UCFI 10-Q
CN Healthy Food Tech Group Corp. (UCFI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number
(Exact name of Registrant as specified in its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
No.128 Rong’ao Road | ||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the Registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check
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As of August 14, 2026, the registrant had
TABLE OF CONTENTS
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) of CN Healthy Food Tech Group Corp. (the “Company”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to future events or future performance and include, without limitation, statements concerning our business strategy, future revenues, market growth, capital requirements, product introductions, expansion plans and the adequacy of our funding. Forward-looking statements appear in a number of places in this Quarterly Report including, without limitation, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the current expectations of the management of the Company as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in “Risk Factors” and the following:
| ● | The Company’s ability to meet expectations related to its products, technologies and services and its ability to attract and retain revenue-generating customers and execute on its growth plans; |
| ● | the ability of the Company to maintain the right to list its securities from Nasdaq Capital Market. On July 16, 2026, the Company received the Determination Letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC to delist the Company’s common stock and warrants, and the Company already requested an appeal of the Staff’s determination. The request would stay any suspension of the Listed Securities pending the Panel’s decision, although the trading halt currently in effect would remain in place notwithstanding any appeal. |
| ● | the inability to resume trading on the Nasdaq Capital Market since the halt of its trading on October 1, 2025; |
| ● | the continued defaults under the promissory notes issued in connection with the Business Combination and the risk of holders exercising conversion rights; |
| ● | the failure to realize the anticipated benefits of the business combination with Iron Horse Acquisitions Corp. that consummated on September 30, 2025 (the “Business Combination”); |
| ● | the risk of actual or alleged failure to comply with data privacy laws and regulations; |
| ● | the outcome of any legal proceedings that may be instituted against the Company related to the Business Combination; |
| ● | the attraction and retention of qualified directors, officers, employees and key personnel of the Company; |
| ● | the impact from future regulatory, judicial, and legislative changes in the Company’s industry; |
| ● | those factors set forth in documents filed, or to be filed, with the SEC by the Company. |
Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of the Company prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
All subsequent written and oral forward-looking statements concerning the matters addressed in this Quarterly Report and attributable to the Company or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.
ii
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
CN HEALTHY FOOD TECH GROUP CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30,
2026 | December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepayments and other current assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Land use right, net | ||||||||
| Intangible asset, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Other assets | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Advances from customers | ||||||||
| Income tax payable | ||||||||
| Amount due to a director | ||||||||
| Operating lease obligation, current | ||||||||
| Notes payable | ||||||||
| Notes payable — related parties | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Operating lease obligation, noncurrent | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 11) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | $ | |||||||
| Accumulated other comprehensive income | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
CN HEALTHY FOOD TECH GROUP CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
AND COMPREHENSIVE INCOME
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Research and development costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Operating Expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OPERATING INCOME | ||||||||||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Income (Expenses), net | ( | ) | ( | ) | ||||||||||||
| INCOME BEFORE INCOME TAXES | ||||||||||||||||
| Provision for income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET INCOME | $ | $ | $ | $ | ||||||||||||
| OTHER COMPREHENSIVE INCOME | ||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||
| COMPREHENSIVE INCOME | $ | $ | $ | $ | ||||||||||||
| Basic and diluted earnings per share | $ | $ | $ | $ | ||||||||||||
| Basic and diluted weighted average number of shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
CN HEALTHY FOOD TECH GROUP CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three and Six Months Ended June 30, 2026
| Shares | Amount | Additional Paid-in Capital | Retained Earnings | AOCI (Loss) | Total Stockholders’ Equity | |||||||||||||||||||
| Balance — December 31, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income | — | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||
| Balance — March 31, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||
| Balance — June 30, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||
For the Three and Six Months Ended June 30, 2025
| Shares | Amount | Additional Paid-in Capital | Retained Earnings | AOCI (Loss) | Total Stockholders’ Equity | |||||||||||||||||||
| Balance — December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||
| Balance — March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||
| Balance — June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
CN HEALTHY FOOD TECH GROUP CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation of property and equipment | ||||||||
| Depreciation of right-of-use assets | ||||||||
| Amortization of shares issued for services | ||||||||
| Amortization of land use right | ||||||||
| Amortization of intangible asset | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Prepayments and other current assets | ( | ) | ||||||
| Deferred tax assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Advances from customers | ( | ) | ( | ) | ||||
| Other payables | ( | ) | ||||||
| Income tax payable | ||||||||
| Operating lease liability, current portion | ||||||||
| Operating lease liability, non-current portion | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Purchase of intangible asset | ( | ) | ( | ) | ||||
| Purchase of other investment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Business Combination Financing | ||||||||
| Net cash provided by (used in) financing activities | ||||||||
| Effect of exchange rates on cash and cash equivalents | ||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
CN HEALTHY FOOD TECH GROUP CORP. AND SUBSIDIARIES
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
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, $
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 and six months ended June 30, 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.
5
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.
The Company is in default of its payment obligations
under the September 2025 Note Payable, the Assumed Note Payable and the Sponsor Note Payable, with an aggregate of approximately $
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 are
6
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
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 and six months ended June 30, 2026 or 10% of accounts receivable as of June 30, 2026.
The Company currently obtains inventory from approximately
twenty 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
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 June 30, 2026 and December 31, 2025, an allowance for obsolete or slow-moving inventory was not required, and there was provision for inventory shrinkage for the six months ended June 30, 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
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 $
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
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. The number of shares outstanding and the number of warrants remain unchanged as of June 30,2026. 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.
All potentially dilutive securities listed below were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive or, in the case of the shares issuable under the Assumed Note Payable, because the effect would have been immaterial.
The following potentially dilutive securities were outstanding as of the dates indicated:
| June 30, 2026 | December 31, 2025 | |||||||
| Public Warrants | ||||||||
| Private Warrants | ||||||||
| Convertible Promissory Note (Assumed Note) | ||||||||
| Total | ||||||||
All warrants are equity-classified at June
30, 2026 (see Note 8). The
Foreign Currency and Foreign Currency Translation
Translation of amounts from RMB into USD has been made at the following exchange rates for the respective periods:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| Average exchange rate: | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| RMB:USD | ||||||||||||||||
| HKD:USD | ||||||||||||||||
| Period exchange rate: | June 30, 2026 | December 31, 2025 | ||||||
| RMB:USD | ||||||||
| HKD:USD | ||||||||
8
Recent Accounting Pronouncements, adopted during the six months ended June 30, 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.
9
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:
| Common stock outstanding prior to Business Combination | ||||
| Less: redemption of Iron Horse shares of common stock | ( | ) | ||
| Iron Horse shares of common stock | ||||
| Shares issued to holders of Iron Horse rights | ||||
| Legacy CFI shares | ||||
| Shares issued in connection with consulting agreements (see Note 8) | ||||
| Total shares of common stock after Business Combination |
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
| June 30, 2026 | December 31, 2025 | |||||||
| Advisory services through share issuance | $ | $ | ||||||
| Prepayments to suppliers and vendors | ||||||||
| Prepaid insurance | ||||||||
| Other current assets | ||||||||
| Total prepayments and other current assets | $ | $ | ||||||
Note 5 – Accrued Expenses and Other Current Liabilities
| June 30, 2026 | December 31, 2025 | |||||||
| Accrued transaction costs due to Sponsor | $ | $ | ||||||
| Accrued default interest on notes payable | ||||||||
| Accrued vendor and supplier invoices | ||||||||
| Other taxes payable | ||||||||
| Other | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
Accrued default interest on notes payable as of
June 30, 2026 was comprised of $
10
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 $
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
As of June 30, 2026, $
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 $
As of June 30, 2026, $
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 $
As of June 30, 2026, $
11
Note 8 – Stockholders’ Equity
Preferred Stock
The Company is authorized to issue
Common Stock
The Company is authorized to issue
Shares Issued for Services
On September 30, 2025, the Company issued
Note 9 – Warrants
As of June 30, 2026, the Company had
| Warrants Outstanding at June 30, 2026 | Exercise Price | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | ||||||||||||
| Public Warrants | $ | $ | ||||||||||||||
| Private Warrants | ||||||||||||||||
| Total | $ | $ | ||||||||||||||
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 six months ended June 30, 2026.
12
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 June 30, 2026.
Notice of Delist Determination Letter
On July 16, 2026, the Company received the Determination Letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC to delist the Company’s common stock and warrants from Nasdaq Capital Market, and the Company already requested an appeal of the Staff’s determination. The request would stay any suspension of the Listed Securities pending the Panel’s decision, although the trading halt currently in effect would remain in place notwithstanding any appeal.
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
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.
13
Operating Leases
The Company’s primary long-term operating lease
is for office space of approximately
Year ending December 31,
| Amount | ||||
| 2026 (remaining six months) | $ | |||
| 2027 | ||||
| Total undiscounted payments | ||||
| Less: Imputed interest | ( | ) | ||
| Total operating lease liability | ||||
| Less: Operating lease liability, current portion | ( | ) | ||
| Operating lease liability, non-current portion | $ | |||
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 rates were
As of June 30, 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.
14
Note 13 – Segment Information
The Company’s chief operating decision maker
(“CODM”) is the Company’s Chairman and . The Company has determined that it has
| For the Three Months Ended June 30, 2026 | ||||||||||||||||
| Wholesale distribution | Live-stream sales | Corporate | Total | |||||||||||||
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| Sale of inventories to distributors | ||||||||||||||||
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| Sales staff costs | ( | ) | ( | ) | ( | ) | ||||||||||
| Administrative staff costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Outbound transportation expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Advertising | ( | ) | ( | ) | ||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consulting | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Rental | ( | ) | ( | ) | ||||||||||||
| Research and development costs | ( | ) | ( | ) | ||||||||||||
| Marketing expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Sales tax and surcharges | ( | ( | ) | ( | ) | |||||||||||
| Audit fee | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Commission for E-commerce platform | ||||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Penalty | ( | ) | ( | ) | ||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
15
| For the Six Months Ended June 30, 2026 | ||||||||||||||||
| Wholesale distribution | Live-stream sales | Corporate | Total | |||||||||||||
| Revenue: | ||||||||||||||||
| Sale of inventories to distributors | ||||||||||||||||
| Sale of digital coupons to customers | ||||||||||||||||
| Total revenue, net | ||||||||||||||||
| Costs of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales staff costs | ( | ) | ( | ) | ( | ) | ||||||||||
| Administrative staff costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Outbound transportation expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Advertising | ( | ) | ( | ) | ( | ) | ||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consulting | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Rental | ( | ) | ( | ) | ||||||||||||
| Research and development costs | ( | ) | ( | ) | ||||||||||||
| Marketing expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Sales tax and surcharges | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Audit fee | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Commission for E-commerce platform | ( | ) | ( | ) | ||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Penalty | ( | ) | ( | ) | ||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| For the Three Months Ended June 30, 2025 | ||||||||||||||||
| Wholesale distribution | Live-stream sales | Corporate | Total | |||||||||||||
| Revenue: | ||||||||||||||||
| Sale of inventories to distributors | ||||||||||||||||
| Sale of digital coupons to customers | ||||||||||||||||
| Total revenue, net | ||||||||||||||||
| Costs of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales staff costs | ( | ) | ( | ) | ( | ) | ||||||||||
| Administrative staff costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Outbound transportation expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Advertising | ||||||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consulting | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Rental | ( | ) | ||||||||||||||
| Research and development costs | ( | ) | ( | ) | ||||||||||||
| Marketing expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Sales tax and surcharges | ( | ) | ( | ) | ( | ) | ||||||||||
| Audit fee | ||||||||||||||||
| Commission for E-commerce platform | ||||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Penalty | ||||||||||||||||
| Total other income (expense), net | ||||||||||||||||
| Provision for income tax | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
16
| For the Six Months Ended June 30, 2025 | ||||||||||||||||
| Wholesale distribution | Live-stream sales | Corporate | Total | |||||||||||||
| Revenue: | ||||||||||||||||
| Sale of inventories to distributors | ||||||||||||||||
| Sale of digital coupons to customers | ||||||||||||||||
| Total revenue, net | ||||||||||||||||
| Costs of revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales staff costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Administrative staff costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Outbound transportation expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Advertising | ( | ) | ( | ) | ||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consulting | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Rental | ( | ) | ( | ) | ( | ) | ||||||||||
| Research and development costs | ( | ) | ( | ) | ||||||||||||
| Marketing expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Sales tax and surcharges | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Audit fee | ||||||||||||||||
| Commission for E-commerce platform | ( | ) | ( | ) | ||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating income (loss) | ( | ) | ||||||||||||||
| Penalty | ||||||||||||||||
| Total other income (expense), net | ||||||||||||||||
| Provision for income tax | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
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 July 16, 2026, the Company received the Determination Letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC to delist the Company’s common stock and warrants from Nasdaq Capital Market, and the Company already requested an appeal of the Staff’s determination. The request would stay any suspension of the Listed Securities pending the Panel’s decision, although the trading halt currently in effect would remain in place notwithstanding any appeal. The Company did not identify any other material subsequent events requiring adjustment or disclosure.
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise indicated, references to “we”, “us”, “our”, “CN Healthy” or the “Company” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are to CN Healthy Food Tech Group Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto included in Part I. Item 1. of this Quarterly Report, the risk factors included in Part II. Item 1A. of this Quarterly Report, and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 31, 2026, as amended on June 12, 2026.
Overview
We operate within the high-end health food industry, driven by artificial intelligence technology and biotechnology innovation. We are committed to researching, developing, producing, and selling natural, grain-based health foods, and integrating modern biotechnology with traditional Chinese medicine theory to support preventative health and wellness. We manage our business in two operating segments: wholesale distribution and live-stream sales.
Recent Developments
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. On April 24, 2026, our PRC operating subsidiary Heilongjiang Zhongneng Liangke Agricultural Technology Co., Ltd. received an Advance Notice of Administrative Penalty from the Heilongjiang Regulatory Bureau of the CSRC, proposing administrative fines of RMB 3,000,000 on Zhongneng Liangke and RMB 1,500,000 on Mr. Zhenjun Jiang, our Chairman and Chief Executive Officer, as the directly responsible executive,these penalties have already been paid on May 24, 2026; see Note 11 to the condensed consolidated financial statements.
On July 16, 2026, the Company received the Determination Letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC to delist the Company’s common stock and warrants from Nasdaq Capital Market, and the Company already requested an appeal of the Staff’s determination. The request would stay any suspension of the Listed Securities pending the Panel’s decision, although the trading halt currently in effect would remain in place notwithstanding any appeal. The company has not identified any other significant subsequent events that require adjustment or disclosure.
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 June 30, 2026 or subsequent to June 30, 2026 through the filing date of this Quarterly Report.
Comparability of Financial Information
Our historical results of operations for the three and six months ended June 30, 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.
18
Results of Operations — Three and Six Months Ended June 30, 2026 compared to Three and Six Months Ended June 30, 2025
| For the three months ended June 30 | ||||||||||||
| 2026 | 2025 | % Change | ||||||||||
| Revenues, net | $ | 8,733,904 | $ | 7,460,022 | 17.1 | % | ||||||
| Cost of revenue | (2,492,589 | ) | (2,516,756 | ) | (1.0 | )% | ||||||
| Gross profit | 6,241,315 | 4,943,266 | 26.3 | % | ||||||||
| Total operating expenses | (1,126,289 | ) | (1,069,178 | ) | 5.3 | % | ||||||
| Operating income | 5,115,026 | 3,874,088 | 32.0 | % | ||||||||
| Total other income (expense), net | (549,040 | ) | 154,248 | (455.9 | )% | |||||||
| Income before income taxes | 4,565,986 | 4,028,336 | 13.3 | % | ||||||||
| Provision for income tax | (1,505,608 | ) | (1,106,294 | ) | 36.1 | % | ||||||
| Net income (loss) | $ | 3,060,378 | $ | 2,922,042 | 4.7 | % | ||||||
| Other comprehensive income | 383,387 | 179,385 | 113.7 | % | ||||||||
| Comprehensive income | $ | 3,443,765 | $ | 3,101,427 | 11.0 | % | ||||||
| For the six months ended June 30 | ||||||||||||
| 2026 | 2025 | %
Change | ||||||||||
| Revenues, net | $ | 14,562,448 | $ | 11,979,062 | 21.6 | % | ||||||
| Cost of revenue | (3,956,285 | ) | (4,982,858 | ) | (20.6 | )% | ||||||
| Gross profit | 10,606,163 | 6,996,204 | 51.6 | % | ||||||||
| Total operating expenses | (4,760,521 | ) | (2,316,918 | ) | 105.5 | % | ||||||
| Operating income | 5,845,642 | 4,679,286 | 24.9 | % | ||||||||
| Total other income (expense), net | (738,116 | ) | 247,845 | (397.8 | )% | |||||||
| Income before income taxes | 5,107,526 | 4,927,131 | 3.7 | % | ||||||||
| Provision for income tax | (2,356,145 | ) | (1,231,406 | ) | 91.3 | % | ||||||
| Net income (loss) | $ | 2,751,381 | $ | 3,695,725 | (25.6 | )% | ||||||
| Other comprehensive income | 721,571 | 232,407 | 210.5 | % | ||||||||
| Comprehensive income | $ | 3,472,952 | $ | 3,928,132 | (11.6 | )% | ||||||
Revenue
Revenue, net increased during the second quarter and first six month of 2026 compare to the same period of 2025. The increase was driven by continued expansion of our wholesale distribution network and launch of new salable products. 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.
Cost of Revenue
Cost of revenue decreased during the second quarter and first six month of 2026 compare to the same periods of 2025. 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 Beikang Industrial Park, Heilongjiang Province in October 2025, with the six months ended June 30, 2026 being the period 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; and (ii) operating leverage on relatively fixed production-related costs as the wholesale distribution network expanded.
19
Operating Expenses
Total operating expenses increased during the second quarter and first six months of 2026 compared to the same periods of 2025. Total operating expenses were $1,126,289 for the three months ended June 30, 2026, a slight increase compared to the same period of 2025, primarily due to higher consulting and audit expenses (see Note 13 - Segment Information). The significant increase in operating expenses for the first six months of 2026 was primarily attributable to $2,045,000 of amortization expense associated with 1,000,000 restricted common shares issued to officers of Iron Horse in September 2025 for management advisory services rendered over a six-month period ended 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. Selling expenses decreased $108,466, or 24.9%, and $383,749, or 30.9%, for the three and six months ended June 30, 2026, respectively, compared with the same periods of 2025, primarily reflecting a shift in the mix of selling and distribution activity. Research and development expenses remained relatively stable in the second quarter of 2026 and increased $15,576, or 26.7%, for the six months ended June 30, 2026 compared to the same period of 2025, due to higher labor costs in the R&D department.
Other Income (Expense), net
Total other income (expense), net changed from net other income of $154,248 and $247,845 for the three and six months ended June 30, 2025, respectively, to net other expense of $549,040 and $738,116 for the three and six months ended June 30, 2026. The change was mainly attributable to: (i) the recognition in the second quarter of 2026 of the CSRC administrative penalty of RMB 3,000,000, equivalent to $436,961; and (ii) the recognition of $335,908 of default interest expense during the six months ended June 30, 2026 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 six months ended June 30, 2026. Interest income decreased $135,265, or 84.6%, and $157,478, or 79.3%, for the three and six months ended June 30, 2026, respectively, compared to the same periods of 2025, primarily due to lower bank deposit interest rates.
Provision for Income Tax
The Company's effective tax rate was 33.0% for the second quarter of 2026, compared to 27.5% for the same period of 2025 and 46.1% for the six months ended June 30, 2026,compared to 25.0% for the same period of 2025. The effective tax rate for the second quarter and first six month of 2026 differs significantly from both the comparative period of 2025 and the PRC statutory rate of 25.0% principally because (i) the $2,045,000 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 $335,908 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 $4,565,986 while the underlying PRC operating entities continued to generate taxable income subject to PRC income tax.(iv)Loss on some subsidiaries diluted the companies total income before tax.
Liquidity and Capital Resources
As of June 30, 2026, our cash and cash equivalents totaled $23,317,217 and a net working capital surplus of $15,785,144. As of June 30, 2026, approximately $23,302,900 and $14,317 of our cash and cash equivalents were held in the PRC and United States, respectively.
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 June 30, 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 June 30, 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.
20
Cash Flows Summary
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by (used in) operating activities | $ | (10,630,971 | ) | $ | (1,472,289 | ) | ||
| Net cash used in investing activities | $ | (6,657 | ) | $ | (447,768 | ) | ||
| Net cash provided by (used in) financing activities | $ | 116,000 | $ | — | ||||
Net cash used in operating activities for the six months ended June 30, 2026 was $10,630,971, compared to net cash used of $1,472,289 for the six months ended June 30, 2025. The increase in operating cash outflow was driven principally by a $15,462,898 decrease in advances from customers during the period, which represents the fulfillment and recognition as revenue of customer prepayments received in prior periods,and $1,040,401 increase in procurement of inventories, partially offset by a $1,769,444 increase in accounts payable, with a further $1,047,762 increase in prepayments to suppliers adding to the outflow. Net cash used in investing activities for the six months ended June 30, 2026 was $6,657, reflecting minimal capital expenditure during the period, compared to net cash used of $447,768 in the comparative period. Net cash provided by financing activities for the six months ended June 30, 2026 was $116,000, reflecting Business Combination-related financing receipts (June 30, 2025: $nil). The effect of foreign currency exchange rate changes on cash and cash equivalents was a positive $825,097 for the current period (June 30, 2025: $708,526). After consideration of all activities, cash and cash equivalents decreased by $9,696,532 during the six months ended June 30, 2026, ending at $23,317,217.
Holding Company Structure
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.
As of June 30, 2026, no capital contributions have been made to our PRC subsidiaries from our intermediate holding companies, and no dividends or other distributions have been paid from our PRC subsidiaries to our intermediate holding companies located outside of mainland China. The cross-border transfer of funds from CFI HK to its PRC subsidiaries is permitted in the form of shareholder loans or capital contributions, subject to applicable PRC government registration, approval, and filing requirements. We currently do not have formal cash management policies governing the transfer of funds between our holding company and our subsidiaries.
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.
21
Off-Balance Sheet Financing Arrangements
As of June 30, 2026, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
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).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective at a reasonable assurance level, due to insufficient in-house U.S. GAAP/SEC reporting expertise, segregation of duties, lack of supervision and review, and limited documentation around controls. No specific remediation actions addressing the material weaknesses identified in our Annual Report on Form 10-K for the year ended December 31, 2025 were taken during the six months ended June 30, 2026. Management continues to evaluate remediation alternatives.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the six months ended June 30, 2026 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We have a limited operating history. Currently, other than as described in Note 11 to the condensed consolidated financial statements and the Nasdaq trading halt and Notice of Delist Determination Letter described in Part I of this Quarterly Report, we are not involved in, nor are we aware of any threats of, material legal or administrative proceedings.
Item 1A. Risk Factors
Other than as set forth below, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2025.
Risks Related to the Continued Nasdaq Trading Halt
Following our listing on the Nasdaq Capital Market on October 1, 2025, Nasdaq notified us that the China Securities Regulatory Commission (the “CSRC”) had not yet completed its process of review of our U.S. listing, and Nasdaq halted trading of our common stock and warrants pending receipt of additional clarification. The trading halt remained in effect as of the filing date of this Quarterly Report.
Risks Related to the Notice of Delist Determination Letter
On July 16, 2026, the Company received a letter (the “Determination Letter”) from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (the “Staff”) notifying the Company that the Staff had determined to delist the Company’s common stock and warrants (the “Listed Securities”) from the Nasdaq Capital Market. The Company timely requested an appeal of the Staff’s determination before the Nasdaq Hearings Panel (the “Panel”). The timely filing of the appeal request stays any suspension or delisting action with respect to the Listed Securities pending the Panel’s decision; however, the trading halt that has been in effect since October 1, 2025 in connection with the CSRC’s review of the Company’s U.S. listing will remain in place notwithstanding the appeal. There can be no assurance that the Panel will grant the Company’s request for continued listing or that the Company will be able to satisfy any conditions that the Panel may impose. If the Company’s securities are ultimately delisted from Nasdaq, such delisting could constitute an event of default or trigger acceleration provisions under our outstanding promissory notes and other contractual arrangements. In addition, the continued trading halt and the Determination Letter, together with the matters described in the immediately following risk factor relating to the CSRC Administrative Penalty Decision, may adversely affect our reputation, our relationships with customers, suppliers, and lenders, and our overall business, financial condition, and prospects.
Risks Related to the CSRC Administrative Penalty Decision
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”). The Notice advised that the CSRC had completed its investigation of the Company’s merger with Iron Horse Acquisition Corp. and subsequent listing on the Nasdaq Capital Market in September 2025, and determined that the Company failed to complete the CSRC’s mandatory offshore listing filing procedures prior to such listing, in violation of Articles 13 and 19(1) of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), constituting an offense under Article 27(1) of the Trial Measures. On May 7, 2026, Zhongneng Liangke received the final Administrative Penalty Decision (the “Decision”) from the CSRC, whereby the CSRC affirmed and formally imposed fines of RMB 3,000,000 (approximately $440,000) on Zhongneng Liangke and RMB 1,500,000 (approximately $220,000) on Mr. Zhenjun Jiang, the Company’s Chairman and Chief Executive Officer, as the directly responsible executive. These penalties were fully paid on May 24, 2026, and no further amounts are payable by the Company under the Decision. The fine imposed on Mr. Jiang is his personal liability and not an obligation of the Company. The Decision may signal to regulators, investors, and business partners a heightened compliance risk associated with our PRC operations. We cannot predict the extent to which the CSRC’s penalties and the underlying compliance findings may adversely affect our reputation, our relationships with business partners, our ability to conduct business in China, or our financial condition and results of operations.
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Risks Related to Our Defaulted Promissory Notes and Potential Dilution
As of June 30, 2026, three promissory notes issued in connection with our September 30, 2025 Business Combination remained outstanding and in default of their respective payment obligations, with aggregate outstanding principal of approximately $3.5 million and accrued default interest of approximately $335,908. Each note accrues default interest at a rate of 15.0% per annum until the applicable event of default is cured. Two of the three notes contain conversion provisions that, upon default, permit the respective note holder to receive shares of our common stock — in one case, up to 5,000,000 shares (subject to a 4.99% beneficial ownership cap), and in another case, 650,000 shares at a fixed conversion ratio. The third note, held by our Sponsor (a related party), requires us to reserve shares of our common stock to satisfy the unpaid balance, also subject to a 4.99% beneficial ownership cap. If any of these note holders elects to enforce its conversion or share-delivery rights, the issuance of common stock to satisfy these obligations could result in substantial dilution to our existing stockholders. We are currently in discussions with each of the note holders to extend the maturity dates and address the defaults, but there can be no assurance that these discussions will result in favorable terms or any agreement at all. If we are unable to negotiate forbearance, extension, or repayment terms acceptable to the note holders, they may exercise their available remedies, which could have a material adverse effect on our financial condition, results of operations, and stockholders’ equity.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
As described in Notes 6 and 7 to the condensed consolidated financial statements, the Company was in default of its payment obligations under the September 2025 Note Payable (outstanding principal of $2,018,500), the Assumed Note Payable (outstanding principal of $1,000,000), and the Sponsor Note Payable and Assumed Sponsor Note Payable (aggregate outstanding principal of $454,690) as of June 30, 2026. The Company continues to be in discussions with the respective note holders to extend the maturity dates. Default interest at 15.0% per annum has been accrued during the six months ended June 30, 2026.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Adoption or Termination of Trading Arrangements
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Item 6. Exhibits
| * | Filed herewith |
| ** | Furnished herewith |
| # | In accordance with Item 601(b)(32)(ii) of Regulation S-K, the certifications furnished pursuant to Section 906 are not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CN HEALTHY FOOD TECH GROUP CORP. | ||
| Date: August 14, 2026 | By: | /s/ Zhenjun Jiang |
| Zhenjun Jiang | ||
| Chief Executive Officer | ||
| (Principal Executive Officer and Duly Authorized Officer) | ||
| Date: August 14, 2026 | By: | /s/ Weihong Zhu |
| Weihong Zhu | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer and Duly Authorized Officer) | ||
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