CN Healthy Food Tech Group Corp. 10-Q

Item 1. Financial Statements (unaudited) CN Healthy Food Tech Group Corp AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 December 31, 2024 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 37,207,274 $ 41,432,852 Accounts receivable - 845 Inventories 1,851,687 1,250,701 Prepayments and other current assets 7,121,106 1,333,310 Total Current Assets 46,180,067 44,017,708 Non-Current Assets Marketable securities held in Trust Account 2,414,229 - Property and equipment, net 4,390,946 4,039,852 Land use right, net 2,612,852 2,645,891 Intangible asset, net 86,266 49,286 Operating lease right-of-use asset 408,355 - Other investment 140,459 - TOTAL ASSETS $ 56,233,174 $ 50,752,737 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable $ 2,057,733 $ 585,304 Accrued expenses and other current liabilities 1,680,423 227,726 Operating lease obligation, current 210,101 - Other taxes payable 913,292 558,022 Advances from customers 25,032,514 37,721,923 Due to stockholders for redemption of Common Stock (see Note 3) 2,414,229 - Income tax payable 1,392,353 849,174 Notes payable 3,018,500 - Notes payable – related parties 1,468,690 - Total Current Liabilities 38,187,835 39,942,149 Non-Current Liabilities Operating lease obligation, noncurrent 297,968 - TOTAL LIABILITIES 38,485,803 39,942,149 COMMITMENTS AND CONTINGENCIES (NOTE 11) STOCKHOLDERS’ EQUITY Common stock, $ 0.0001 par value; 160,000,000 shares authorized; 52,235,000 and 47,689,349 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 5,224 4,769 Additional paid-in capital 6,452,780 6,930,538 Retained earnings 11,036,694 3,996,003 Accumulated other comprehensive loss 252,673 ( 120,722 ) TOTAL STOCKHOLDERS’ EQUITY 17,747,371 10,810,588 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 56,233,174 $ 50,752,737 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 INCOME AND COMPREHENSIVE INCOME Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue, net $ 7,905,065 $ 4,291,966 $ 19,884,127 $ 5,254,161 Cost of revenue ( 2,337,565 ) ( 1,343,843 ) ( 7,320,423 ) ( 1,786,842 ) GROSS PROFIT 5,567,500 2,948,123 12,563,704 3,467,319 OPERATING EXPENSES Selling expenses 507,554 142,115 1,747,857 142,115 General and administrative expenses 438,067 508,540 1,461,947 652,735 Research and development costs 37,844 - 96,188 - Total Operating Expenses 983,465 650,655 3,305,992 794,850 OPERATING INCOME 4,584,035 2,297,468 9,257,712 2,672,469 OTHER INCOME (EXPENSES) Interest income 130,973 4,156 329,651 7,110 Other income 10,139 9,135 64,934 11,548 Other expenses ( 1,929 ) ( 74 ) ( 1,948 ) ( 74 ) Total Other Income, net 139,183 13,217 392,637 18,584 INCOME BEFORE INCOME TAXES 4,723,218 2,310,685 9,650,349 2,691,053 Provision for income tax ( 1,378,252 ) ( 743,648 ) ( 2,609,658 ) ( 766,803 ) NET INCOME $ 3,344,966 $ 1,567,037 $ 7,040,691 $ 1,924,250 OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment 140,988 294,893 373,395 259,827 COMPREHENSIVE INCOME $ 3,485,954 $ 1,861,930 $ 7,414,086 $ 2,184,077 Basic and diluted earnings per share $ 0.07 $ 0.04 $ 0.16 $ 0.05 Basic and diluted weighted average number of shares outstanding 47,689,349 47,689,349 47,689,349 47,689,349 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 NINE MONTHS ENDED SEPTEMBER 30, 2025 Common Stock Additional Paid-in Retained Accumulated Other Comprehensive Total Stockholders’ Shares Amount Capital Earnings Income (Loss) Equity Balance – December 31, 2024 47,689,349 $ 4,769 $ 6,930,538 $ 3,996,003 $ ( 120,722 ) $ 10,810,588 Net income - - - 773,683 - 773,683 Foreign currency translation adjustment - - - - 53,022 53,022 Balance – March 31, 2025 47,689,349 4,769 6,930,538 4,769,686 ( 67,700 ) 11,637,293 Net income - - - 2,922,042 - 2,922,042 Foreign currency translation adjustment - - - - 179,385 179,385 Balance – June 30, 2025 47,689,349 4,769 6,930,538 7,691,728 111,685 14,738,720 Business Combination financing 3,545,651 355 ( 4,567,658 ) - - ( 4,567,303 ) Fair value of shares issued for services 1,000,000 100 4,089,900 - - 4,090,000 Net income - - - 3,344,966 - 3,344,966 Foreign currency translation adjustment - - - - 140,988 140,988 Balance – September 30, 2025 52,235,000 $ 5,224 $ 6,452,780 $ 11,036,694 $ 252,673 $ 17,747,371 FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 Ordinary Shares Common Stock Additional Paid-in Retained Accumulated Other Comprehensive Total Stockholders’ Shares Amount Shares Amount Capital Earnings Income (Loss) Equity Balance – December 31, 2023 1 $ 1 - $ - $ - $ - $ - $ 1 Retroactive application of recapitalization (see Note 3) ( 1 ) ( 1 ) 47,689,349 4,769 ( 4,768 ) - - - Adjusted balance, beginning of period - - 47,689,349 4,769 ( 4,768 ) - - 1 Capital Contribution - - - - 6,935,306 - - 6,935,306 Net income - - - - - 375 - 375 Foreign currency translation adjustment - - - - - - ( 4 ) ( 4 ) Balance – March 31, 2024 - - 47,689,349 4,769 6,930,538 375 ( 4 ) 6,935,678 Net income - - - - - 356,838 - 356,838 Foreign currency translation adjustment - - - - - - ( 35,062 ) ( 35,062 ) Balance – June 30, 2024 - - 47,689,349 4,769 6,930,538 357,213 ( 35,066 ) 7,257,454 Net income - - - - - 1,567,037 - 1,567,037 Foreign currency translation adjustment - - - - - - 294,893 294,893 Balance – September 30, 2024 - $ - 47,689,349 $ 4,769 $ 6,930,538 $ 1,924,250 $ 259,827 $ 9,119,384 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 CN Healthy Food Tech Group Corp AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended September 30, 2025 2024 Cash flows from operating activities Net income $ 7,040,691 $ 1,924,250 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 336,095 111,024 Amortization of right-of-use assets 89,459 - Changes in operating assets and liabilities: Accounts receivable, net 858 ( 973,854 ) Inventories ( 555,755 ) ( 1,561,588 ) Prepaid and other current asset ( 1,220,623 ) ( 1,707,792 ) Accounts payable 1,368,575 704,739 Accrued expenses and other current liabilities ( 3,009 ) 116,796 Other taxes payables 333,829 6,686 Advances from customers ( 13,618,419 ) 22,488,258 Income tax payable 510,514 743,607 Operating lease obligation 10,111 - Net cash (used in) provided by operating activities ( 5,707,674 ) 21,852,126 Cash flows from investing activities: Loan advances to an unrelated third party - ( 2,782,570 ) Purchase of property and equipment ( 444,499 ) - Purchase of intangible asset ( 42,425 ) ( 25,238 ) Purchase of other investment ( 138,468 ) - Net cash used in investing activities ( 625,392 ) ( 2,807,808 ) Cash flows from financing activities: Business Combination Financing 1,016,762 - Net cash provided by financing activities 1,016,762 - Effect of exchange rates on cash and cash equivalents 1,090,726 461,765 Net change in cash and cash equivalents ( 4,225,578 ) 19,506,083 Cash and cash equivalents, beginning of period 41,432,852 14 Cash and cash equivalents, end of period $ 37,207,274 $ 19,506,097 Supplemental Cash Flow Information: Cash paid for income taxes $ 2,207,648 $ 23,176 Cash paid for interest $ - $ - Supplemental non-cash in investing and financing activities: Operating lease right-of-use asset, obtained in exchange for operating lease obligation $ 550,919 $ - De-recognition of operating lease right-of-use asset and operating lease obligation on modified lease $ 58,895 $ - Fair value of shares issued in exchange for services to be received $ 4,090,000 $ - 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 operate within the health and wellness food industry or holistic health food industry, focusing on distributing natural, grain-based health foods that support preventative health and wellness. The Company offers products that cater to the rising demand for safe, high-quality nutritional options, blending modern technology with traditional Chinese medicine. Basis of Presentation and Principles of Consolidation: On September 29, 2025 (the “Closing Date”), Iron Horse Acquisition Corp. (“Iron Horse)” consummated the merger transactions contemplated by the business combination agreement (the “Initial BCA”) executed during September 2024 with Zhong Guo Liang Tou Group Limited, 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 Initial BCA was subsequently amended in December 2024, August 2025, and September 2025 (the “Amended BCA”) (see Note 3). 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 (the “Company” or “CN Healthy”) 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 based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combination (“ASC 805”). The determination was primarily based on Legacy CFI’s stockholder prior to the Business Combination having the greatest voting interest in the combined company, Legacy CFI’s stockholder having the ability to control decisions regarding the election and removal of directors and officers of the combined company, Legacy CFI will comprise the ongoing operations of the combined company, and Legacy CFI’s existing senior management comprising the senior management of the combined company. 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 are 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 unaudited condensed consolidated financial statements included in this 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 ration established in the Business Combination. The accompanying unaudited 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”) and include the assets, liabilities, revenues, expenses and cash flows of all wholly owned subsidiaries. The accompanying unaudited consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of the Company’s management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with GAAP. References to GAAP issued by the Financial Accounting Standards Board (“FASB”) in these accompanying notes to the unaudited condensed consolidated financial statements are to the FASB ASC. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s audited financial statements filed with the proxy statement/prospectus filed with the Securities and Exchange Commission by Iron Horse Acquisitions Corp. on May 15, 2025. 5 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 Emerging Growth Company: The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups (“JOBS”) Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as to those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Use of Estimates: The preparation of the unaudited consolidated financial statements in conformity with U.S. GAAP requires the Company’s 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 unaudited consolidated financial statements. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The Company's most significant assumptions and estimates relate to the carrying value of accounts receivable, including the determination of the allowance for credit losses, 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, income tax provision, determination of uncertain tax positions, and determination of deferred tax valuation allowances. These estimates are based on assumptions which management believes are reasonable. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates. Segment Information: ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM uses operating income as the primary measure to manage the business. The Company determined there are two operating and reportable segments based on the level at which the CODM reviews operating income, assesses performance and makes decisions regarding resource allocation. These operating segments are 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 (TikTok), Meituan and Kuaishou. Cash and Cash Equivalents: Cash and cash equivalents consists of cash and fixed deposits held at banks, both of which are highly liquid and has original maturities of three months or less and is unrestricted as to withdrawal or use. The Company maintains cash and cash equivalents in excess of insured limits of RMB 500,000 ($ 70,230 at September 30, 2025) per financial institutions located in the PRC and $ 250,000 per financial institution located in the United States. The Company makes such deposits with financial institutions it believes are of high credit quality and has not experienced losses on these deposits as of September 30, 2025. Management believes the Company is not exposed to significant risks on such deposits. The amounts over these insured limits as of June 30, 2025 was RMB 249,370,596 ($ 35,026,420 at September 30, 2025) and $ 766,762 for financial institutions located in the PRC and United States, respectively. Marketable Securities Held in Trust Account: As of September 30, 2025, the Company invested substantially all the assets held in the Trust Account in U.S. Treasury Bills. The Company accounts for its marketable securities as trading securities under ASC 320, where securities are presented at fair value on the condensed consolidated balance sheets and with unrealized gains or losses, if any, presented on the statements of operations. Prior to the closing of the reverse merger, the Company did not have any marketable securities held in Trust Account. As of September 30, 2025 and December 31, 2024, the assets held in Trust Account amounted to $ 2,414,229 and nil , respectively . 6 Customer, Supplier and Concentration Risk Customer: The Company maintains a low concentration risk, with no single customer contributing more than 10% of total revenue for the three and nine months ended September 30, 2025, or 10% of accounts receivable as of September 30, 2025. Supplier: Three suppliers have each contributed over 10% of the Company’s total procurement, with individual contributions of 70 %, 10 % and 10 % for the three months ended September 30, 2025 and two suppliers have each contributed over 10% of the Company’s total procurement, with individual contributions of 38 % and 37 % for the nine months ended September 30, 2025. Four suppliers have each contributed over 10% of the Company’s total procurement, with individual contributions of 27 %, 21 %, 21 % and 11 % for the three months ended September 30, 2024, and four suppliers have each contributed over 10% of the Company’s total procurement, with individual contributions of 25 %, 24 %, 19 % and 10 % for the nine months ended September 30, 2024. Accounts Receivable and Allowance for Credit Losses: As of September 30, 2025 and December 31, 2024, no allowance for credit losses was required. Prepaid and other current assets: Prepaid and other current assets consist of funds deposited for future finished goods, services purchased from suppliers, or amounts paid on behalf of employees, all of which are expected to be either repaid by the employee or recoverable through statutory offsets within the next 12 months. Certain of the Company’s suppliers require deposits as a guarantee that the Company will complete its purchases to secure a specific purchase price. Inventories: Inventories consist of finished goods. As of September 30, 2025 and 2024 an allowance for obsolete or slow-moving inventory was not required. There was no provision for inventory shrinkage for the three and nine months ended September 30, 2025 and 2024. Investment in equity securities: Investment in equity securities without readily determinable fair values are accounted for in accordance with ASC 321, Investment in Equity Securities (“ASC 321”), under either the measurement alternative method or as an equity method investment. Measurement Alternative Method: Investments in equity securities that either (i) do not provide the Company with control or significant influence or (ii) do not have risk and reward characteristics that are substantially similar to an investment in the investee’s common stock. The Company records such investments under the measurement alternative method pursuant to ASC 321 as these investments do not have readily determinable fair values. Under the measurement alternative method, the Company records the investment at cost less impairment losses, if any, unless it identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, in which case the Company will measure its investments at fair value as of the date that the observable transaction occurred. Such investments are presented as Other Investments on the consolidated balance sheets and any impairment recognized related to these investments are presented as Impairment of other investments, a component of other income (expense), net in the unaudited consolidated statements of income. Equity Method: The Company utilizes the equity method to account for investments when it possesses the ability to exercise significant influence, but not control, over the operating and financial decisions of the investee. Generally, the ability to exercise significant influence is presumed when the investor possesses more than 20 % of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is not present. The Company applies the equity method to investments in common stock and to other investments in nonconsolidated entities that have risk and reward characteristics that are substantially similar to an investment in the investee’s common stock. The Company subsequently adjusts the carrying amount of the equity method investment by the Company’s proportionate share of the net earnings or losses and other comprehensive income or loss of the investee based on the Company’s percentage of common stock or in-substance common stock ownership during the respective reporting period. The Company records its share of the results of equity method investees and any impairment related to equity method investments as earnings or losses from investments in equity method investees, net of tax in the unaudited consolidated statements of income. In the event that net losses of the investee reduce the carrying amount to zero , additional net losses may be recorded if the Company has other investment or other outstanding loans and advances to the investee and would be determined based on the Company’s proportionate share of the respective class of securities. 7 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 ($137,588 at the date of acquisition and $ 140,459 at September 30,2025) and recorded it as an Other investment on the accompanying unaudited consolidated balance sheets at cost under the measurement alternative method as the investment does not provide the Company with control or significant influence nor does the investment have risk and reward characteristics that are substantially similar to an investment in the investee’s common stock. Revenue Recognition: Wholesale distribution segment As of September 30, 2025 the Company could not assert that it was probable that a significant reversal in the amount of revenue recognized would not occur for a potential shortfall to the minimum purchase volume at the end of the in place distributor agreements, which have a remaining term of twelve months. The Company has no obligations related to discounts, returns, and allowances recorded on its unaudited condensed consolidated balance sheets as of September 30, 2025. Live-stream sales segment The Company has no obligations related to service fees and refunds recorded on its unaudited consolidated balance sheets as of September 30, 2025. There are no acquisition costs associated with obtaining customers in either segment and there are no amounts owed to third-party merchant for the goods or services to be provided at the time the digital coupon is redeemed as of September 30, 2025. Research and development expense: Research and development costs did not meet the requirements to be recognized as an asset as the associated future benefits were at best uncertain and there was no alternative future use at the time the costs were incurred. Research and development costs include, but are not limited to, staff costs, including salaries and benefits, related to the Company’s products and services. Warrants: The Company evaluates the appropriate balance sheet classification of warrants issued as either equity or as a derivative liability. In accordance with ASC 815, Derivatives and Hedging (“ASC 815”), a warrant is classified as equity if it is “indexed to the Company’s equity” and meets several specific conditions for equity classification, A warrant is not considered “indexed to the Company’s equity,” in general, when it contains certain types of exercise contingencies or potential adjustments to its exercise price. If a warrant is not indexed to the Company’s equity or it has net cash settlement provisions that result in the warrants being accounted for under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) or ASC 815, it is classified as a derivative liability which is carried on the condensed consolidated balance sheets at fair value with any changes in its fair value recognized in the statements of income and comprehensive income. At September 30, 2025, all of the Company’s outstanding warrants were classified as equity. Leases: The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement conveys the right to use and control specific property or equipment. The Company leases office space under an operating lease primarily having an initial term of approximately three years . The Company records a lease liability and corresponding right-of-use asset at lease commencement for identified leases at the lease commencement date, which is generally when the Company takes possession of the asset. Lease agreements may contain adjustments to lease payments based on fixed escalation clauses, an index or a rate. Lease agreements may also require the Company to pay real estate taxes, insurance, common area maintenance, and other costs, collectively referred to as operating costs, in addition to lease payments. Lease agreements also may contain lease incentives, such as tenant improvement allowances and rent holidays. Lease agreements can include one or more options to renew or extend the initial lease term. The exercise of a lease renewal option is generally at the Company’s sole discretion. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 8 Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. The lease liability is initially measured at the present value of the minimum fixed lease payments over the expected lease term, which includes options to extend or terminate the lease agreement when it is reasonably certain those options will be exercised, using the Company’s discount rate as of lease commencement. Minimum fixed lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because the Company does not generally borrow on a collateralized basis, it uses the loan prime rate announced by the Bank of China as its incremental borrowing rate. The Company accounts for fixed lease and non-lease components of a lease as a single lease component. Therefore, minimum lease payments used to measure the lease liability include all of the fixed consideration in the contract. Variable lease payments associated with the Company’s leases are recognized upon the occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed. Variable lease payments are presented in the accompanying unaudited consolidated statements of income and comprehensive income in the same line item as expense arising from fixed lease payments, which is generally within general and administrative expenses. Leases with an initial term of 12 months or less are not recorded on the accompanying consolidated balance sheets and are recognized on a straight-line basis over the lease term within general administrative costs on the accompanying consolidated statements of income and comprehensive income. Franchise Tax: Delaware, where the company is incorporated, imposes a franchise tax that applies to most business entities that are formed or qualified to do business, or which are otherwise doing business, in Delaware. Delaware franchise tax is based on authorized shares or an assumed par and non-par capital, whichever yields a lower result. Under the authorized shares method, each share is taxed at a graduated rate based on the number of authorized shares. Inflation Reduction Act of 2022: On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1 % excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1 % of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The Company was not subject to this excise tax in connection with the Business Combination (see Note 1 and Note 3). Any redemption or other repurchase that occurs after December 31, 2022, may be subject to the excise tax. Income Taxes: The Company accounts for income taxes under the provisions of ASC 740, Income Taxes (“ASC 740”), which is an asset and liability approach that requires recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC 740 prescribes a recognition threshold and measurement process for accounting for uncertain tax positions and also provides guidance on various related matters such as derecognition, interest, penalties, and disclosures required. The Company does not have any entity-level uncertain tax positions. The Company files income tax returns in the British Virgin Islands (“BVI”), Hong Kong, and PRC. The Company’s tax returns remain open, subject to examination by major tax jurisdictions. Under the current laws of the BVI, the Company’s subsidiaries domiciled in BVI are not subject to tax on income or capital gain. Additionally, upon payment of dividends by CFI to its stockholder, no BVI withholding tax will be imposed. Under the current laws in Hong Kong, the Company’s subsidiaries domiciled in Hong Kong are subject to a Hong Kong profits tax rate of 16.5 %. Additionally, upon payment of dividends by CFI HK to its stockholder, no Hong Kong withholding tax will be imposed. Under the current laws in the PRC, the Company’s subsidiaries domiciled in the PRC are subject to a 25 % enterprise income tax under the Enterprise Income Tax law (“EIT”) of the PRC with the exception that 15 % tax rate under preferential policies applicable to enterprises operating within the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (Hengqin Cooperation Zone),a designated special economic zone offering targeted tax incentives. 9 Earnings per Share: Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period, excluding the effects of any potential dilutive securities. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common share equivalents had been issued and if the additional common shares were dilutive. Earnings per share excludes all potential dilutive shares of common shares if their effect is anti-dilutive. The potential dilutive securities at September 30, 2025 and December 31, 2024 were: September 30, 2025 December 31, 2024 (Unaudited) Public Warrants 6,900,000 - Private Warrants 2,457,000 - 9,357,000 - 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 September 30, Nine Months Ended September 30, Average exchange rate: 2025 2024 2025 2024 RMB:USD 7.1577 7.1633 7.2219 7.1876 HKD:USD 7.8210 NA 7.7805 NA Period exchange rate: September 30, 2025 December 31, 2024 RMB:USD 7.1195 7.2980 HKD:USD 7.2219 NA Recent Accounting Pronouncements, adopted: ASU 2024-02, Codification Improvements-Amendments to Remove References to the Concepts Statements (“ASU 2024-02”) updates accounting standards for revenue recognition (ASC 606), lease accounting (ASC 842), and impairment of long-lived assets (ASC 360). ASU 2024-02 provides enhanced guidance for estimating variable consideration, accounting for contract modifications, determining lease terms, and simplifying impairment testing for long-lived assets. It also introduces increased disclosure requirements for financial instruments and derivatives. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2024-02 from January 1, 2025. Recent Accounting Pronouncements, not yet adopted: ASU 2023-09, Income Taxes (“ASU 2023-09”), requires disclosure of specific categories and disaggregation of information in the rate reconciliation table and expands disclosures related to income taxes paid. The new standard is effective for fiscal years beginning after December 15, 2024 and is to be applied prospectively. The Company is currently evaluating the impact, if any, adoption will have on its unaudited condensed consolidated financial statements and disclosures. ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), requires public companies to disaggregate key expense categories, such as inventory purchases, employee compensation and depreciation in their financial statements. This aims to improve investor insight into company performance. ASU 2024-03 is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its unaudited condensed consolidated financial statements and disclosures. 10 ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures: Clarifying the Effective Date (“ASU 2025-01”) clarifies the effective date of ASU 2024-03 is for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of ASU 2024-03 on its unaudited condensed consolidated financial statements and disclosures. The Company has evaluated other new accounting standards issued by the FASB and SEC that are not yet effective. Management does not expect these standards to have a material impact on the Company’s consolidated financial position or results of operations. 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. Upon the closing of the Business Combination, Iron Horse’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of capital stock to 200,000,000 shares, of which 160,000,000 were designated common stock, $ 0.0001 par value per share, and of which 40,000,000 shares were designated preferred stock, $ 0.0001 par value per share. Upon the consummation of the Business Combination, (i) the Legacy CFI ordinary share issued and outstanding was cancelled and converted into 47,689,349 shares of the Company’s common stock and (i) the holders of Iron Horse rights to receive one-fifth of one share of the Company’s common stock upon consummation of a Business Combination were issued 1,380,000 shares of the Company’s common stock. Outstanding warrants to purchase Iron Horse common stock will remain outstanding at the Closing Date. The warrants will become exercisable 30 days after the completion of the Business Combination and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation (see Note 7), Certain Iron Horse shareholders exercised their right to redeem certain of their outstanding shares for cash resulting in the redemption of 6,701,349 shares of Iron Horse common stock for gross redemption payments of approximately $ 71,066,578 . As of September 30, 2025, redemption payments totaling $ 2,414,229 were not yet paid to redeeming stockholders and were recorded on the accompanying condensed consolidated balance sheets as due to stockholders for redemption of Common Stock. These redemption payments were paid during October 2025. The Business Combination is accounted for as a reverse recapitalization in accordance with US GAAP. Under this method of accounting, Iron Horse was treated as the “acquired” company for financial reporting purposes (see Note 1). Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy CFI issuing stock for the net assets of Iron Horse, accompanied by a recapitalization. The net assets of Iron Horse are stated at historical cost, with no goodwill or intangible assets recorded. Outstanding warrants to purchase shares of Iron Horse common stock will remain outstanding at the Closing Date. The warrants will become exercisable 30 days after the completion of the Business Combination and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation (see Note 8). The Business Combination represents a reverse acquisition for federal income tax purposes in the United States. Prior to the Business Combination, Iron Horse filed separate standalone federal, state and local tax returns and Legacy CFI did not file any federal, state or local tax returns as there were no operations based in the United States. As a result of the Business Combination, Legacy CFI will file a full year consolidated income tax return in the year the Business Combination closes, with Iron Horse joining in the return the day after the Closing Date. 11 The number of shares of common stock issued immediately following the consummation of the Business Combination were: Common stock, outstanding prior to Business Combination 8,867,000 Less: redemption of Iron Horse shares of common stock ( 6,701,349 ) Iron Horse shares of common stock 2,165,651 Shares issued to holders of Iron Horse rights 1,380,000 Legacy CFI shares 47,689,349 Shares issued in connection with consulting agreements (see Note 7) 1,000,000 Total shares of common stock after Business Combination and as of September 30, 2025 52,235,000 Lock-Up Arrangements: Certain former stockholders of Legacy CFI and Iron Horse have agreed to lock-up restrictions regarding the future transfer shares of common stock. Such shares may not be transferred or otherwise disposed of for a period of six months through March 2026, subject to certain exceptions. Transaction Costs: Transaction costs incurred in connection with the Business Combination totaled approximately $ 5,907,000 , including compensation owed to the Sponsor in the amount of $ 2,000,000 as provided in the Amended BCA, which were charged to additional paid-in capital for the three and nine months ended September 30, 2025. As of September 30, 2025, approximately $ 4,376,000 of transaction costs were not paid and included on the accompanying condensed consolidated balance sheets as part of accounts payable, accrued expenses and other current liabilities, notes payable and notes payable, related parties. Note 4 – Prepaid and Other Current Assets The following table details the primary categories of prepaid and other current assets for the periods presented: September 30, 2025 December 31, 2024 (Unaudited) Advisory services through share issuance $ 4,090,000 $ - Prepayments to suppliers and vendors 2,545,361 1,313,695 Prepaid insurance 337,054 - Other current assets 148,691 19,615 $ 7,121,106 $ 1,333,310 Note 5 – 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 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 matures on November 17, 2025 (the “September 2025 Note Payable”). The September 2025 Note Payable can be prepaid at anytime without penalty. Upon the occurrence of an event of default (as defined in the agreement), the September 2025 Note Payable will accrue an interest rate of 15.0 % per annum until such time the event of default is cured. If the Company fails to repay the September 2025 Note Payable by the maturity date, the note holder will have 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 was required to reserve 5,000,000 shares of its common stock to satisfy the unpaid balance. The September 2025 Note Payable will remain outstanding until such time the holder has sold the shares issued and received net proceeds that equal or exceed the amount due, including default interest. If the net proceeds of shares sold are less than the balance owed, the Company will be required to make a cash payment for the shortfall balance owed under the September 2025 Note Payable. If the net proceeds from the sale of the shares exceed the balance due, including default interest, then the remaining unsold shares shall be cancelled and any excess proceeds over the amount due shall be reimbursed to the Company. As of September 30, 2025, $ 2,018,500 was outstanding on the September 2025 Note Payable. As of the issuance date of these condensed consolidated financial statements, the Company is in default of its payment obligations under the September 2025 Note Payable and is 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 a lender for the principal sum of $ 1,000,000 that matures on October 13, 2025 (the “Assumed Note Payable”) for the purpose of funding the payment of certain transaction costs on the Closing Date.The Assumed Note Payable can be prepaid at anytime without penalty. Upon the occurrence of an event of default (as defined in the Assumed Note Payable), the Assumed Note Payable will accrue an interest rate of 15.0 % per annum until such time the event of default is cured. If the Company fails to repay the Assumed Note Payable by the maturity date, the lender will have 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. As of September 30, 2025, $ 1,000,000 was outstanding on the Assumed Note Payable. 12 Note 6 – Notes Payable, Related Party In connection with the Business Combination, the Company aggregated the outstanding principal balances of various loans with its Sponsor and the deferred portion of the business combination consideration payment of $ 900,000 (see Note 3) into a single promissory note with the Sponsor with a principal sum of $ 1,421,343 that matures on November 15, 2025 (the “Sponsor Note Payable”). The Sponsor Note Payable can be prepaid at anytime without penalty. Upon the occurrence of an event of default (as defined in the agreement), the Sponsor Note Payable will accrue an interest rate of 15.0 % per annum until such time the event of default is cured. If the Company fails to repay the Sponsor Note Payable by the maturity date, the Sponsor will have 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 was required to reserve an unlimited number shares of its common stock to satisfy the unpaid balance. The Sponsor Note Payable will remain outstanding until such time the Sponsor has sold the shares issued and received net proceeds that equal or exceed the amount due, including default interest. If the net proceeds of shares sold are less than the balance owed, the Company will be required to make a cash payment for the shortfall balance owed under the Sponsor Note Payable. In connection with the Business Combination, the Company assumed the remaining balance of a non-interest bearing promissory note with the Sponsor totaling $ 47,347 , which was due on demand (the “Assumed Sponsor Note Payable”). As of September 30, 2025, $ 1,468,690 was outstanding under the Sponsor Note Payable and the Assumed Sponsor Note Payable. As of the issuance date of these condensed consolidated financial statements, the Company is in default of its payment obligations under the Sponsor Note Payable and is in discussions with the Sponsor to extend the maturity date. The Company is currently in default of its payment obligations under Sponsor Note Payable and is in discussions with the Sponsor to extend the maturity of the Sponsor Note Payable. Note 7 – Stockholders’ Equity As discussed in Note 1 and Note 3, on September 30, 2025, the company consummated the Business Combination, which has been accounted for as a reverse recapitalization. Pursuant to the Certificate of Incorporation as amended on September 30, 2025 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the Legacy CFI ordinary shares issued and outstanding prior to September 30, 2025 to give effect to the shares of common stock of the combined entity into which the Legacy CFI’s ordinary share was converted. Preferred Stock: The Company is authorized to issue 40,000,000 shares of preferred stock with a par value of $ 0.0001 per share. The Company’s board of directors is authorized to issue shares of preferred stock in one or more series, fix the number of shares of such series, determine such voting rights and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences. As of September 30, 2025 and December 31, 2024, there were no 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 52,235,000 and 47,689,349 shares were issued and outstanding as of September 30, 2025 and December 31, 2024, respectively. Each common stockholder is entitled to one vote for each share held. Non-monetary Contribution: On May 30, 2024, the Company increased additional-paid in capital by the fair value of a non-monetary contribution of a building and a land use right from the stockholder of Rosy Sea (see Note 10). 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 with a fair value of $ 4,090,000 . These shares of common stock were valued based on the market value of the Company’s common stock price at the issuance date or the date the Company entered into the agreement related to the issuance. The Company will amortize the value of the shares as the services are rendered over a six month term commencing October 1, 2025. As of September 30, 2025, the fair value of the shares was included as a prepaid asset (see Note 4). Note 8 – Warrants Public Warrants: On December 29, 2023, Iron Horse completed an initial public offering that included warrants for shares of common stock (the “Public Warrants”). Each Public Warrant entitles the holder to the right to purchase one share of common stock at an exercise price of $ 11.50 per share. No fractional shares will be issued upon exercise of the Public Warrants. The Company may elect to redeem the Public Warrants, in whole and not in part, at a price of $ 0.01 per Public Warrant if (i) 30 days prior written notice of redemption is provided to the holders, and (ii) the last reported sale price of the Company’s common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ended on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders. On the Closing Date, there were 6,900,000 Public Warrants outstanding. 13 Private Warrants: Simultaneous with Iron Horse’s initial public offering in December 2023, Iron Horse’s sponsor purchased warrants at a purchase price of $ 1.00 per warrant in a private placement (the “Private Warrants”). The Private Warrants have terms and provisions identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period, except that the Private Warrants and the common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or saleable until 30 days after the completion of the Business Combination, subject to limited exceptions. On the Closing Date, there were 2,457,000 Private Warrants outstanding. All warrants were determined to have equity classification at issuance, and as such, were recorded to additional paid-in capital at the time of issuance. In no event will the Company be required to net cash settle any warrant. The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding at September 30, 2025: Warrants Outstanding Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Public Warrants $ 11.50 6,900,000 5.0 $ 11.50 Private Warrants 11.50 2,457,000 5.0 11.50 $ 11.50 9,357,000 5.0 $ 11.50 A summary of warrant activity for the periods presented is as follows: Warrants Weighted-Average Exercise Price Outstanding at December 31, 2024 - $ - Assumed in Business Combination (see Note 3) 9,357,000 11.50 Outstanding at September 30, 2025 9,357,000 $ 11.50 Note 9 – Fair Value Measurements The following table presents information about the Company’s assets that are measured at fair value for the periods presented and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. Level September 30, 2025 December 31, 2024 Marketable securities held in Trust Account 1 2,414,229 $    - Note 10 – Related Party Transactions On May 30, 2024, the stockholder of Rosy Sea contributed to the Company (i) a building with a gross floor area of 4,032.36 square meters and (ii) a land use right for 18,000 square meters that expire in September 2056 , both of which are located in Deliger Industrial Park, Duerbot Mongolian Autonomous County, Daqing City, Heilongjiang Province. The building and land use right (collectively, the “Contributed Assets”) were recorded on the contribution date at fair value of RMB 30,310,000 ($ 4,189,937 at May 30, 2024 and $ 4,225,863 at June 30, 2025, respectively) and RMB 19,860,000 ($ 2,745,369 at May 30, 2024 and $ 2,768,909 at June 30, 2025, respectively), respectively. Determining the fair values of the Contributed Assets requires judgments and the use of significant estimates and assumptions. The Company engaged an independent third-party appraisal firm to assist in the fair value determination of the Contributed Assets on the contribution date. The Contributed Assets were valued using a cost method valuation approach which utilizes assumptions about future economic factors, replacement costs, and depreciation rates relevant to the unique characteristics of the Contributed Assets. Note 11 – Commitments and Contingencies Indemnification Agreements: The Company enters into contractual relationships that contain indemnification provisions in its normal course of business with other parties. The Company may agree to hold other parties harmless against specific losses, such as those that could arise from a breach of representation, covenant, or third-party infringement claims. It may not be possible to determine the maximum potential amount of liability under such indemnification agreements due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, there have been no such indemnification claims. Management believes any liability arising from these agreements will not be material to the Company’s unaudited consolidated financial statements. Legal Matters: The Company is periodically involved in legal proceedings, legal actions, and claims arising in the normal course of business, including proceedings relating to intellectual property, safety and health, employment and other matters. Management believes that the outcome of such legal proceedings, legal actions, and claims will not have a significant adverse effect, individually, or in the aggregate, on the Company’s financial position, results of operations or cash flows. 14 Geographical Data: Primarily all of the Company’s revenue is generated in the PRC and all of the Company’s assets are located in the PRC. Short-term operating leases: In December 2024, the Company renewed the lease for office space for a term of six-months with monthly payments of RMB 13,616 ($ 1,912 at September 30, 2025). Operating lease expense of RMB 27,233 ($ 3,771 at September 30, 2025) for the nine months ended September 30, 2025 is included as a component of general and administrative expenses on the accompanying unaudited condensed consolidated statements of income and comprehensive income. Long-term operating lease: In January 2025, the Company entered a thirty-four month lease for office space of approximately 2,247.34 square meters in Zhuhai, China, expiring December 31, 2027 , with monthly payments of RMB 144,325 ($ 20,272 at September 30, 2025) commencing August 1, 2025. During September 2025, the lease agreement was modified to defer the payment commencement date to November 1, 2025, resulting in a derecognition of $ 58,895 from the right-of-use asset and operating lease obligations. Operating lease expense of RMB 350,534 ($ 48,534 ) and RMB 709,910 ($ 98,300 ) for the three and nine months ended September 30, 2025, respectively, was included as a component of general and administrative expenses on the accompanying unaudited condensed consolidated statements of income and comprehensive income. The weighted-average discount rate used in the lease measurement was 3.1 % at inception and remaining lease-term as September 30, 2025 was 2.25 years. The following tables provides a summary of lease liability maturities as of: September 30, 2025 For the year ending December 31, 2025 $ 40,543 2026 243,261 2027 243,261 Total undiscounted payments 527,065 Less: Imputed interest ( 18,996 ) Total operating lease liability 508,069 Less: Operating lease liability, current portion ( 210,101 ) Operating lease liability, non-current portion $ 297,968 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 related specifically to interim periods. The income tax impact of discrete items is recognized in the period these occur. Our effective tax rate was 29.1 % and 27.0 % for the three and nine months ended September 30, 2025, respectively, and 32.1 % and 28.4 % for the three and nine months ended September 30, 2024, respectively. The primary difference from the corporate income tax rate of 25 % under the PRC Enterprise Income Tax Law (EIT) was i) income tax was calculated on an individual entity basis, and losses in certain subsidiaries reduced consolidated income before tax while the tax expenses of profitable entities remained unchanged; and (ii) income tax was paid based on first-quarter profits, whereas losses occurred in subsequent quarters and such tax payments are generally non-refundable. As a result, total tax expenses were higher relative to consolidated income before tax, leading to a higher effective tax rate. Note 13 – Segment Information The Company reports its results of operations in two operating segments: (i) wholesale distribution segment, which includes product sales made through the Company’s extensive distributor network, and (ii) live-stream sales segment, which includes digital coupon sales made through online platforms. The Company separately reports the results of its corporate division, which primarily consists of expenses associated with corporate functions and projects, certain employee benefits, rent, utilities, depreciation of property, amortization of land use right and intangible asset, interest income, and inter-segment eliminations. This presentation is consistent with the manner in which the CODM reviews the business to assess performance and allocate resources. The CODM uses operating income to allocate resources for each segment on an ongoing basis and to assess the performance for each segment. 15 The following tables include additional information about reported segment revenue, significant segment expenses and segment measure of profitability: For the three months ended September 30, 2025 Wholesale distribution Live-stream sales Corporate Total Revenue: Sale of inventories to distributors $ 7,791,395 $ - $ - $ 7,791,395 Sale of digital coupons to customers - services - 113,670 - 113,670 Total revenue, net 7,791,395 113,670 - 7,905,065 Costs of revenues 2,337,565 - - 2,337,565 Gross profit 5,453,830 113,670 - 5,567,500 Operating expenses: Sales staff costs 48,937 153,604 42,710 245,251 Administrative staff costs 10,752 144,019 76,085 230,856 Outbound transportation expenses 63,358 452 - 63,810 Advertising 14,347 - - 14,347 Depreciation and amortization 7,145 68,114 82,763 158,022 Consulting 11,461 16,456 496 28,413 Research and development costs 37,575 - - 37,575 Marketing expense 54,465 - - 54,465 Sales tax and surcharges 86,421 - - 86,421 Other expenses 1,108 38,560 24,637 64,305 Total operating expenses 335,568 421,206 226,691 983,465 Operating income (loss) 5,118,262 ( 307,536 ) ( 226,691 ) 4,584,035 Total other income (expense), net - - 139,183 139,183 Provision for income tax - - ( 1,378,252 ) ( 1,378,252 ) Net income $ 5,118,262 $ ( 307,536 ) $ ( 1,465,760 ) $ 3,344,966 For the three months ended September 30, 2024 Wholesale distribution Live-stream sales Corporate Total Revenue: Sale of inventories to distributors $ 3,835,199 $ - $ - $ 3,835,199 Sale of digital coupons to customers - services - 456,767 - 456,767 Total revenue, net 3,835,199 456,767 - 4,291,966 Costs of revenues 1,343,843 - - 1,343,843 Gross profit 2,491,356 456,767 - 2,948,123 Operating expenses: Administrative staff costs 52,024 91,180 205,611 348,815 Outbound transportation expenses 2,981 - - 2,981 Advertising - 11,130 - 11,130 Depreciation and amortization 470 470 82,418 83,358 Consulting 41,620 139 - 41,759 Other expenses 145,486 7,384 9,742 162,612 Total operating expenses 242,581 110,303 297,771 650,655 Operating income (loss) 2,248,775 346,464 ( 297,771 ) 2,297,468 Total other income (expense), net - - 13,217 13,217 Provision for income tax - - ( 743,648 ) ( 743,648 ) Net income $ 2,248,775 $ 346,464 $ ( 1,028,202 ) $ 1,567,037 16 For the nine months ended September 30, 2025 Wholesale distribution Live-stream sales Corporate Total Revenue: Sale of inventories to distributors $ 16,217,525 $ - $ - $ 16,217,525 Sale of digital coupons to customers - goods - 3,151,519 - 3,151,519 Sale of digital coupons to customers - services - 515,083 - 515,083 Total revenue, net 16,217,525 3,666,602 - 19,884,127 Costs of revenues 5,386,116 1,934,307 - 7,320,423 Gross profit 10,831,409 1,732,295 - 12,563,704 Operating expenses: Sales staff costs 168,366 496,846 141,907 807,119 Administrative staff costs 20,452 356,867 263,248 640,567 Outbound transportation expenses 104,144 125,638 - 229,782 Advertising 14,587 - - 14,587 Depreciation and amortization 12,646 127,639 248,237 388,522 Consulting 29,529 35,898 60,122 125,549 Research and development costs 96,188 - - 96,188 Marketing expense 223,962 - - 223,962 Sales tax and surcharges 154,446 - - 154,446 Other expenses 142,182 377,135 105,953 625,270 Total operating expenses 966,502 1,520,023 819,467 3,305,992 Operating income (loss) 9,864,907 212,272 ( 819,467 ) 9,257,712 Total other income (expense), net - - 392,637 392,637 Provision for income tax - - ( 2,609,658 ) ( 2,609,658 ) Net income $ 9,864,907 $ 212,272 $ ( 3,036,488 ) $ 7,040,691 For the nine months ended September 30, 2024 Wholesale distribution Live-stream sales Corporate Total Revenue: Sale of inventories to distributors $ 4,676,759 $ - $ - $ 4,676,759 Sale of digital coupons to customers - services - 577,402 - 577,402 Total revenue, net 4,676,759 577,402 - 5,254,161 Costs of revenues 1,786,842 - - 1,786,842 Gross profit 2,889,917 577,402 - 3,467,319 Operating expenses: Administrative staff costs 60,359 114,902 262,402 437,663 Outbound transportation expenses 2,981 - - 2,981 Advertising - 11,130 - 11,130 Depreciation and amortization 506 - 110,518 111,024 Consulting 58,150 139 - 58,289 Other expenses 160,648 7,989 5,126 173,763 Total operating expenses 282,644 134,160 378,046 794,850 Operating income (loss) 2,607,273 443,242 ( 378,046 ) 2,672,469 Total other income (expense), net - - 18,584 18,584 Provision for income tax - - ( 766,803 ) ( 766,803 ) Net income $ 2,607,273 $ 443,242 $ ( 1,126,265 ) $ 1,924,250 Note 14 – Subsequent Events The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than as described below or within these unaudited consolidated financial statements, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the unaudited consolidated financial statements. Following its listing on Nasdaq on October 1, 2025, the Company was notified by Nasdaq that it had received a notification from personnel at the China Securities Regulatory Commission (the “CSRC”) informing Nasdaq that the CSRC had not yet completed its process of review of the Company’s U.S. listing. As a result, Nasdaq has halted trading of the Company’s common stock and warrants while it seeks clarification of these matters from the Company. The Company believes it has satisfied its obligations with respect to the CSRC and has received a legal opinion from its Chinese securities counsel to that effect. The Company has provided Nasdaq with additional documentation and is awaiting further information at this time. 17