What changed in this filing

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Item 1. Financial Statements

2025-08-11 compared with 2025-05-12 · 139 added, 99 removed, 518 unchanged (31% of the section changed)

4 unchanged sentences

(In thousands, except share data)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

CURRENT ASSETS:

40 unchanged sentences

100,000,000 shares authorized;

54,735,073 and 54,735,073 shares issued and 52,737,650 and 52,737,650 shares outstanding as of March 31, 2025 and December 31, 2024, respectively

55,012,128 and 54,735,073 shares issued and 53,014,705 and 52,737,650 shares outstanding as of June 30, 2025 and December 31, 2024, respectively

Treasury stock, at cost;

1,997,423 shares as of March 31, 2025 and December 31, 2024

1,997,423 shares as of June 30, 2025 and December 31, 2024

( 7,750 ) ( 7,750 )

9 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net revenue - third parties $ 313,550 $ 301,331 $ 611,023 $ 596,167

6 unchanged sentences

Distribution, selling and administrative expenses 51,013 49,840 100,818 100,336

INCOME (LOSS) FROM OPERATIONS 1,154 ( 85 )

INCOME FROM OPERATIONS

4,119 2,625 5,273 2,540

Interest expense 2,817 3,119 5,426 5,953

Other income, net ( 177 ) ( 94 )

Other (income) expense, net

( 414 ) 3,466 ( 591 ) 3,372

Change in fair value of interest rate swap contracts 685 ( 361 ) 1,869 ( 2,331 )

Lease guarantee income — ( 5,433 ) — ( 5,548 )

LOSS BEFORE INCOME TAXES ( 2,462 ) ( 740 )

Income tax benefit ( 932 ) ( 181 )

NET LOSS AND COMPREHENSIVE LOSS ( 1,530 ) ( 559 )

net income attributable to noncontrolling interests 115 135

NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO HF FOODS GROUP INC.

INCOME (LOSS) BEFORE INCOME TAXES

1,031 1,834 ( 1,431 ) 1,094

LOSS PER COMMON SHARE - BASIC $ ( 0.03 ) $ ( 0.01 )

LOSS PER COMMON SHARE - DILUTED $ ( 0.03 ) $ ( 0.01 )

Income tax expense (benefit)

521 1,599 ( 411 ) 1,418

NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

510 235 ( 1,020 ) ( 324 )

net (loss) income attributable to noncontrolling interests

( 706 ) 218 ( 591 ) 353

NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HF FOODS GROUP INC.

$ 1,216 $ 17 $ ( 429 ) $ ( 677 )

EARNINGS (LOSS) PER COMMON SHARE - BASIC

$ 0.02 $ — $ ( 0.01 ) $ ( 0.01 )

EARNINGS (LOSS) PER COMMON SHARE - DILUTED

$ 0.02 $ — $ ( 0.01 ) $ ( 0.01 )

WEIGHTED AVERAGE SHARES - BASIC 52,969,037 52,585,715 52,853,982 52,370,842

5 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

26 unchanged sentences

Cash flows from financing activities:

Payments for tax withholding related to vested stock awards ( 156 ) ( 128 )

Proceeds from line of credit 631,713 735,717

3 unchanged sentences

Repayment of obligations under finance leases ( 3,070 ) ( 1,737 )

Net cash used in financing activities ( 1,752 ) ( 5,656 )

Net increase in cash 1,632 2,983

Net cash (used in) provided by financing activities

( 2,693 ) 3,126

Net increase (decrease) in cash

1,183 ( 1,264 )

Cash at beginning of the period 14,467 15,232

3 unchanged sentences

Property acquired in exchange for finance leases 13,596 9,218

Dissolution of noncontrolling interests — 772

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

16 unchanged sentences

Balance at March 31, 2024 54,153,391 $ 5 1,997,423 $ ( 7,750 ) $ 603,832 $ ( 309,382 ) $ 286,705 $ 1,457 $ 288,162

— — — — — 17 17 218 235

Issuance of common stock pursuant to equity compensation plan 555,181 — — — — — — — —

Shares withheld for tax withholdings on vested awards ( 40,403 ) — — — ( 128 ) — ( 128 ) — ( 128 )

Dissolution of noncontrolling interests — — — — ( 772 ) — ( 772 ) 772 —

Stock-based compensation — — — — 522 — 522 — 522

Balance at June 30, 2024 54,668,169 $ 5 1,997,423 $ ( 7,750 ) $ 603,454 $ ( 309,365 ) $ 286,344 $ 2,447 $ 288,791

Balance at January 1, 2025 54,735,073 $ 5 1,997,423 $ ( 7,750 ) $ 604,235 $ ( 357,199 ) $ 239,291 $ 2,003 $ 241,294

2 unchanged sentences

Balance at March 31, 2025 54,735,073 $ 5 1,997,423 $ ( 7,750 ) $ 604,609 $ ( 358,844 ) $ 238,020 $ 2,118 $ 240,138

Net income (loss)

— — — — — 1,216 1,216 ( 706 ) 510

Issuance of common stock pursuant to equity compensation plan 316,251 — — — — — — — —

Shares withheld for tax withholdings on vested awards ( 39,196 ) — — — ( 156 ) — ( 156 ) — ( 156 )

Stock-based compensation — — — — 625 — 625 — 625

Balance at June 30, 2025 55,012,128 $ 5 1,997,423 $ ( 7,750 ) $ 605,078 $ ( 357,628 ) $ 239,705 $ 1,412 $ 241,117

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

16 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

For consolidated entities where we own or are exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interests in its condensed consolidated statements of operations and comprehensive loss equal to the percentage of the economic or ownership interest retained in such entity by the respective noncontrolling party.

For consolidated entities where we own or are exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interests in its condensed consolidated statements of operations and comprehensive income (loss) equal to the percentage of the economic or ownership interest retained in such entity by the respective noncontrolling party.

Reclassifications

1 unchanged sentence

Prior periods amounts were reclassified to conform to the current period presentation.

The reclassification did not impact condensed consolidated balance sheets or condensed consolidated statements of operations and comprehensive loss.

The reclassification did not impact condensed consolidated balance sheets or condensed consolidated statements of operations and comprehensive income (loss).

Variable Interest Entities

3 unchanged sentences

If deemed the primary beneficiary, the Company consolidates the VIE.

For the quarter ended March 31, 2025, the Company had no VIEs.

For the quarter ended June 30, 2025, the Company had no VIEs.

The Company had one VIE, AnHeart, Inc.

4 unchanged sentences

GAAP requires that noncontrolling interests in subsidiaries and affiliates be reported in the equity section of the Company’s condensed consolidated balance sheets.

In addition, the amounts attributable to the net income (loss) of those noncontrolling interests are reported separately in the condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2025 and December 31, 2024, noncontrolling interest equity consisted of the following:

In addition, the amounts attributable to the net income (loss) of those noncontrolling interests are reported separately in the condensed consolidated statements of operations and comprehensive income (loss).

As of June 30, 2025 and December 31, 2024, noncontrolling interest equity consisted of the following:

($ in thousands) Ownership of

noncontrolling interest at March 31, 2025

March 31, 2025 December 31, 2024

noncontrolling interest at June 30, 2025

June 30, 2025 December 31, 2024

Min Food, Inc.

25 unchanged sentences

The following table presents the Company’s net revenue disaggregated by principal product categories:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands) 2025 2024 2025 2024

8 unchanged sentences

Accounts receivable, net consisted of the following:

(In thousands) March 31, 2025 December 31, 2024

(In thousands) June 30, 2025 December 31, 2024

Accounts receivable $ 54,257 $ 55,664

2 unchanged sentences

Movement of allowance for expected credit losses was as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2025 2024

4 unchanged sentences

Prepaid expenses and other current assets consisted of the following:

(In thousands) March 31, 2025 December 31, 2024

(In thousands) June 30, 2025 December 31, 2024

Prepaid expenses $ 1,878 $ 4,443

3 unchanged sentences

Property and equipment, net consisted of the following:

(In thousands) March 31, 2025 December 31, 2024

(In thousands) June 30, 2025 December 31, 2024

Automobiles (1)

12 unchanged sentences

_________________

(1) The cost and accumulated depreciation of property and equipment related to finance leases was $ 46.1 million and $ 15.6 million, respectively, at March 31, 2025 and $ 36.1 million and $ 14.3 million, respectively, at December 31, 2024.

The total future minimum lease payments under all finance leases as of March 31, 2025 is $ 47.9 million.

Depreciation expense was $ 2.9 million and $ 2.6 million for the three months ended March 31, 2025 and 2024, respectively.

(1) The cost and accumulated depreciation of property and equipment related to finance leases was $ 49.5 million and $ 17.5 million, respectively, at June 30, 2025 and $ 36.1 million and $ 14.3 million, respectively, at December 31, 2024.

The total future minimum lease payments under all finance leases as of June 30, 2025 is $ 47.1 million.

Depreciation expense was $ 3.2 million and $ 2.5 million for the three months ended June 30, 2025 and 2024, respectively.

Depreciation expense was $ 6.1 million and $ 5.1 million for the six months ended June 30, 2025 and 2024, respectively.

Long-term investments consisted of the following:

(In thousands) Ownership as of March 31,

2025 March 31, 2025 December 31, 2024

(In thousands) Ownership as of June 30,

2025 June 30, 2025 December 31, 2024

Asahi Food, Inc.

4 unchanged sentences

The investment in Asahi is accounted for under the equity method due to the fact that the Company has significant influence but does not exercise control over this investee.

The Company determined there was no impairment for the three months ended March 31, 2025 and 2024 for these investments.

The Company determined there was no impairment for the three months ended June 30, 2025 and 2024 for these investments.

Accrued expenses and other liabilities consisted of the following:

(In thousands) March 31, 2025 December 31, 2024

(In thousands) June 30, 2025 December 31, 2024

Accrued compensation $ 7,164 $ 7,497

7 unchanged sentences

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the dates indicated:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

14 unchanged sentences

(In thousands) Level 1 Level 2 Level 3 Carrying Value

March 31, 2025

June 30, 2025

Fixed rate debt:

17 unchanged sentences

The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.

No adjustments to fair value from the write-down of asset values due to impairment were made during the three months ended March 31, 2025 and 2024.

No adjustments to fair value from the write-down of asset values due to impairment were made during the six months ended June 30, 2025 and 2024.

As further disclosed in Note 6 - Goodwill and Acquired Intangible Assets, we performed a quantitative goodwill impairment analysis as of December 31, 2024.

2 unchanged sentences

The calculation of the fair value of our reporting unit was determined using Level 3 fair value measurements due to its use of internal projections and unobservable measurement inputs.

There were no assets that were carried at nonrecurring fair value at March 31, 2025.

There were no assets that were carried at nonrecurring fair value at June 30, 2025.

There were no assets carried at nonrecurring fair value other than goodwill at December 31, 2024.

Note 6 - Goodwill and Acquired Intangible Assets

There is only one reporting unit at March 31, 2025 and December 31, 2024.

There is only one reporting unit at June 30, 2025 and December 31, 2024.

The Company tests goodwill for impairment at least annually, as of December 31, or whenever events or changes in circumstances indicated goodwill might be impaired.

As a result of continued declines in the level of stock price, the Company performed a quantitative impairment assessment as of December 31, 2024.

As a result of the declines in the level of stock price prior to year end, the Company performed a quantitative impairment assessment as of December 31, 2024.

The results of the testing as of December 31, 2024, concluded that the estimated fair value of the reporting unit fell short of carrying value, and therefore impairment existed as of that date.

A goodwill impairment charge of $ 46.3 million was recorded in the fourth quarter during the year ended December 31, 2024.

For the December 31, 2024 impairment test, the Company used a combination of discounted cash flow (“DCF”) model and market approaches, such as public company comparable analysis and comparable acquisitions analysis to determine fair value of the reporting unit.

The income approach and market approaches were weighted equally to estimate fair value.

The income approach requires detailed forecasts of cash flows, including assumptions such as revenue growth rates, gross profit margins, distribution, selling and administrative expenses, among other assumptions, and an estimate of weighted-average cost of capital which the Company believes approximate the assumptions from a market participant’s perspective.

The market approaches are primarily impacted by an enterprise value multiple of EBITDA.

These estimates incorporate many uncertain factors which could be impacted by changes in market conditions, interest rates, growth rate, tax rates, costs, customer behavior, regulatory environment and other macroeconomic changes.

In addition, the Company considered the reasonableness of the fair value of the reporting unit by assessing the implied enterprise value control premium based on the Company’s market capitalization.

The Company determined that the implied control premium was reasonable which corroborates the Company’s fair value estimates.

Assumptions used in impairment testing are made at a point in time and require significant judgment;

2 unchanged sentences

If, in future periods, the financial performance of the reporting unit does not meet forecasted expectations, or a prolonged decline occurs in the market price of the Company’s common stock, it may cause a change in the results of the impairment assessment and, as such, could result in further impairment of goodwill.

The Company determined that there were no events or circumstances during the three months ended March 31, 2025 that would more likely than not reduce the fair value of the reporting unit below its carrying value.

Goodwill was $ 38.8 million as of March 31, 2025 and December 31, 2024.

The Company determined that there were no events or circumstances during the six months ended June 30, 2025 that would more likely than not reduce the fair value of the reporting unit below its carrying value.

Goodwill was $ 38.8 million as of June 30, 2025 and December 31, 2024.

Acquired Intangible Assets

The components of the intangible assets are as follows:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

(In thousands) Gross

6 unchanged sentences

Customer relationships 185,266 ( 53,934 ) 131,332 185,266 ( 48,651 ) 136,615

Inventory Management System 5,667 ( 138 ) 5,529 — — —

Total $ 239,032 $ ( 79,640 ) $ 159,392 $ 233,365 $ ( 71,839 ) $ 161,526

Amortization expense for acquired intangible assets was $ 3.9 million and $ 4.1 million for the three months ended March 31, 2025 and 2024, respectively.

Amortization expense for acquired intangible assets was $ 3.9 million and $ 4.1 million for the three months ended June 30, 2025 and 2024.

Amortization expense for acquired intangible assets was $ 7.8 million and $ 8.1 million for the six months ended June 30, 2025 and 2024.

Note 7 - Derivative Financial Instruments

12 unchanged sentences

The Company evaluated the aforementioned IRS contracts currently in place and did not designate those as cash flow hedges.

Hence, the fair value changes of these IRS contracts are accounted for and recognized as a change in fair value of interest rate swap contracts in the condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2025, the Company determined that the fair values of the IRS contracts were $ 0.4 million in an asset position and $ 1.0 million in a liability position.

As of June 30, 2025, the Company determined that the fair values of the IRS contracts were $ 0.3 million in an asset position and $ 1.6 million in a liability position.

As of December 31, 2024, the fair values of the IRS contracts were $ 0.5 million in an asset position and none in a liability position.

1 unchanged sentence

Note 8 - Debt

Long-term debt at March 31, 2025 and December 31, 2024 is summarized as follows:

Long-term debt at June 30, 2025 and December 31, 2024 is summarized as follows:

($ in thousands)

Bank Name Maturity Interest Rate at March 31, 2025

March 31, 2025 December 31, 2024

Bank Name Maturity Interest Rate at June 30, 2025

June 30, 2025 December 31, 2024

Bank of America (a)

16 unchanged sentences

Balloon payments of $ 1.8 million and $ 3.0 million are due at maturity in 2027 and 2029, respectively.

(c) Real estate term loan with a principal balance of $ 100.0 million as of March 31, 2025 and $ 101.3 million as of December 31, 2024 is secured by assets held by the Company and has a maturity date of January 2030.

(c) Real estate term loan with a principal balance of $ 98.7 million as of June 30, 2025 and $ 101.3 million as of December 31, 2024 is secured by assets held by the Company and has a maturity date of January 2030.

The terms of the various loan agreements related to long-term bank borrowings require the Company to comply with certain financial covenants, including, but not limited to, a fixed charge coverage ratio and effective tangible net worth.

As of March 31, 2025, the Company was in compliance with its covenants.

As of June 30, 2025, the Company was in compliance with its covenants.

Credit Facility

2 unchanged sentences

On February 6, 2024, the Company amended the Third Amended Credit Agreement to (i) remove a cap on permitted indebtedness in respect of capital lease obligations, subject to certain enumerated conditions;

(ii) create a reserve on the borrowing base, which will be reduced on a dollar-for-dollar basis once the Company has made expenditures in excess of such amount relating to the development and construction of certain real property, and which amounts shall be excluded from certain financial covenants under the Third Amended Credit Agreement and;

under the Third Amended Credit Agreement and;

(iii) remove certain sublease income from various financial covenants.

3 unchanged sentences

to the credit agreement as a “Lender” thereunder, (iv) amending certain affirmative covenants commensurate with the increase in the Revolving Facility, and (v) amending certain restrictions regarding incurring obligations under real property leases and equipment financings in the ordinary course of business.

As of March 31, 2025, the Company was in compliance with its covenants.

The outstanding principal balance on the line of credit as of March 31, 2025 was $ 58.6 million and outstanding letters of credit amounted to $ 6.4 million leaving access to approximately $ 60.0 million in additional funds through our $ 125.0 million line of credit, subject to a borrowing base calculation.

As of June 30, 2025, the Company was in compliance with its covenants.

The outstanding principal balance on the line of credit as of June 30, 2025 was $ 60.8 million and outstanding letters of credit amounted to $ 6.4 million leaving access to approximately $ 57.8 million in additional funds through our $ 125.0 million line of credit, subject to a borrowing base calculation.

Note 9 - Earnings (Loss) Per Share

4 unchanged sentences

Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

There were 1,446,582 and 1,470,541 potential common shares related to performance-based restricted stock units and restricted stock units that were excluded from the calculation of diluted EPS for the three months ended March 31, 2025 and 2024, respectively, because their effect could have been anti-dilutive.

There were 1,305,105 and 1,354,908 potential common shares related to performance-based restricted stock units and restricted stock units that were excluded from the calculation of diluted EPS for the six months ended June 30, 2025 and 2024, respectively, because their effect could have been anti-dilutive.

The following table sets forth the computation of basic and diluted EPS:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands, except share and per share data) 2025 2024 2025 2024

Net loss attributable to HF Foods Group Inc.

Net income (loss) attributable to HF Foods Group Inc.

$ 1,216 $ 17 $ ( 429 ) $ ( 677 )

2 unchanged sentences

Weighted-average dilutive shares outstanding 53,414,715 52,661,119 52,853,982 52,370,842

Loss per common share:

Earnings (Loss) per common share:

Basic $ 0.02 $ — $ ( 0.01 ) $ ( 0.01 )

5 unchanged sentences

Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company’s effective income tax rate in the future.

As of March 31, 2025, the Company had one subsidiary outside the U.S.

However, the foreign subsidiary did not record any activity as of March 31, 2025.

As of June 30, 2025, the Company had one subsidiary outside the U.S.

that generated an insignificant amount of activity.

As such, no foreign income tax was recorded.

For the three months ended March 31, 2025 and 2024, the Company’s effective income tax rate of 37.9 % and 24.5 %, respectively, differed from the federal statutory tax rate primarily as a result of permanent differences and state income taxes, partially offset by tax credits.

For the three and six months ended June 30, 2025, the Company’s effective income tax rate of 50.5 % and 28.7 %, respectively, differed from the federal statutory tax rate primarily as a result of permanent differences and state income taxes, partially offset

by tax credits.

The company’s tax provision for the three and six months ended June 30, 2025 includes a discrete tax expense of $ 500 related to stock-based compensation shortfalls.

For the three and six months ended June 30, 2024, the Company’s effective income tax rate of 87.2 % and 129.6 %, respectively, differed from the federal statutory tax rate primarily as a result of discrete tax items, permanent differences and state income taxes.

The Company’s tax provision for the three and six months ended June 30, 2024 included a discrete tax expense of $ 1.0 million related to the Company’s SEC settlement and $ 0.1 million tax expense related to stock-based compensation shortfalls.

Absent the discrete items, the estimated annual effective income tax rate from continuing operations for the three and six months ended June 30, 2024 was 25.5 % and 25.1 %, respectively.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company is currently evaluating the impact of the new legislation but does not expect it to have a material impact on its consolidated financial statements.

Note 11 - Related Party Transactions

1 unchanged sentence

Related party affiliations were attributed to transactions conducted between the Company and those business entities partially or wholly owned by the Company, the Company’s officers and/or shareholders who owned no less than 10 % shareholdings of the Company.

The Company believes that Mr.

Xiao Mou Zhang (“Mr.

Zhang”), the former Chief Executive Officer through October 24, 2024 and current Director on the board of directors of the Company, and certain of his immediate family members have ownership interests in various related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors.

Zhang”), the former Chief Executive Officer through October 24, 2024, together with certain of his immediate family members are collectively beneficial owners of more than 10 % of the Company’s outstanding common stock, and they have ownership interests in various related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors.

Zhang does not have any involvement in negotiations with any of the above-mentioned related parties.

3 unchanged sentences

Ni’s four children, are collectively beneficial owners of more than 10 % of the outstanding shares of the Company’s common stock, and he and certain of his immediate family members have ownership interests in related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors.

The related party transactions as of March 31, 2025 and December 31, 2024 and for the three months ended March 31, 2025, and 2024, are identified as follows:

The related party transactions as of June 30, 2025 and December 31, 2024 and for the three and six months ended June 30, 2025, and 2024, are identified as follows:

Related Party Sales, Purchases, and Lease Agreements

Below is a summary of purchases of goods and services from related parties recorded for the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended March 31,

Below is a summary of purchases of goods and services from related parties recorded for the three and six months ended June 30, 2025 and 2024, respectively:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) Nature 2025 2024 2025 2024

3 unchanged sentences

Trade 41 60 114 140

5 unchanged sentences

Zhou Min Ni owns an equity interest in this entity.

Below is a summary of sales to related parties recorded for the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended March 31,

Below is a summary of sales to related parties recorded for the three months ended June 30, 2025 and 2024, respectively:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2025 2024 2025 2024

1 unchanged sentence

(b) Asahi Food, Inc.

235 148 387 287

(a) Conexus Food Solutions LLC (formerly known as Best Food Services, LLC) 498 335 840 588

1 unchanged sentence

Ocean Pacific Seafood Group, Inc.

Total $ 1,303 $ 1,011 $ 2,258 $ 1,829

4 unchanged sentences

Zhou Min Ni owns an equity interest in this entity indirectly through its parent company.

Zhou Min Ni owns an equity interest in this entity.

Lease Agreements

3 unchanged sentences

In February 2021, the Company executed a new five-year operating lease agreement with Yoan Chang Trading Inc., effective January 1, 2021 and expiring on December 31, 2025.

Rent expense was $ 0.1 million for the three months ended March 31, 2025 and 2024, respectively, which is included in distribution, selling and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.

Rent expense, which is included in distribution, selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss), was $ 0.1 million for both the three months ended June 30, 2025 and 2024, and $ 0.2 million for both the six months ended June 30, 2025 and 2024.

Beginning 2014, the Company leased a warehouse to Asahi Food, Inc.

2 unchanged sentences

The lease term was extended by an addendum dated September 1, 2023, which extended the lease through September 1, 2025.

Rental income was $ 36 thousand for the three months ended March 31, 2025 and 2024, respectively, which is included in other expense (income), net in the condensed consolidated statements of operations and comprehensive loss.

Rental income was $ 36 thousand for both the three months ended June 30, 2025 and 2024, and $ 72 thousand for both the six months ended June 30, 2025 and 2024, which is included in other expense (income), net in the condensed consolidated statements of operations and comprehensive income (loss).

Related Party Balances

Accounts Receivable - Related Parties, Net

Below is a summary of accounts receivable with related parties recorded as of March 31, 2025 and December 31, 2024, respectively:

(In thousands) March 31, 2025 December 31, 2024

Below is a summary of accounts receivable with related parties recorded as of June 30, 2025 and December 31, 2024, respectively:

(In thousands) June 30, 2025 December 31, 2024

(a) ABC Food Trading, LLC $ 58 $ 155

(b) Asahi Food, Inc.

(a) Conexus Food Solutions LLC (formerly known as Best Food Services, LLC) 236 —

Total $ 409 $ 239

4 unchanged sentences

All accounts receivable from these related parties are current and considered fully collectible.

No additional allowance is deemed necessary as of March 31, 2025 and December 31, 2024.

No additional allowance is deemed necessary as of June 30, 2025 and December 31, 2024.

Line of Credit Note - Related Parties

The Company issued a $ 51,000 line of credit note to Asahi Food, Inc.

on November 1, 2024, which is outstanding at March 31, 2025 and included in other current assets in the consolidated balance sheet.

on November 1, 2024, which is outstanding at June 30, 2025 and included in other current assets in the consolidated balance sheet.

Interest shall accrue at a rate of 7.25 % per annum with monthly payments of interest only due beginning December 1, 2024 and continuing through the first day of each calendar month until the maturity date of October 31, 2025.

Interest income was $ 1,233 for the three months ended March 31, 2025, which is included in other income, net in the condensed consolidated statements of operations and comprehensive loss.

Interest income was $ 924 and $ 2,157 for the three and six months ended June 30, 2025, which is included in other income, net in the condensed consolidated statements of operations and comprehensive income (loss).

Accounts Payable - Related Parties

All the accounts payable to related parties are payable upon demand without interest.

Below is a summary of accounts payable with related parties recorded as of March 31, 2025 and December 31, 2024, respectively:

(In thousands) March 31, 2025 December 31, 2024

Below is a summary of accounts payable with related parties recorded as of June 30, 2025 and December 31, 2024, respectively:

(In thousands) June 30, 2025 December 31, 2024

(a) Conexus Food Solutions LLC (formerly known as Best Food Services, LLC) $ 229 $ 35

7 unchanged sentences

On June 3, 2024, the Company’s shareholders approved an amendment to the 2018 Incentive Plan which increased the number of shares of the Company’s common stock available for issuance under the 2018 Incentive Plan to 7,000,000 , an increase of 4,000,000 shares.

As of March 31, 2025, the Company had 585,472 time-based vesting restricted stock units unvested, 854,574 performance-based restricted stock units unvested, 1,169,943 shares of common stock vested and 4,390,011 shares remaining available for future awards under the 2018 Incentive Plan.

Stock-based compensation expense was $ 0.4 million and $ 0.7 million for the three months ended March 31, 2025 and 2024, respectively.

Stock-based compensation expense was included in distribution, selling and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive loss.

As of March 31, 2025, there was $ 2.9 million of total unrecognized compensation cost related to all non-vested outstanding RSUs and PSUs outstanding under the 2018 Incentive Plan, with a weighted average remaining service period of 1.98 years.

As of June 30, 2025, the Company had 671,128 time-based vesting restricted stock units unvested, 1,077,464 performance-based restricted stock units unvested, 1,486,194 shares of common stock vested and 3,765,214 shares remaining available for future awards under the 2018 Incentive Plan.

Stock-based compensation expense was $ 0.6 million and $ 0.5 million for the three months ended June 30, 2025 and 2024, respectively.

Stock-based compensation expense was $ 1.0 million and $ 1.3 million for the six months ended June 30, 2025 and 2024, respectively.

Stock-based compensation expense was included in distribution, selling and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income (loss).

As of June 30, 2025, there was $ 4.8 million of total unrecognized compensation cost related to all non-vested outstanding RSUs and PSUs outstanding under the 2018 Incentive Plan, with a weighted average remaining service period of 2.25 years.

Note 13 - Segment Information

5 unchanged sentences

The Company’s measure of segment assets is total assets, as reported on the condensed consolidated balance sheets.

Accounting policies for the company’s single operating segment are the same as those described in Note 2 - Summary of Significant Accounting Policies .

The following table presents selected financial information with respect to the Company’s single operating segment for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2025 and 2024:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2025 2024 2025 2024

1 unchanged sentence

Cost of Revenue 259,721 249,877 507,190 495,120

Operating Expenses:

Payroll and related labor costs 25,644 24,202 50,423 49,069

6 unchanged sentences

Interest expense 2,817 3,119 5,426 5,953

Other income, net ( 177 ) ( 94 )

Other (income) expense, net

( 414 ) 3,466 ( 591 ) 3,372

Change in fair value of interest rate swap contracts 685 ( 361 ) 1,869 ( 2,331 )

Lease guarantee income — ( 5,433 ) — ( 5,548 )

Income tax benefit ( 932 ) ( 181 )

Income tax expense (benefit)

521 1,599 ( 411 ) 1,418

net income attributable to noncontrolling interests ( 706 ) 218 ( 591 ) 353

NET LOSS AND COMPREHENSIVE LOSS ATTRIBUTABLE TO HF FOODS GROUP INC.

NET INCOME AND COMPREHENSIVE INCOME ATTRIBUTABLE TO HF FOODS GROUP INC.

$ 1,216 $ 17 $ ( 429 ) $ ( 677 )

23 unchanged sentences

In March 2024, the Company began construction of a multi-use facility on 273 Fifth Avenue and committed $ 7.0 million for the completion of the construction project.

The Company has incurred $ 6.3 million in construction costs which was recorded in construction in progress within property and equipment, net in the Company’s condensed consolidated balance sheet as of March 31, 2025.

The Company expects to complete construction in June 2025.

The Company has incurred $ 7.2 million in construction costs which was recorded in construction in progress within property and equipment, net in the Company’s condensed consolidated balance sheet as of June 30, 2025.

The Company completed construction as of June 2025 and is currently waiting for final approval on its certificate of occupancy for the building.

On January 17, 2022, the Company received notice that AnHeart had defaulted on its obligations as tenant under the lease for 275 Fifth Avenue.

21 unchanged sentences

The Company shall pay rent of approximately $ 120,000 per month with provisions for yearly increases totaling $ 29.0 million in future minimum lease payments over 15 years.

As of March 31, 2025, the current portion and non-current portion of obligations under all operating leases was $ 4.3 million and $ 25.6 million, respectively.

As of March 31, 2025, the Company had additional automobile leases that had not yet commenced which total $ 3.3 million in future minimum lease payments.

As of June 30, 2025, the current portion and non-current portion of obligations under all operating leases was $ 4.3 million and $ 24.9 million, respectively.

As of June 30, 2025, the Company had additional automobile leases that had not yet commenced which total $ 0.8 million in future minimum lease payments.

Note 15 - Subsequent Events

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements