CN Healthy Food Tech Group Corp.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Description of Business and Basis of Presentation

CN Healthy Food Tech Group Corp and its wholly owned subsidiaries focus on the high-end health food field driven by AI artificial intelligence technology and biotechnology innovation, mainly engaged in the research and development, production, and sales of related products. The group deeply integrates modern biotechnology with traditional Chinese medicine theory, precisely meeting the market’s growing demand for safe, high-quality, nutritious and healthy food.

The Company’s operating subsidiaries are domiciled in the People’s Republic of China (“PRC”) and are collectively referred to as the “PRC Subsidiaries” and the parent company of the PRC Subsidiaries (“CFI HK”) is domiciled in Hong Kong.

Basis of Presentation and Principles of Consolidation

On September 30, 2025 (the “Closing Date”), Iron Horse Acquisitions Corp. (“Iron Horse”) consummated the merger transactions contemplated by the business combination agreement (as amended, the “BCA”) with Grain Science Technology Innovative Bio (BVI) Co., Ltd, a company incorporated and existing under the laws of the British Virgin Islands (“Legacy CFI”), and Rosy Sea Holdings Limited, a company incorporated and existing under the laws of the British Virgin Islands (“Rosy Sea” or the “Seller”) and the owner of 100% of the issued and outstanding capital stock of Legacy CFI (the “Business Combination”).

On the Closing Date, and in connection with the closing of the Business Combination, Iron Horse changed its name to CN Healthy Food Tech Group Corp. and the Company’s common stock began trading on the Nasdaq stock market under the ticker symbol UCFI. Legacy CFI was deemed the accounting acquirer to the Business Combination, and accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy CFI’s issuing stock for the net assets of Iron Horse, accompanied by a recapitalization. The net assets of Iron Horse were stated at historical cost, with no goodwill or other intangible assets recorded.

While Iron Horse was the legal acquirer in the Business Combination, because Legacy CFI was deemed the accounting acquirer, the historical financial statements of Legacy CFI became the historical financial statements of the combined company upon the consummation of the Business Combination. As a result, the consolidated financial statements included in this Quarterly Report reflect (i) the historical operating results of Legacy CFI prior to the Business Combination; (ii) the combined results of Iron Horse and Legacy CFI following the closing of the Business Combination; (iii) the assets and liabilities of Legacy CFI at their historical cost; and (iv) the Company’s equity structure for all periods presented.

In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date to reflect the number of shares of the Company’s common stock, $0.0001 par value per share, issued to the Legacy CFI stockholder in connection with the recapitalization transaction. As such, the shares and corresponding capital amounts and earnings per share related to Legacy CFI ordinary shares prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2026.

The accompanying unaudited condensed consolidated financial statements include the accounts of CN Healthy and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.

Note 2 – Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies from those described in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, other than the addition of the policy on default interest accrual on notes payable described below. Significant accounting policies of importance to the reader are summarized below; refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for the full discussion of significant accounting policies.

Going Concern

In accordance with ASC 205-40, Presentation of Financial Statements — Going Concern, management evaluates at each reporting period whether there are conditions and 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 the financial statements are issued. Based on the Company’s evaluation as of March 31, 2026, considering its cash and cash equivalent position of $29,690,865, continuing profitable operations of its PRC subsidiaries, and management’s plans with respect to the matters described in Notes 6, 7 and 11, management has concluded that substantial doubt about the Company’s ability to continue as a going concern does not exist.

Management has considered the following conditions and events as of March 31, 2026: (i) the Nasdaq trading halt that has been in effect since October 1, 2025, a period of approximately seven months as of the filing date of this Quarterly Report, with no clear recovery date; (ii) three outstanding promissory notes in default of their payment obligations with aggregate outstanding principal of approximately $3,473,190 (see Notes 6 and 7); and (iii) the China Securities Regulatory Commission (“CSRC”) Advance Notice of Administrative Penalty dated April 24, 2026 (see Notes 11 and 14). After consideration of these matters, management notes that the Company maintains cash and cash equivalents of approximately $29.7 million as of March 31, 2026, which management considers sufficient to fund operations and satisfy known obligations for at least the next twelve months. Management is currently engaged in negotiations with each of the holders of the defaulted promissory notes to extend the respective maturity dates rather than effect immediate cash repayment, and is responding to the CSRC matters in coordination with legal counsel. The Company’s PRC operating subsidiaries continued to generate growth in revenue during the three months ended March 31, 2026, and management considers ongoing operations to be stable. Based on the foregoing, management has concluded that there is no substantial doubt about the Company’s ability to continue as a going concern within one year from the date these condensed consolidated financial statements are issued.

Emerging Growth Company

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). The Company has elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Actual results could differ from those estimates. The Company’s most significant assumptions and estimates relate to the carrying value of accounts receivable, the net realizable value of inventories, the valuation of nonmonetary transactions, the useful life and recoverability of long-lived assets, the determination of reserves for customer refunds, classification of warrants, accrual of default interest on notes payable, income tax provision, determination of uncertain tax positions, and determination of deferred tax valuation allowances.

Segment Information

The Company determined there aretwo operating and reportable segments: wholesale distribution and live-stream sales. The wholesale distribution segment focuses on product sales made through the Company’s extensive distributor network. The live-stream sales segment focuses on digital coupon sales for healthcare products and services on behalf of third-party merchants made through online platforms, primarily live-streaming platforms such as Douyin, Meituan and Kuaishou.

Cash and Cash Equivalents

The Company maintains cash and cash equivalents at financial institutions in the People’s Republic of China (“PRC”), where deposits are insured up to RMB 500,000 (approximately $72,519 at March 31, 2026) per institution, and at financial institutions in the United States, where deposits are insured up to $250,000 per institution. Substantially all of the Company’s cash and cash equivalents balance of $29,690,865 at March 31, 2026 was held at PRC financial institutions ($29,690,682) with the remainder ($183) held at U.S. financial institutions, and the substantial majority of these balances exceeded the applicable insurance limits. The Company has not experienced any losses on its cash deposits and believes the risk of loss is mitigated by the financial standing of the institutions in which the funds are held.

Customer and Supplier Concentration

The Company controls credit risk through credit approvals, requirement for customer advances, credit limits, and monitoring procedures. The Company maintains a low concentration risk, with no single customer contributing more than 10% of total revenue for the three months ended March 31, 2026 or 10% of accounts receivable as of March 31, 2026.

The Company currently obtains inventory from approximately nineteen suppliers. The Company sources each of its products from two to three different suppliers to minimize disruption to its supply chain if one supplier were to encounter production issues. Three suppliers have each contributed over 10% of the Company’s total procurement, with individual contributions of 11.7%,11.7%, and 10.4% for the three months ended March 31, 2026. Five suppliers have each contributed over 10% of the Company’s total procurement, with individual contributions of 30.4%,20.3%,18.5%,11.4%, and 11.0% for the three months ended March 31, 2025.

Inventories

Inventories, consisting of finished goods, are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value. As of March 31, 2026 and December 31, 2025, an allowance for obsolete or slow-moving inventory was not required, and there wasno provision for inventory shrinkage for the three months ended March 31, 2026 and 2025.

Investment in Equity Securities

Investments in equity securities without readily determinable fair values are accounted for under either the measurement alternative method or the equity method, in accordance with ASC 321, Investments — Equity Securities. During April 2025, the Company acquired a 5.0% equity interest in a privately held household appliance enterprise in exchange for RMB 1,000,000 ($145,588 at the date of acquisition and $145,039 at March 31, 2026) and recorded it within other assets on the accompanying condensed consolidated balance sheets at cost under the measurement alternative method, as the investment does not provide the Company with control or significant influence and does not have risk and reward characteristics substantially similar to an investment in the investee’s common stock.

Advertising Costs

The Company expenses the costs of advertising as incurred. Advertising expenses, included within selling expenses on the accompanying condensed consolidated statements of operations and comprehensive income (loss), were $19,982 and $159,778 for the three months ended March 31, 2026 and 2025, respectively.

Notes Payable — Default Interest

Beginning in the first quarter of 2026, the Company commenced accruing default interest on its three defaulted promissory notes at the contractual default rate of 15.0% per annum. As of December 31, 2025, the expected default interest on the three defaulted promissory notes totaled approximately $77,560, which was determined to be de minimis and was not accrued as of that date. Such amount, together with additional default interest accrued during the three months ended March 31, 2026, has been recorded as interest expense during the current quarter. The Company evaluated the embedded conversion features of its outstanding promissory notes under ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity, and concluded that no bifurcation from the host debt instrument was required. The Company accounts for any subsequent amendments, settlements or restructurings of these instruments under ASC 470-50, Debt — Modifications and Extinguishments. See Notes 6 and 7.

Earnings per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similarly except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive securities had been issued and the inclusion was not anti-dilutive. For the three months ended March 31, 2026, the Company reported a net loss; accordingly, all potentially dilutive securities have been excluded from the computation of diluted loss per share as their inclusion would have been anti-dilutive. Potentially dilutive shares issuable upon conversion of the September 2025 Note Payable and the Sponsor Note Payable are excluded from the table below because the conversion formulas are not defined in the respective agreements and the number of shares issuable is indeterminable.

The following potentially dilutive securities were outstanding as of the dates indicated:

All warrants are equity-classified at March 31, 2026 (see Note 8). The 650,000 shares represent the fixed conversion right embedded in the Assumed Note Payable (see Note 6).

Recent Accounting Pronouncements, adopted during the three months ended March 31, 2026

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for public business entities when estimating expected credit losses on current accounts receivable and current contract assets arising from transactions within the scope of Topic 606. Under the practical expedient, an entity may assume that current economic conditions as of the balance sheet date will persist through the remaining life of such receivables. The Company adopted ASU 2025-05 effective January 1, 2026. The adoption did not have a material effect on the Company’s condensed consolidated financial statements, as the Company’s current trade receivables are not material and historically have not experienced credit losses.

In November 2024, the FASB issued ASU 2024-04, Debt — Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion under ASC 470-20. The Company adopted ASU 2024-04 effective January 1, 2026 on a prospective basis. The adoption did not have a material effect on the Company’s condensed consolidated financial statements. The Company will apply the guidance in ASU 2024-04 in the event any amendment, settlement or conversion of its outstanding convertible promissory notes (see Notes 6 and 7) is determined to be an induced conversion.

Recent Accounting Pronouncements, previously adopted

As disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, the Company adopted the following pronouncements during the year ended December 31, 2025, none of which had a material effect on its consolidated financial statements: ASU 2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures; ASU 2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures; and ASU 2024-02, Codification Improvements — Amendments to Remove References to the Concepts Statements.

Recent Accounting Pronouncements, not yet adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as subsequently clarified by ASU 2025-01. ASU 2024-03 requires public business entities to disclose, in tabular format within the notes to the financial statements, disaggregated information about specific categories of expenses (including purchases of inventory, employee compensation, depreciation, and intangible asset amortization) included in each relevant expense caption presented on the face of the income statement. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that adoption will have on its condensed consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies certain form-and-content requirements for condensed interim financial statements and the applicability of specified interim disclosure requirements. The Company is currently evaluating the impact that adoption of ASU 2025-11 will have on its condensed consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which includes 33 narrow-scope clarifications and corrections to various Topics in the Accounting Standards Codification. The Company is currently evaluating the impact, if any, that adoption of ASU 2025-12 will have on its condensed consolidated financial statements and related disclosures.

The Company has evaluated other recently issued but not yet effective accounting standards and does not expect the adoption of any such standards to have a material effect on its condensed consolidated financial statements.

Note 3 – Reverse Recapitalization

On September 30, 2025, Legacy CFI and Iron Horse consummated the merger contemplated by the BCA, with Legacy CFI surviving the merger as a wholly owned subsidiary of Iron Horse. The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy CFI’s issuing stock for the net assets of Iron Horse, accompanied by a recapitalization. The net assets of Iron Horse were stated at historical cost, with no goodwill or intangible assets recorded. See Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for additional information.

The number of shares of common stock issued immediately following the consummation of the Business Combination were:

Lock-Up Arrangements

Certain former stockholders of Legacy CFI and Iron Horse agreed to lock-up restrictions regarding the future transfer of shares of common stock for a period of six months through March 2026, subject to certain exceptions. The lock-up period expired during the first quarter of 2026.

Note 4 – Prepayments and Other Current Assets

Note 5 – Accrued Expenses and Other Current Liabilities

Accrued default interest on notes payable as of March 31, 2026 was comprised of $111,156 on the September 2025 Note Payable, $69,452 on the Assumed Note Payable, and $25,413 on the Sponsor Note Payable and the Assumed Sponsor Note Payable combined (see Notes 6 and 7). No default interest was accrued as of December 31, 2025; the Company concluded that the amount that would have been accrued at year-end was de minimis under the Securities and Exchange Commission’s Staff Accounting Bulletin No. 99 (“SAB 99”) guidance and was not recorded.

Note 6 – Notes Payable

September 2025 Note Payable

In connection with the Business Combination, the Company modified the payment terms of the deferred underwriting commission stated in the underwriting agreement entered into between Iron Horse and D. Boral Capital LLC, the underwriter, on December 27, 2023 to replace a cash payment of $2,518,500 on the Closing Date with (i) a cash payment of $500,000 on the Closing Date and (ii) a non-interest bearing promissory note for a principal sum of $2,018,500 that matured on November 17, 2025 (the “September 2025 Note Payable”). Upon the occurrence of an event of default (as defined in the agreement), the September 2025 Note Payable accrues interest at a rate of 15.0% per annum until such time as the event of default is cured.

If the Company fails to repay the September 2025 Note Payable by the maturity date, the note holder has the right to convert the unpaid principal into shares of the Company’s common stock, provided that in no case can the lender’s beneficial ownership of the Company’s outstanding shares exceed 4.99%. The conversion formula was not defined in the agreement; however, the Company is required to reserve 5,000,000 shares of its common stock to satisfy the unpaid balance.

As of March 31, 2026, $2,018,500 of principal remained outstanding on the September 2025 Note Payable and accrued default interest of approximately $111,156 was included in accrued expenses and other current liabilities. The Company is in default of its payment obligations and continues to be in discussions with the underwriter to extend the maturity date.

Assumed Note Payable

In connection with the Business Combination, the Company assumed a non-interest bearing promissory note entered into by Iron Horse on September 29, 2025 with Yanjun Jiao for the principal sum of $1,000,000 that matured on October 13, 2025 (the “Assumed Note Payable”). Upon the occurrence of an event of default, the Assumed Note Payable accrues interest at a rate of 15.0% per annum. Upon default, the lender may elect to convert the unpaid principal into 650,000 shares of the Company’s common stock.

As of March 31, 2026, $1,000,000 of principal remained outstanding on the Assumed Note Payable and accrued default interest of approximately $69,452 was included in accrued expenses and other current liabilities. The Company is in default of its payment obligations and continues to be in discussions with the lender to extend the maturity date.

Note 7 – Notes Payable, Related Party

In connection with the Business Combination, the Company aggregated the outstanding principal balances of various loans with its Sponsor, Bengochea SPAC Sponsors I LLC, and the deferred portion of the business combination consideration payment of $900,000 into a single promissory note with the Sponsor with a principal sum of $1,421,343 that matured on November 15, 2025 (the “Sponsor Note Payable”). Upon the occurrence of an event of default, the Sponsor Note Payable accrues interest at a rate of 15.0% per annum. Upon default, the Sponsor has the right to convert the unpaid principal into shares of the Company’s common stock, subject to a 4.99% beneficial ownership limitation; the conversion formula is not defined in the agreement, and the Company is required to reserve an unlimited number of shares to satisfy the unpaid balance. The Company also assumed a non-interest bearing promissory note with the Sponsor totaling $47,347, due on demand (the “Assumed Sponsor Note Payable”).

As of March 31, 2026, $454,690 of principal remained outstanding on the Sponsor Note Payable and the Assumed Sponsor Note Payable combined, and accrued default interest of approximately $25,413 was included in accrued expenses and other current liabilities. The Company is in default of its payment obligations under the Sponsor Note Payable and continues to be in discussions with the Sponsor to extend the maturity date.

Note 8 – Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 40,000,000 shares of preferred stock with a par value of $0.0001 per share. As of March 31, 2026 and December 31, 2025, there wereno shares of preferred stock issued and outstanding.

Common Stock

The Company is authorized to issue 160,000,000 shares of common stock with a par value of $0.0001 per share, of which 52,234,983 shares were issued and outstanding as of March 31, 2026 and December 31, 2025. Each common stockholder is entitled toone vote for each share held.

Shares Issued for Services

On September 30, 2025, the Company issued 1,000,000 shares of restricted common stock to officers of Iron Horse for management advisory services to be rendered over a six-month term, with a fair value of $4,090,000. The fair value is being amortized over the service period ending March 30, 2026. During the three months ended March 31, 2026, the Company amortized $2,045,000 (December 31, 2025: $2,045,000). As of March 31, 2026, the unamortized balance was $nil (December 31, 2025: $2,045,000).

Note 9 – Warrants

As of March 31, 2026, the Company had 6,900,000 Public Warrants and 2,457,000 Private Warrants outstanding, each exercisable forone share of common stock at an exercise price of $11.50 per share. All warrants were determined to have equity classification at issuance and remained classified as equity as of March 31, 2026. In no event will the Company be required to net cash settle any warrant. During the three months ended March 31, 2026, no warrants were exercised, redeemed, or modified. See Note 11 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for additional information.

Note 10 – Related Party Transactions

See Note 7 regarding the Sponsor Note Payable and the Assumed Sponsor Note Payable.

There were no other material related party transactions during the three months ended March 31, 2026.

Note 11 – Commitments and Contingencies

Indemnification Agreements

The Company enters into contractual relationships that contain indemnification provisions in its normal course of business. Historically, there have been no such indemnification claims, and management believes any liability arising from these agreements will not be material to the Company’s condensed consolidated financial statements.

Legal Matters

The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business. Management believes the outcome of such matters will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows.

Nasdaq Trading Halt

Following its listing on Nasdaq on October 1, 2025, the Company was notified by Nasdaq that the China Securities Regulatory Commission (the “CSRC”) had not yet completed its process of review of the Company’s U.S. listing. As a result, Nasdaq halted trading of the Company’s common stock and warrants while it seeks clarification. The trading halt remained in effect as of March 31, 2026. The Company has provided Nasdaq with additional documentation and is awaiting further information.

CSRC Administrative Penalty Notice

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 issuance of these condensed consolidated financial statements, no final penalty has been paid and the Company has not recorded any accrual for this matter as the proposed penalties were assessed by the CSRC to be reasonably possible but not probable under ASC 450-20 and the amount of any final loss, if any, is not yet estimable.

Geographical Data

Substantially all of the Company’s revenue is generated in the PRC, and substantially all of the Company’s long-lived assets are located in the PRC.

Operating Leases

The Company’s primary long-term operating lease is for office space of approximately 2,247.34 square meters in Zhuhai, China, with monthly payments of RMB 144,325 and a term expiring December 31, 2027. The lease was initially entered into in January 2025 with a payment commencement date of August 1, 2025, but was subsequently modified during September 2025 to defer the payment commencement date to November 1, 2025, resulting in a $59,162 derecognition from the right-of-use asset and operating lease obligation. For the three months ended March 31, 2026, operating lease expense of $45,262 was included as a component of general and administrative expenses (March 31, 2025: $5,897, related to a short-term lease at the Company’s prior premises). The weighted-average discount rate used in the lease measurement was 3.1% at inception, and the remaining lease term as of March 31, 2026 was approximately 1.75 years.

Year ending December 31,

Note 12 – Income Taxes

Income tax provisions for interim quarterly periods are generally based on an estimated annual effective income tax rate, calculated separately from the effect of significant, infrequent or unusual items. 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 primary difference from the PRC statutory rate of 25% is attributable to (i) income tax being calculated on an individual entity basis (with losses in certain subsidiaries not reducing tax expense at profitable entities); (ii) differences between U.S. federal and PRC rates; and (iii) valuation allowance adjustments at the U.S. parent level.

As of March 31, 2026 and December 31, 2025, the Company had no unrecognized tax benefits. The Company’s tax returns remain open, subject to examination by the relevant tax authorities in the United States, British Virgin Islands, Hong Kong, and the PRC.

Note 13 – Segment Information

The Company’s chief operating decision maker (“CODM”) is the Company’s Chairman and Chief Executive Officer. The Company has determined that it hastwo operating and reportable segments: wholesale distribution and live-stream sales. The wholesale distribution segment focuses on product sales made through the Company’s extensive distributor network, primarily to dealers and offline customers in the PRC. The live-stream sales segment focuses on digital coupon sales for healthcare products and services on behalf of third-party merchants made through online platforms, primarily live-streaming platforms such as Douyin (TikTok), Meituan and Kuaishou. The CODM regularly reviews segment revenues, operating expenses, operating income (loss), and net income (loss) by segment, together with corporate-level items that are not allocated to a reportable segment, to make resource allocation decisions and assess segment performance. All of the Company’s operations are conducted in the PRC.

Note 14 – Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Other than as described below or within these condensed consolidated financial statements, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

On April 24, 2026, Zhongneng Liangke received the Notice from the CSRC proposing 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. On May 7, 2026, Zhongneng Liangke received the Decision from the CSRC, affirming and formally imposing the fines proposed in the Notice. See Note 11 — Commitments and Contingencies, CSRC Administrative Penalty Notice. As of the date these condensed consolidated financial statements were issued, the Nasdaq trading halt remained in effect and the September 2025 Note Payable, the Assumed Note Payable, and the Sponsor Note Payable each remained outstanding and in default. See Notes 6 and 7. No further amendments, settlements, conversions, or lender enforcement actions have occurred with respect to these notes between April 1, 2026 and the date of issuance of these condensed consolidated financial statements. The Company did not identify any other material subsequent events requiring adjustment or disclosure.