subsidiaries. Because substantially all of our cash and operations are held through our PRC subsidiaries, our ability to use such cash to satisfy obligations of CN Healthy Food Tech Group Corp., the U.S. holding company — including the defaulted promissory notes described above — may be subject to PRC foreign exchange controls administered by the State Administration of Foreign Exchange (“SAFE”), dividend distribution requirements, withholding tax on dividends, statutory reserve requirements, and other regulatory procedures and restrictions, all of which can affect both the timing and amount of cash that can be made available to the U.S. holding company.

Current report

Our PRC operating subsidiaries’ ability to distribute dividends is based upon their distributable earnings, as determined in accordance with PRC accounting standards and regulations. Under PRC law, our PRC subsidiaries are required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory reserve fund until such reserve fund reaches 50% of their respective registered capital. Distributions of dividends from our PRC subsidiaries to non-PRC enterprises are subject to a 10% withholding tax under the PRC Enterprise Income Tax Law, which may be reduced to 5% under the tax treaty between mainland China and the Hong Kong Special Administrative Region, subject to qualification and applicable approvals. To address persistent capital outflow concerns, the People’s Bank of China and SAFE have implemented capital control measures over the past several years, including stricter vetting procedures for PRC-based companies remitting foreign currency for overseas acquisitions, dividend payments, and shareholder loan repayments. There is no assurance that the PRC government will not further intervene or impose additional restrictions on the ability of our PRC subsidiaries to transfer cash out of the PRC.

Current report

There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, other than the commencement of default interest accrual on our defaulted promissory notes beginning in the first quarter of 2026 (see Note 2).

Previous report

On September 29, 2025 (the “Closing Date”), Iron Horse Acquisition Corp. (“Iron Horse)” consummated the merger transactions contemplated by the business combination agreement (the “Initial BCA”) executed during September 2024 with Zhong Guo Liang Tou Group Limited (“Legacy CFI”), and Rosy Sea Holdings Limited (“Rosy Sea” or the “Seller”) and the owner of 100% of the issued and outstanding capital stock of Legacy CFI, with Legacy CFI surviving the mergers as a wholly-owned subsidiary of Iron Horse (the “Business Combination”). As a result of the Business Combination, we became listed on the Nasdaq stock market.

Previous report

Our operations commenced in May 2024 and our key products at September 30, 2025 include Cordyceps Peptide Selenium powder, Baofei Granule Extract plant-based drink, Sea Cucumber Peptide Selenium powder, Double protein peptide selenium powder, Hundred-grain quality porridge. We manage our business in two operating segments: wholesale distribution and live-stream sales, which account for approximately 81.5% and 18.5% of consolidated revenue for the nine months ended September 30, 2025. The wholesale distribution segment consists of product sales made through our extensive distributor network. The live-stream sales segment consists of digital coupon sales for goods and services made through online platforms, primarily live-streaming platforms such as Douyin (TikTok), Meituan and Kuaishou.

Previous report

As disclosed on it current report on Form 8-K filed with the SEC on October 6, 2025, following its listing on Nasdaq on October 1, 2025, the Company was notified by Nasdaq that it had received a notification from personnel at the China Securities Regulatory Commission (the “CSRC”) informing Nasdaq that the CSRC had not yet completed its process of review of the Company’s U.S. listing. As a result, Nasdaq has halted trading in the Company’s Common Stock and Warrants while it seeks clarification of these matters from the Company. The Company believes it has satisfied its obligations with respect to the CSRC and has received a legal opinion from its Chinese securities counsel to that effect. The Company has provided Nasdaq with additional documentation and is awaiting further information at this time.*** ***

Previous report

Our historical operations and statements of assets and liabilities may not be comparable to our current operations and statements of assets and liabilities as a result of (a) our commencement of operations during May 2024, resulting in only five months in the nine month period ending September 30, 2024 where there were revenue generating activities as compared to the nine months over revenue generating activities during the same period in 2025 and (b) the consummation of the Business Combination in September 2025 and becoming a public company.

Previous report

Results of Operations

Previous report

Comparison of the three and nine months ended September 30, 2025 and 2024

Previous report

The following table summarizes our results of operations for the three and nine months ended September 30, 2025 and 2024:

Previous report

Total revenue for the three months ended September 30, 2025 was $7.9 million, compared to $4.3 million for the same period in 2024, an increase of $3.6 million, or 84.1%, and for the nine months ended September 30, 2025 was $19.9 million, compared to $5.3 million for the same period in 2024, an increase of $14.6 million, or 278.4%. Growth for both periods was primarily driven by strategic promotional campaigns and new product launches to reach new customers and increase business with existing customers to drive revenue growth.

Previous report

Total cost of revenue for the three months ended September 30 2025 was $2.3 million, compared to $1.3 million for the same period in 2024, an increase of $1.0 million, or 73.9%, and for the nine months ended September 30, 2025 was $7.3 million, compared to $1.8 million for the same period in 2024, an increase of $5.5 million, or 309.6%. The increase was primarily driven by the increase in revenue.

Previous report

Total operating expenses for the three months ended September 30, 2025 were $1.0 million, compared to $0.7 million for the same period in 2024, an increase of $0.3 million, or 51.1%, and for the nine months ended September 30, 2025 were $3.3 million, compared to $0.8 million for the same period in 2024, an increase of $2.5 million, or 315.9%.

Previous report

The increases in both periods were attributable to our focus to scale and grow our business as business operations generated cash flows enabling us to hire additional employees, establish a sales and marketing function, and establish a research and development function that facilitated additional growth in both our customer base and our product offerings.

Previous report

Other Income, net

Previous report

Total other income, net for the three months ended September 30, 2025 was $0.1 million, compared to less than $0.1 million for the same period in 2024, an increase of $0.1 million, or 953.0%, and for the nine months ended September 30, 2025 was $0.4 million, compared to less than $0.1 million for the same period in 2024, an increase of $0.4 million, or 2,012.7%. The increase in both periods is primarily driven by increased cash balances from operations to hold in deposit accounts and generate interest income.

Previous report

The provision for income tax for the three months ended September 30, 2025 was $1.4 million, compared to $0.7 million for the same period in 2024, an increase of $0.7 million, or 85.3%, and for the nine months ended September 30, 2025 was $2.6 million, compared to $0.8 million for the same period in 2024, an increase of $1.8 million, or 240.3%. The increase in the provision for income tax in both periods is attributable to the increase in revenue, offset by the increase in cost of revenue, operating expenses and other income.

Previous report

Overview

Previous report

Historically, our primary uses of cash have been to finance working capital needs and to make deposits with certain of our suppliers. We expect that we will be able to meet our needs to fund operations, capital expenditures and other commitments in the next 12 months primarily with our cash and cash equivalents, operating cash flows and bank borrowings.

Previous report

We may, however, require additional cash resources due to changes in business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could result in additional dilution to stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations. Financing may not be available in amounts or on terms acceptable to us, or at all.

Previous report

Our primary sources of liquidity have been cash provided by operating activities, our cash and cash equivalents, which have historically been sufficient to meet our working capital and substantially all of our capital expenditure requirements.

Previous report

We believe our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs over at least the next twelve months, though we may require additional capital resources in the future. Additionally, if the wholesale distribution segment and live-stream sales segment revenue mix changes, the operating cash flow generated from the wholesale distribution segment may not be sufficient to cover operating costs and additional capital resources may be required in the future. We may elect to raise additional capital through the sale of equity to fund our future needs beyond the next twelve months or through the acquisition of a debt facility.

Previous report

Presented below is a summary of our net cash flows from operating, investing and financing activities:

Previous report

Cash flows (used in) provided by operating activities

Previous report

For the nine months ended September 30, 2025, operating activities used $5.7 million in cash and cash equivalents, primarily resulting from a net income of $7.0 million, non-cash adjustments totaling approximately $0.4 million, and a net cash outflow from changes in operating assets and liabilities of $13.2 million. Net cash used in changes in operating assets and liabilities was driven primarily by an increase in inventory of $0.6 million, an increase in prepaid and other current assets of $1.2 million, and a decrease in advances from customers of $13.6 million. These outflows were partially offset by an increase in accounts payable of $1.4 million, an increase in other taxes payable of $0.3 million and an increase in income tax payable of $0.5 million.

Previous report

For the nine months ended September 30, 2024, operating activities provided $21.9 million in cash and cash equivalents, primarily resulting from a net income of $1.9 million, non-cash adjustments totaling $0.1 million, and a net cash inflow from changes in operating assets and liabilities of $19.8 million. Net cash provided by changes in operating assets and liabilities was driven primarily by an increase to advances from customers of $22.5 million, an increase in income taxes payable of $0.7 million, an increase in accounts payable of $0.7 million, an increase in accrued expenses and other current liabilities of $0.1 million. The inflows were partially offset by an increase in inventories of $1.6 million, an increase in prepaid and other current assets of $1.6 million, and an increase in accounts receivable of $1.0 million.

Previous report

Cash flows used in investing activities

Previous report

During the nine months ended September 30, 2025, net cash used in investing activities was $0.6 million, of which $0.4 million was attributed to the purchase of property and equipment, $0.1 million was attributed to the purchase of an equity investment, and less than $0.1 million was attributed to the acquisition of intangible assets.

Previous report

During the nine months ended September 30, 2024, net cash used in investing activities was approximately $2.8 million and was primarily attributable to a loan made to our construction developer.

Previous report

During the nine months ended September 30, 2025, the consummation of the Business Combination provided approximately $1.1 million of cash.

Previous report

During the nine months ended September 30, 2024, the cash provided by financing activities was nil.

Previous report

We face various risks and uncertainties relating to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may impact our ability to conduct certain businesses, accept foreign investments, or list and conduct offerings on a United States or other foreign exchange. These risks could result in a material adverse change in our operations and the value of our common stock, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of risks relating to doing business in China, see “Risk Factors - Risks Related to Doing Business in the PRC” in our proxy statement/prospectus.

Previous report

The PRC government’s significant discretion and authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of our securities to significantly decline or become worthless. For more details, see “Risk Factors - Risks Relating to Doing Business in the PRC - Chinese regulatory authorities could disallow our holding company structure, which may result in a material change in our operations and/or a material change in the value of New CFI’s securities, including that it could cause the value of such securities to significantly decline” in our proxy statement/prospectus and “Risk Factors - The Company and CFI have concluded, based on advice received from CFI’s legal counsel in the PRC, that CFI has made all necessary filings with the CSRC under applicable PRC securities laws, and that there are no material legal impediments under currently effective PRC securities laws that would prevent the completion of the Business Combination and the combined company’s listing on a U.S. national securities exchange. If the relevant PRC governmental authorities, including the CSRC, reach a different conclusion about the transaction or the applicability or scope of current PRC laws and regulations, the Company could be subject to legal sanctions or penalties” in our Current Report on Form 8-K, as filed with the SEC on October 6, 2025.

Previous report

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and cause our Common Stock to decrease in value or become worthless. For more details, see “Risk Factors - Risks Relating to Doing Business in the PRC - Uncertainties with respect to the legal system and changes in laws and regulations in mainland China could adversely affect us in our proxy statement/prospectus.

Previous report

Cash and Other Assets Transfers between the Holding Company and Its Subsidiaries

Previous report

We refer to our subsidiaries domiciled in the PRC as the “PRC Subsidiaries” and the parent company of the PRC Subsidiaries domiciled in Hong Kong as “CFI HK”.

Previous report

As of September 30, 2025, there were no capital contributions made to our PRC Subsidiaries, neither directly nor through intermediate holding companies.

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To date, there have not been any dividends or other distributions from our PRC Subsidiaries to our intermediate holding companies located outside of mainland China. Our intermediate holding companies may rely on dividends and other distributions on equity paid by our PRC Subsidiaries for their cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to their stockholders, subject to our charter and M&A and BVI law or HK law (as applicable) or to service any expenses and other obligations it may incur.

Previous report

Within our direct holding structure, the cross-border transfer of funds from CFI HK to its PRC Subsidiaries is permitted under laws and regulations of the PRC currently in effect. Specifically, CFI HK is permitted to provide funding to its PRC Subsidiaries in the form of shareholder loans or capital contributions, subject to satisfaction of applicable government registration, approval and filing requirements in China. There are no quantity limits on CFI HK’s ability to make capital contributions to its PRC Subsidiaries under the PRC law and regulations. However, the PRC Subsidiaries may only procure stockholder loans from CFI HK in an amount equal to the difference between its registered capital and total investment amount as recorded in the Chinese Foreign Investment Comprehensive Management Information System or 2.5 times of its net assets, at the discretion of such PRC Subsidiaries.

Previous report

For additional information, see “Risk Factors - Risks Related to Doing Business in the PRC - PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our offshore financing to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business” in our proxy statement/prospectus.

Previous report

The PRC Enterprise Income Tax Law (the “EIT Law”) and its implementation rules provide that a withholding tax will be applicable to dividends payable by PRC companies at a rate of 10% to non-PRC-resident enterprises, unless reduced under treaties or arrangements between the PRC central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant to the tax agreement between mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that the reduced 5% withholding rate will apply to dividends received by CFI HK from our PRC Subsidiaries. This withholding tax will reduce the amount of dividends we may receive from our PRC Subsidiaries.

Previous report

If we or CFI HK is classified as a PRC resident enterprise for PRC enterprise income tax purposes because the PRC tax authorities determined that either we or CFI HK has an actual management body located within the territory of China, we will be subject to a uniform 25% enterprise income tax rate on our worldwide income, which would materially reduce net income.

Previous report

For additional information, see “*Risk Factors - Risks Related to Doing Business in the PRC - Under the PRC Enterprise Income Tax Law, New CFI may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to New CFI and its non-PRC shareholders and have a material adverse effect on its results of operations and the value of your investment”*in our proxy statement/prospectus.