8-K: CN Healthy Food Tech Completes Merger, Faces Nasdaq Halt

CN Healthy Food Tech Group Corp. (formerly Iron Horse Acquisitions Corp.) has completed its business combination with Zhong Guo Liang Tou Group Limited, but Nasdaq has halted trading pending regulatory review.

Summary

• CN Healthy Food Tech Group Corp. (formerly Iron Horse Acquisitions Corp.) completed its business combination with Zhong Guo Liang Tou Group Limited on September 30, 2025.
• The combined company's common stock (UCFI) and warrants (UCFIW) commenced trading on Nasdaq on October 1, 2025, but trading was subsequently halted by Nasdaq due to an incomplete review process by the China Securities Regulatory Commission (CSRC).
• Shareholders redeemed 6,701,349 shares for approximately $71.07 million, at $10.60 per share, leaving 51,235,000 shares of Common Stock outstanding post-combination.
• An Amended and Restated Registration Rights Agreement was executed, granting resale registration rights for various securities, including 1,967,000 Founder Shares, 2,457,000 private warrants, Consideration Shares, and 1,000,000 Consulting Shares.
• The company settled a $2,518,500 deferred underwriting commission with D. Boral Capital LLC (DBC) by paying $500,000 in cash and issuing a $2,018,000 promissory note, with 5,000,000 shares reserved as collateral.
• A $3,079,293.09 Sponsor debt was partially repaid with $1,657,949.96 cash, and a $1,421,343.13 promissory note was issued to the Sponsor, with 5,000,000 shares reserved as collateral.
• A $1,000,000 promissory note was issued to Yanjun Jiao to cover closing costs, convertible into 650,000 shares if not repaid by October 13, 2025.
• CFI (Zhong Guo Liang Tou Group Limited) reported significant financial growth for the six months ended June 30, 2025, with revenue increasing by 1,145% to $11.98 million and net income rising by 935% to $3.70 million compared to the same period in 2024.
• CFI's operations commenced in May 2024, and its business focuses on distributing natural, grain-based health foods, blending modern technology with traditional Chinese medicine, through wholesale distribution and live-stream sales segments.

Sentiment

Score: 3

Explanation: While CFI's historical financial performance shows strong growth, the immediate post-merger events, particularly the Nasdaq trading halt due to regulatory review and the significant potential for dilution from multiple promissory notes, create substantial uncertainty and risk, leading to a negative sentiment.

Positives

• CFI (Zhong Guo Liang Tou Group Limited) demonstrated strong financial performance for the six months ended June 30, 2025, with revenue increasing by 1,145% to $11.98 million.
• Net income for CFI grew by 935% to $3.70 million for the six months ended June 30, 2025, compared to the prior year period.
• Gross profit for CFI increased by 1,248% to $6.99 million for the six months ended June 30, 2025.
• CFI has established a substantial R&D function, collaborating with prominent Chinese institutions, and holds 66 trademark rights, 13 patents, and 5 copyrights, with 17 additional patents and licenses under application.
• The company opened a new 2,247.34 square meter office in Hengqin in Q2 2025, supporting live streaming operations and supply chain management, and invested in advanced AI-powered live streaming technology.
• The business combination successfully closed, marking a significant milestone for CFI to enhance market presence and capitalize on growth opportunities.

Negatives

• Nasdaq halted trading in the company's Common Stock and Warrants on October 1, 2025, due to an incomplete review process by the China Securities Regulatory Commission (CSRC).
• The company settled a $2,518,500 deferred underwriting commission with DBC by issuing a $2,018,000 promissory note, with 5,000,000 shares reserved as collateral, indicating significant post-merger debt and potential dilution.
• A $1,421,343.13 promissory note was issued to the Sponsor, also with 5,000,000 shares reserved as collateral, further increasing potential dilution.
• A $1,000,000 promissory note to Yanjun Jiao is convertible into 650,000 shares if not repaid by October 13, 2025, posing additional dilution risk.
• Net cash used in operating activities for CFI was $(1,665,138) for the six months ended June 30, 2025, a significant decrease from $8,070,762 provided in the same period of 2024, despite strong revenue growth.
• The business combination agreement end date was extended multiple times, indicating potential challenges in closing the transaction.

Risks

• The company's ability to meet expectations related to its products, technologies, and services, and to attract and retain revenue-generating customers and execute on growth plans.
• Failure to realize the anticipated benefits of the Business Combination.
• Inability to maintain the listing of securities on Nasdaq due to regulatory review or other factors.
• Costs related to the Business Combination, including legal, accounting, and printing fees.
• 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.
• Challenges in attracting and retaining qualified directors, officers, employees, and key personnel.
• Impact from future regulatory, judicial, and legislative changes in the company's industry.
• Risks related to doing business in China, including regulatory approvals on offshore offerings, anti-monopoly actions, cybersecurity, and data privacy oversight.
• Potential disallowance of the holding company structure by Chinese regulatory authorities, which could materially change operations and security value.
• Uncertainties with respect to the legal system and quickly evolving laws and regulations in mainland China.
• Restrictions on the remittance of Renminbi into and out of China and governmental control of currency conversion, limiting the ability to pay dividends and other obligations.
• Potential classification as a PRC resident enterprise for tax purposes, leading to a 25% enterprise income tax rate on worldwide income.
• Dependence on the ability to attract and retain individual distributors for the wholesale distribution segment and local merchants for the live-stream sales segment.
• Reliance on OEM suppliers for sourcing raw materials and manufacturing, exposing the company to risks of production delays, raw material shortages, and operational inefficiencies.
• Inefficiencies in inventory and order management due to inaccurate demand forecasting or delayed orders by distributors.
• Impact of macroeconomic conditions, including global economics, geopolitical uncertainty, higher labor costs, labor shortages, government regulations, trade restrictions, tariffs, and supply chain challenges.
• Foreign currency translation risk due to operations primarily in Chinese Renminbi (RMB) and reporting in U.S. dollars (USD).

Future Outlook

The company aims to enhance its market presence and capitalize on growth opportunities in the health and biotechnology food sector. It plans to continue scaling and growing its business, expanding product offerings through R&D, and improving live-stream offerings. However, the company acknowledges various risks, including the ability to meet expectations, maintain Nasdaq listing, and navigate complex Chinese regulatory environments.

Management Comments

• "We are pleased to announce the successful completion of our merger, marking a significant step forward in bringing value for our shareholders. We’re so thrilled for the future and showcasing our strengths to the world." Representatives of CFI
• "Today is an incredible blessing. This deal is a testament to God who stood by us every step of the way. The amount of work and sleepless nights that go into arriving at a moment like this can feel daunting and insurmountable, but the Lord shepherded us through each and every moment. I want to thank the entire Iron Horse family who stood by us and worked together endlessly to bring this transaction to market and enhance value for all our shareholders. To God be the glory." Jose A. Bengochea, CEO of Iron Horse

Industry Context

The company operates in the health and wellness food industry, focusing on natural, grain-based health foods and blending modern technology with traditional Chinese medicine. This sector is experiencing rising consumer demand for high-quality nutritional options. The company's strategy to leverage live-stream sales aligns with broader e-commerce and digital marketing trends, particularly prevalent in the Chinese market. However, the regulatory environment in China, especially concerning U.S. listings and data privacy, presents significant industry-specific challenges for China-based issuers.

Comparison to Industry Standards

• The reported revenue growth of 1,145% and net income growth of 935% for CFI (pre-merger) for the six months ended June 30, 2025, are exceptionally high and would significantly outperform most established companies in the health food industry, such as Nestle Health Science or Danone's specialized nutrition division, which typically see single to low-double-digit growth. However, this growth is from a low base as CFI's operations commenced in May 2024, making direct comparison to mature industry players less meaningful for assessing sustainable growth rates.
• The company's investment in R&D, including 39 scientists and numerous patents/trademarks, suggests a commitment to innovation comparable to leading food tech companies, though the scale of investment relative to larger players like Beyond Meat or Impossible Foods is not specified.
• The reliance on OEM suppliers for manufacturing is a common model in the food industry, particularly for emerging brands, but it introduces supply chain risks that larger, vertically integrated competitors mitigate through in-house production or diversified supplier networks.
• The Nasdaq trading halt due to CSRC review is a unique regulatory challenge specific to Chinese companies listing in the U.S., a situation not typically faced by U.S. or European industry peers and highlights the heightened scrutiny in this cross-border context.

Management Changes

Corporate Governance

Legal Proceedings

• The company is periodically involved in legal proceedings, legal actions, and claims arising in the normal course of business, including intellectual property, safety and health, and employment matters. Management believes the outcome will not have a significant adverse effect on financial position, results of operations, or cash flows.

Related Party Transactions

• On May 30, 2024, the stockholder of Rosy Sea contributed a building (valued at $4,189,937) and a land use right (valued at $2,745,369) to the Company.
• The Sponsor (Bengochea SPAC Sponsors I LLC) loaned $650,000 to Iron Horse, partially funded by Mr. Zhenjun Jiang, with a repayment agreement by March 31, 2026, and 200,000 Founder Shares excluded from lock-up as an incentive.
• A $1,421,343.13 senior promissory note was issued to the Sponsor as part of the settlement of CFI's obligation to fund Sponsor payments.
• Consulting Agreements were entered into with Jose A. Bengochea (CEO of former Iron Horse and Sponsor) and William Caragol (CFO of former Iron Horse), providing 500,000 restricted shares each as compensation.

Stakeholder Impact

• **Shareholders**: Existing Iron Horse shareholders who did not redeem their shares now own a smaller percentage of the combined company. New shareholders (from CFI) hold a significant majority. All shareholders face uncertainty due to the Nasdaq trading halt and potential dilution from promissory notes convertible into shares.
• **Employees**: The combined company has a new management team and corporate governance structure, which may impact employees through organizational changes and new policies.
• **Customers**: The company aims to enhance market presence and capitalize on growth opportunities, potentially leading to new products and improved services, particularly in the health and wellness food sector and live-stream sales.
• **Suppliers**: The company's reliance on OEM suppliers means their operations are critical to the company's ability to meet demand and maintain product quality. Supplier relationships are formalized through three-year supply agreements.
• **Creditors**: D. Boral Capital LLC and the Sponsor are now creditors holding promissory notes, with significant share reserves as collateral, providing them with a strong position in case of default.

Next Steps

• The company must address Nasdaq's concerns regarding the China Securities Regulatory Commission (CSRC) review to lift the trading halt.
• The company needs to file a shelf registration statement covering Registrable Securities no later than October 20, 2025.
• The company must repay the $1,000,000 Jiao Note by October 13, 2025, to avoid conversion into shares.
• The company must repay the $1,421,343.13 Sponsor Promissory Note by November 15, 2025, to avoid issuance of reserved shares.
• The company must repay the $2,018,000 DBC Promissory Note by November 17, 2025, to avoid issuance of reserved shares.
• Jose A. Bengochea and William Caragol will provide advisory services for a six-month term post-Closing under their Consulting Agreements.

Key Dates

Recommendation

Despite strong historical financial performance from CFI, the immediate post-merger events present severe red flags for investors. The Nasdaq trading halt due to an incomplete CSRC review creates significant regulatory uncertainty and liquidity risk, as shares cannot be traded. Furthermore, the company has issued multiple promissory notes totaling over $4.4 million, with substantial share reserves (5 million for DBC, 5 million for Sponsor, 650,000 for Jiao Note) that could lead to massive dilution if these notes are not repaid in cash. This combination of regulatory uncertainty, immediate illiquidity, and high potential for dilution makes the stock a 'strong sell' for any seasoned investor seeking stability and clear growth prospects.

Keywords

CN Healthy Food Tech Group Corp, Zhong Guo Liang Tou Group Limited, Iron Horse Acquisitions Corp, SPAC, Business Combination, Nasdaq Halt, SEC Filing, Registration Rights, Promissory Notes, Dilution, Health Food Industry, China Market, Regulatory Risk, Financial Performance, Corporate Governance