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What changed in HF Foods Group Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of HF Foods Group Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+212 added−221 removedSource: 10-K (2026-03-16) vs 10-K (2025-03-17)

Top changes in HF Foods Group Inc.'s 2025 10-K

212 paragraphs added · 221 removed · 136 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe following table sets forth our broad range of products and sales percentage by category for the year ended December 31, 2024: Category Description Percentage Seafood Lobster, shrimp, crab, scallops and fish, such as tuna and Alaskan salmon 33% Asian Specialty Products with an Asian flair or flavor, including specialty noodles, rice, dry goods, such as dried mushrooms or dried beans, specialty sauces/seasonings, spring rolls, and canned products, such as preserved vegetables, bamboo shoots and water chestnuts 25% Meat and Poultry Beef, pork, chicken and duck 21% Fresh Produce Fresh, seasonal fruits and vegetables, such as celery, napa cabbage and winter melon which are widely used in Asian cuisines 11% Packaging and Other Take-out accessories for customers, from bamboo chopsticks to takeout containers, plastic cups and sushi combo boxes 5% Commodity General commodities including oil, flour, salt and sugar 5% Our extensive supplier network and long-standing relationships with key suppliers strengthen our negotiating power, allowing us to procure large quantities efficiently through our centralized inventory system.
Biggest changeWe also source a significant amount of product through imports, including frozen seafood, Asian specialty items, packaging, and other commodities. 3 The following table sets forth our product categories and sales percentage by category for the year ended December 31, 2025: Category Description Percentage Seafood Lobster, shrimp, crab, scallops and fish, such as tuna and Alaskan salmon 36% Meat and Poultry Beef, pork, chicken and duck 22% Asian Specialty Products with an Asian flair or flavor, including specialty noodles, rice, dry goods (such as dried mushrooms or dried beans), specialty sauces/seasonings, spring rolls, and canned products (such as preserved vegetables, bamboo shoots and water chestnuts) 18% Commodity General commodities including oil, flour, salt and sugar 10% Fresh Produce Fresh, seasonal fruits and vegetables, such as celery, napa cabbage and winter melon which are widely used in Asian cuisines 9% Packaging and Other Take-out accessories, including bamboo chopsticks, takeout containers, plastic cups and sushi combo boxes 5% Our supplier network and long-standing relationships with key suppliers strengthen our purchasing capabilities and negotiating position, enabling us to procure product efficiently and support consistent product availability.
The information contained on or accessible through our corporate website or any other website that we may maintain is not incorporated by reference into and is not part of this Annual Report on Form 10-K.
The information contained on or accessible through our corporate website or any other website that we may maintain is not incorporated by reference into and is not part of this Annual Report on Form 10-K. 10
The fragmented nature of the Asian foodservice market creates acquisition opportunities for us to continue to expand our geographic footprint and customer base. 4 Competitive Advantages over New Entrants . Each distribution center requires a large amount of invested capital to support the full temperature-controlled logistics and warehouse operations to help customers grow their sales and profit.
The fragmented nature of the Asian foodservice market creates acquisition opportunities for us to continue to expand our geographic footprint and customer base. Competitive Advantages over New Entrants . Each distribution center requires a large amount of invested capital to support the full temperature-controlled logistics and warehouse operations to help customers grow their sales and profit.
Consolidated purchasing allows us to pass on cost savings to our customers and provide competitive pricing. We believe our continued investment in technology will lead to long-term expense reduction and further administrative efficiency. These competitive advantages result in economies of scale which smaller and fragmented suppliers cannot match. Demand for Value-Added Services .
Consolidated purchasing allows us to pass on cost savings to our customers and provide competitive pricing. We believe our continued investment in technology will lead to long-term expense reduction and further administrative efficiency. These competitive advantages result in economies of scale which smaller and fragmented suppliers cannot match. 5 Demand for Value-Added Services .
He also held various other leadership positions within Blue Bird Corporation in the Manufacturing Operations and Supply Chain Departments from 2015 to 2016, the Finance 8 and Accounting Department in 2011 and from 2013 to 2015, and the International Business Development and M&A Departments in 2012. Mr.
He also held various other leadership positions within Blue Bird Corporation in the Manufacturing Operations and Supply Chain Departments from 2015 to 2016, the Finance and Accounting Department in 2011 and from 2013 to 2015, and the International Business Development and M&A Departments in 2012. Mr.
Department of Transportation, as well as its agencies, the Surface Transportation Board, the Federal Highway Administration, the Federal Motor Carrier Safety Administration, and the National Highway Traffic Safety Administration, which collectively regulate our trucking business through the regulation of operations, safety, insurance and hazardous 7 materials.
Department of Transportation, as well as its agencies, the Surface Transportation Board, the Federal Highway Administration, the Federal Motor Carrier Safety Administration, and the National Highway Traffic Safety Administration, which collectively regulate our trucking business through the regulation of operations, safety, insurance and hazardous materials.
ITEM 1. BUSINESS. Overview HF Foods Group Inc., headquartered in Las Vegas, Nevada, operating through our subsidiaries (collectively “HF Foods” or the “Company”) is a leading marketer and distributor of fresh produce, frozen and dry food, and non-food products to Asian restaurants, as well as other foodservice customers, throughout the United States.
ITEM 1. BUSINESS Overview HF Foods Group Inc., headquartered in Las Vegas, Nevada, operating through our subsidiaries (collectively “HF Foods” or the “Company”) is a leading marketer and distributor of fresh produce, frozen and dry food, and non-food products to Asian restaurants and other foodservice customers throughout the United States.
For the year ended December 31, 2024, the costs of managing our compliance with environmental laws and regulations was nominal. The U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits bribery of public officials to obtain or retain business in foreign jurisdictions.
For the year ended December 31, 2025, the costs of managing our compliance with environmental laws and regulations was nominal. The U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits bribery of public officials to obtain or retain business in foreign jurisdictions.
Inclusion HF Foods was founded by Asian Americans, and throughout our history, we have continued to maintain inclusion as one of our top priorities by providing opportunities to all employees regardless of background. Four out of five members of our Board of Directors are Asian and three out of five are women.
Inclusion HF Foods was founded by Asian Americans, and throughout our history, we have continued to maintain inclusion as one of our top priorities by providing opportunities to all employees regardless of background. Three out of four members of our Board of Directors are Asian or Hispanic.
Yao served as Chief Financial Officer and Executive Vice President for Markel Food Group, a company providing high-quality, innovative automated process solutions, consulting services and technical support to food producers. Prior to that, from 2002 to 2013, Ms.
For the past 10 years, Ms. Yao served as Chief Financial Officer and Executive Vice President for Markel Food Group, a company providing high-quality, innovative automated process solutions, consulting services and technical support to food producers. Prior to that, from 2002 to 2013, Ms.
As of December 31, 2024, we had 1,015 full-time employees, 26 part-time employees and 33 temporary employees through staffing agencies. We offer attractive compensation and benefit packages, and we believe our relationship with our employees is satisfactory.
As of December 31, 2025, we had 949 full-time employees, 6 part-time employees and 33 temporary employees through staffing agencies. We offer attractive compensation and benefit packages, and we believe our relationship with our employees is satisfactory.
Products that are ordered through import brokers have lead times of up to seven days. None of our suppliers accounted for more than 10% of our aggregate purchases during the years ended December 31, 2024 and 2023.
Certain products sourced through import brokers may have lead times of up to seven days. None of our suppliers accounted for more than 10% of our aggregate purchases during the years ended December 31, 2025 and 2024.
Lin received his B.A. in Accounting and Finance from the Eugene Stetson School of Business and Economics at Mercer University in Georgia, a Master’s degree in Accountancy from the J. Whitney Bunting College of Business at Georgia College and State University in Georgia, and a Master’s degree in Business Administration from the University of North Carolina at Chapel Hill.
Lin received his B.A. in Accounting and Finance from the Eugene Stetson School of Business and Economics at Mercer University in Georgia, a Master’s degree in Accountancy from the J.
HF Foods and our products are also subject to state and local regulation through such measures as the licensing of our facilities; enforcement by state and local health agencies of state and local standards for our products; and regulation of our trade practices in connection with the sale of our products.
The FSMA also imposes new requirements for food products imported into the U.S. and provides the FDA with mandatory recall authority. 8 HF Foods and our products are also subject to state and local regulation through such measures as the licensing of our facilities; enforcement by state and local health agencies of state and local standards for our products; and regulation of our trade practices in connection with the sale of our products.
In addition, according to the Pew Research Center, the Asian population in the U.S. is the fastest growing population group in the country. We believe that these powerful trends will continue and result in expanded opportunities for Asian restaurants. As a leading foodservice distributor to Asian restaurants in the U.S., these trends represent a significant growth opportunity for HF Foods.
The demand for Asian cuisines continues to grow in the U.S. In addition, according to the Pew Research Center, the Asian population in the U.S. is the fastest growing population group in the country. We believe that these powerful trends will continue and result in expanded opportunities for Asian restaurants.
Yao holds a Master’s degree in Accounting from the Virginia Polytechnic Institute and State University and an Executive Master’s degree in Business Administration from the Simon Business School of the University of Rochester. Christine Chang has served as General Counsel and Chief Compliance Officer since September 8, 2021. Ms.
Yao holds a Master’s degree in Accounting from the Virginia Polytechnic Institute and State University and an Executive Master’s degree in Business Administration from the Simon Business School of the University of Rochester. Ms.
Cultural Barriers to Entry . Understanding Asian cooking culture is important to running an Asian restaurant, and, therefore, most Asian restaurants are operated by Asian Americans. We believe that it is very difficult for mainstream food distributors to serve these restaurants due to various cultural and language barriers. Highly Fragmented Market .
We believe that it is very difficult for mainstream food distributors to serve these restaurants due to various cultural and language barriers. Highly Fragmented Market .
Recruiting, Training and Development Our ability to continue to retain, attract, and recruit top talent at all levels is key to our future success. In 2024, we implemented a Learning Management System (LMS) to consolidate employee training in the areas of safety, security, and compliance. We continue to transform our operations through new system and process improvements, training and development.
Recruiting, Training and Development Our ability to continue to retain, attract, and recruit top talent at all levels is key to our future success. We continue to transform our operations through new system and process improvements, automation equipment and technology, training and development.
Supported by an extensive supplier network, we aim to provide a one-stop service with on-time delivery and high fulfillment rates, at competitive pricing. We offer over 2,000 different products to our customers, which include virtually all items needed to operate their restaurant business.
Supported by an extensive supplier network, we seek to provide customers with a one-stop purchasing solution with reliable delivery, high order fulfillment rates, and competitive pricing. We offer over 2,000 products, which include a broad range of items required to operate a restaurant.
Our Business and Products Our business features sixteen distribution centers and three cross-docks with a total of approximately 1.3 million square feet of warehouse space and a fleet of over 400 vehicles to provide a wide variety of products with a strong focus on specialty food 2 ingredients essential for Asian cuisine.
Our Business and Products Our business operates a national distribution platform consisting of sixteen distribution centers and four cross-docks, encompassing approximately 1.4 million square feet of warehouse space and supported by a fleet of over 400 vehicles. We distribute a broad assortment of food and non-food products, with a strong focus on specialty ingredients essential for Asian cuisine.
Product offerings range from meat and poultry, perishable fresh produce, frozen seafood, general commodities and takeout food packaging materials to meet our customers’ demands. The majority of our procurement currently consists of goods purchased domestically, such as meat, poultry, produce and certain key commodities.
Our product offerings include meat and poultry, fresh produce, frozen seafood, general commodities, and packaging and other non-food products. The majority of our procurement consists of goods purchased domestically, including meat, poultry, produce, and certain key commodities.
Most of the unique ingredients for Asian cuisine are staple supplies of HF Foods that are not widely available from mainstream U.S. suppliers. Current Industry Landscape and Opportunities Growing Demand in Asian Cuisines . The demand for Asian cuisines continues to grow in the U.S.
It also requires special seasonings and spices, including peanut oil, cooking wine, vinegar, dark soy sauce, black bean sauce, pepper oil and chili oil. Most of the unique ingredients for Asian cuisine are staple supplies of HF Foods that are not widely available from mainstream U.S. suppliers. Current Industry Landscape and Opportunities Growing Demand in Asian Cuisines .
Asian cuisine requires unique cooking techniques such as steaming and stir-frying in a wok, and requires specialty ingredients and vegetables such as bitter melons, Asian yams, vine spinach, napa cabbage and winter melon. It also requires special seasonings and spices, including peanut oil, cooking wine, vinegar, dark soy source, black bean sauce, pepper oil and chili oil.
Unique Cooking Style and Ingredients for Asian Cuisines . Asian cuisine requires unique cooking techniques such as steaming and stir-frying in a wok, and requires specialty ingredients and vegetables such as bitter melons, Asian yams, vine spinach, napa cabbage and winter melon.
Our Strategy We are differentiated from mainstream food distribution companies, such as Sysco Corporation, US Foods Holding Corp. and Performance Food Group Company, through our strong understanding of Asian culture and cooking essentials, distinctive product portfolio, and resourceful supply chains.
Our Strategy We believe we are differentiated from large, mainstream foodservice distributors, such as Sysco Corporation, US Foods Holding Corp. and Performance Food Group Company, by our deep understanding of Asian culture and cooking essentials, a differentiated product portfolio, and specialized sourcing and distribution capabilities tailored to the needs of independent restaurants.
These are the value added services that we are able to provide to our customers in our one-stop shopping offering. Continued Consumer Spending on Food Away From Home .
These are the value added services that we are able to provide to our customers in our one-stop shopping offering. Continued Consumer Spending on Food Away From Home . Restaurant spending has remained resilient as consumer routines have normalized post-pandemic, with consumers continually favoring dining out as part of their routine food consumption.
Primarily Serving Mainstream Americans . There are tens of thousands of Asian restaurants spread throughout the U.S., primarily serving American customers. Although the dishes they serve are more simply and quickly prepared as compared to traditional full-service Asian restaurant cuisine, they still require specialized and distinctive Asian specialty ingredients used in traditional Asian cooking styles. Operated by Individual Families .
Although the dishes they serve are more simply and quickly prepared as compared to traditional full-service Asian restaurant cuisine, they still require specialized and distinctive Asian specialty ingredients used in traditional Asian cooking styles. Operated by Individual Families . Most restaurants serviced by HF Foods are generally family-owned with very few workers, who are often immigrants or first generation Americans.
Corporate History HF Foods was originally incorporated in the State of Delaware on May 19, 2016 as a special purpose acquisition company under the name Atlantic Acquisition Corp. (“Atlantic”), in order to acquire, through a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with, one or more businesses or entities.
(“Atlantic”), in order to acquire, through a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with, one or more businesses or entities.
Most restaurants serviced by HF Foods are generally family-owned with very few workers, who are often immigrants or first generation Americans. These small restaurant owners, especially the founders, appreciate value-added services from suppliers to help them improve their operational efficiency. The owners and workers in these Asian restaurants usually prefer to speak their primary language.
These small restaurant owners, especially the founders, appreciate value-added services from suppliers to help them improve their operational efficiency. The owners and workers in these Asian restaurants usually prefer to speak their primary language. We believe that understanding their culture and language is paramount to facilitating efficient communications and building trust with customers.
Our 100% satisfaction guarantee permits our customers to reject part of the order or the entire order within twenty-four hours of receipt without any penalty. We believe that this refund policy further cements the trust and loyalty of our customers toward our brand and company. Suppliers We consolidate procurement on bulk and frequently sold items.
We also emphasize customer care and satisfaction through a refund policy without penalty. Our 100% satisfaction guarantee permits customers to reject part of an order or an entire order within 24 hours of receipt without penalty, which we believe further strengthens customer trust and loyalty.
Customer Service We employ a two-pronged approach for a complete and cohesive support to both existing and prospective customers; namely, the two outsourced call centers located in Fuzhou, China and the domestic sales team in the U.S. Utilizing these outsourced call centers in China, customers embrace and appreciate our personal customer service conducted in their primary language.
Customer Service We provide comprehensive support to existing and prospective customers through a two-pronged approach: a centralized outsourced call center in Fuzhou, China and our domestic sales team in the United States.
Cindy Yao has served as Chief Financial Officer since May 1, 2024. Ms. Yao joins HF Foods with over three decades of Finance and Accounting leadership experience. For the past 10 years, Ms.
Whitney Bunting College of Business at Georgia College and State University in Georgia, and a Master’s degree in Business Administration from the University of North Carolina at Chapel Hill. 9 Cindy Yao served as Chief Financial Officer from May 1, 2024 until October 15, 2025. Ms. Yao joined HF Foods with over three decades of Finance and Accounting leadership experience.
At the corporate level, over 50% of our director and above positions are held by women. Recent Developments CEO Transition On October 24, 2024, the Board of Directors of the Company terminated Xiao Mou (Peter) Zhang as Chief Executive Officer of the Company, without cause, effective immediately. In connection with Mr.
At the corporate level, over 50% of our director and above positions are held by women. 7 Recent Developments CFO Transition On October 15, 2025 (the “Separation Date”), Cindy Yao, departed from the Company as its Chief Financial Officer. In connection with Ms. Yao’s departure, the Company entered into a Separation Agreement (the “Separation Agreement”) with Ms.
Utilizing our customized information system to share valuable and pertinent information with our customers is important to help them grow their business. This information includes, but is not limited to, purchasing history, order tracking, item availability, items on promotion, and best-selling or trending items.
We believe our cultural understanding and language capabilities enable us to better anticipate customer preferences and operating needs compared to mainstream foodservice distributors. We also leverage our customized information system to share timely and relevant information with customers to help them grow their business, including purchasing history, order tracking, item availability, promotional items, and best-selling or trending products.
Our relationships with suppliers and knowledge of the market are the cornerstones of our negotiating power with suppliers and enable us to better manage potential supply chain disruptions and stockouts, gain price concessions and increase delivery schedules.
Our supplier relationships and market knowledge strengthen our purchasing and negotiating position and support continuity of supply, including improving our ability to manage potential supply chain disruptions, reduce stockouts, obtain pricing concessions, and maintain reliable delivery schedules.
Zhang’s termination was not due to any disagreement with the Company regarding its financial reporting, policies or practices. Mr. Zhang continues to serve as a director on our Board of Directors. Xi Lin (aka Felix Lin) was appointed to serve as Chief Executive Officer, effective January 1, 2025, and has served as President since February 12, 2024.
Information about our Executive Officers Name Age Position Xi Lin 36 President and Chief Executive Officer Cindy Yao 58 Former Chief Financial Officer Paul McGarry 57 Chief Financial Officer Christine Chang 43 Chief Administrative Officer Xi Lin (aka Felix Lin) was appointed to serve as Chief Executive Officer, effective January 1, 2025, and has served as President since February 12, 2024.
Upon receipt of ordered products, the delivery schedule is determined based on the needs of each location. The lead-time for products is dependent on the product 5 category and need. For perishable goods, products are usually delivered by suppliers within seventy-two hours of placing the order.
Procurement personnel may adjust purchasing decisions based on inventory data, forecasted demand, and supplier lead times. Delivery schedules are coordinated based on the needs of each location and product category. Lead times vary by product type and sourcing channel. For perishable goods, suppliers typically deliver products within 72 hours of order placement.
We maintain a large supplier network through a vendor pool with a carefully selected group of suppliers to ensure product quality, availability and competitive pricing. To minimize costs, the procurement team directly manages our major vendors for large and frequent purchases and engages brokers for our smaller suppliers of specialty goods.
We believe this approach enables us to leverage purchasing scale and maintain vendor relationships under a consistent brand. We maintain a broad supplier network that includes domestic and international suppliers. We source from a defined vendor pool to support product quality, availability, and competitive pricing. Our procurement team manages relationships directly with major vendors for high-volume and frequently purchased items.
Full sales support from the beginning of a sales order to post-sales service is offered through these call centers. These services are complemented by our domestic sales teams who make regular on-site visits to customers’ restaurants.
The call center supports customers in their primary language and provides order-taking, customer relationship management, and after-sales service, while our domestic sales team maintains close in-market relationships through regular on-site visits to customers’ restaurants. Together, these teams support the full sales cycle—from initial order through post-sales service—and help strengthen customer rapport and retention.
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HF Foods was formed through a merger between two complementary market leaders, HF Foods and B&R Global Holdings, Inc. (“B&R Global”), on November 4, 2019. With sixteen distribution centers and three cross-docks and a fleet of over 400 vehicles, our distribution network now spans 46 states covering approximately 95% of the contiguous United States.
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We operate a national distribution platform comprised of sixteen distribution centers and four cross-docks, supported by a fleet of over 400 vehicles, which collectively spans 46 states and covers approximately 95% of the contiguous United States.
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Capitalizing on our deep understanding of Asian cultures, strong relationships with growers and suppliers of food products primarily in North America, South America and Asia, with over 1,000 employees, and supported by two outsourced call centers in China, we have become a trusted partner serving approximately 15,000 customer locations throughout the United States.
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We serve approximately 15,000 customer locations through a high-frequency, service-oriented distribution model designed to meet the operational needs of independent restaurants, including timely delivery and consistent product availability.
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We are committed to providing excellent customer service by delivering a distinctive product portfolio built from an indelible partnership with both foreign and domestic suppliers. These relationships ensure that we deliver an outstanding array of products at competitive prices.
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We believe we are differentiated by our deep cultural and language understanding of the Asian restaurant community, long-standing relationships with growers and suppliers, and specialized sourcing capabilities across North America, South America, and Asia.
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We also purchase a significant amount of goods through the import channel, such as frozen seafood, Asian Specialty, packaging and other commodities.
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These strengths are reinforced by nearly 1,000 employees and a centralized outsourced call center in China, which supports order taking and customer service in customers’ primary language and enables coordinated marketing and promotional campaigns.
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This strategic approach enhances inventory turnover, optimizes accounts payable, and lowers operating costs. This gives customers the ability to shift away from fragmented direct-stores and turn to us as their full-service, one-stop solution for the majority of their purchasing needs.
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Our product portfolio is supported by long-term partnerships with both domestic and international suppliers, which we believe enhances our ability to provide a broad and differentiated assortment at competitive prices.
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This initiative is made possible from order placement to delivery due to our warehouse operations, optimized fleet management, material handling equipment and techniques, and efficient administrative and operating staff.
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While Asian restaurants remain our core customer base, we intend to selectively broaden our customer reach into other ethnic and specialty foodservice segments over time as we execute our long-term growth strategy. Corporate History HF Foods was originally incorporated in the State of Delaware on May 19, 2016 as a special purpose acquisition company under the name Atlantic Acquisition Corp.
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This is further complemented by our two outsourced sales call centers located in China which take customers’ inbound calls during non-office hours in the U.S. for order taking, customer relationship management and after-sales service, offering customers a warm and friendly human interaction channel who speak and understand their language and needs.
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We utilize a centralized inventory system to help manage replenishment, optimize inventory levels, and support efficient operations. We believe these capabilities allow customers to consolidate purchasing that might otherwise be sourced from multiple vendors. Our operations support the full order-to-delivery process through warehouse execution, fleet management, material handling equipment and processes, and experienced administrative and operating personnel.
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We have an extensive reach to our customers through localized, high frequency deliveries which allows them to reduce their inventory through higher inventory turnover and just-in-time inventory, and to reduce waste, especially in fresh products. Our temperature-controlled trucks deliver both short and medium distance routes daily to ensure on-time delivery and to achieve high fill rates to our customers.
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In addition, we maintain a centralized outsourced call center that supports customers during non-office hours in the United States for order-taking, customer relationship management, and after-sales service. Centralizing this function enhances quality assurance and training consistency and provides greater control over coordinated marketing and promotional campaigns, while further strengthening customer service.
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We believe our wide range of Asian-centric product offerings is unmatched, as many of the items we offer are unique and specific to the Asian restaurant industry.
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We provide localized, high-frequency delivery that supports customers’ operating needs, including reduced on-hand inventory and improved freshness for perishable products. Our temperature-controlled fleet services both short- and medium-distance routes on a daily basis to support reliable delivery and high fulfillment levels.
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We believe that our scale and deep knowledge of our customers’ needs provide a competitive advantage over our direct competitors and have contributed greatly to our success, including the following: • Wide array of Asian specialty products: These are not commonly provided by large distributors serving the mainstream market. • Deep understanding of Asian culture: As our customers are primarily Asian restaurants, most of our employees can speak the primary language of our customers.
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We offer a broad range of products commonly used in Asian cuisines, including many items that are not widely carried by mainstream distributors. While Asian restaurants remain our core customer base, we believe many of our competitive strengths—our service model, specialty sourcing, logistics capabilities, and localized delivery density—are also applicable to other ethnic and specialty foodservice segments.
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We believe this is a key business strength and competitive advantage, as many of the restaurants’ owners/chefs are more comfortable speaking in their primary language. • Lower sales and administrative expenses: We outsource our telephone-based sales and customer service to two call centers located in China to better serve our customers around the clock. 3 • Purchasing power: We capitalize on economies of scale and have strong relationships with both our domestic and foreign suppliers. • Warehouse location: We have strategically located distribution centers and cross-docks, supported by our fleet of delivery vehicles with most routes limited to three to five hours driving time, ensuring on-time delivery and order fill-rate. • Technology: With our customized inventory management system, we are able to manage our customer relationships and inventory efficiently and reduce operating expenses. • Customer-specific marketing: Our employees’ bilingual capabilities provide a competitive advantage against other major providers in the industry.
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Accordingly, we intend to selectively broaden our strategic focus over time to pursue adjacent cuisines and customer segments where our platform can deliver compelling value. We also seek to position the Company as a specialty foodservice distributor with capabilities that extend beyond any single category as we execute our long-term growth strategy through a combination of organic initiatives and acquisitions.
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We aim to further expand into new key markets, as well as to strategically consolidate our market leadership position in existing markets, primarily through acquisitions.
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We believe our scale and knowledge of customer preferences and operating needs provide competitive advantages, including: • Differentiated product assortment: We offer a broad range of Asian specialty products that are not commonly provided by large distributors serving the mainstream market. • Cultural and language capabilities: Because many of our customers are immigrant-owned restaurants, a significant portion of our workforce can communicate with customers in their primary language, which we believe strengthens relationships, service quality and retention. • Service and cost structure: We utilize a centralized outsourced call center in China to support telephone-based sales and customer service during non-office hours in the United States, which supports responsiveness and efficient coverage. • Purchasing and sourcing capabilities: We leverage economies of scale and long-standing relationships with both domestic and foreign suppliers to support consistent product availability and competitive pricing. 4 • Distribution network and delivery density: Our distribution centers and cross-docks are strategically located and supported by a fleet of delivery vehicles.
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We will also explore potential vertical expansion in our acquisition strategy, both upstream and downstream of the foodservice value chain, including providing value-added items such as semi-prepared food products to help our customers upgrade their service, as well as exploring adjacent markets.
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Many delivery routes are limited to approximately three to five hours of driving time, which supports delivery timeliness and high fulfillment levels. • Technology-enabled operations: Our customized systems support inventory management, customer service, and operational efficiency. • Customer-specific marketing and engagement: Our cultural and bilingual capabilities support targeted communication and promotional activity tailored to customer preferences.
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We continue to invest in technological advancements to develop state-of-the-art management information and operating systems, to further improve our operational efficiency, accuracy and customer satisfaction, and to cement our foothold as a leading foodservice distributor to Asian restaurants in the U.S. Features of Asian Restaurants Set forth below are the principal characteristics of the Asian restaurants we serve.
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We seek to expand in new and existing markets through a combination of organic initiatives and acquisitions, including opportunities to strengthen our market position, enhance our distribution footprint, and broaden our product capabilities.
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We believe that understanding their culture and language is paramount to facilitating efficient communications and building trust with customers. Unique Cooking Style and Ingredients for Asian Cuisines .
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We also evaluate potential vertical expansion opportunities in connection with acquisitions, including value-added offerings such as semi-prepared food products, where we believe such offerings can support customer needs and improve service. We continue to invest in technology and operating systems to improve efficiency, accuracy, and customer satisfaction and to support our long-term growth objectives.
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As COVID-19 restrictions eased in 2021 and into 2022, both full service and fast food/take out restaurants have rebounded, and we believe the long-term trend of increasing food away from home market consumption has resumed and continues to be a key driver of demand for Asian restaurants.
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Features of Asian Restaurants Set forth below are the principal characteristics of the Asian restaurants we serve. Primarily Serving Mainstream Americans . There are tens of thousands of Asian restaurants spread throughout the U.S., primarily serving American customers.
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With cultural understanding coupled with a distinct and diverse cultural bonding, the entire sales team has been successful in forging better customer rapport and retention and is better able to understand customers’ needs and operations as compared to the mainstream foodservice distributors attempting to serve this channel.
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As a leading foodservice distributor to Asian restaurants in the U.S., these trends represent a significant growth opportunity for HF Foods. Cultural Barriers to Entry . Understanding Asian cooking culture is important to running an Asian restaurant, and, therefore, most Asian restaurants are operated by Asian Americans.
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We formulate strategies and implement action plans to ensure cohesive sales and marketing efforts to our existing and prospective customers. The domestic sales team works closely with the sales staff in China to ensure our strategies are implemented effectively and our action plans are carried out swiftly.
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This trend reflects a broader preference for the convenience, experience, and variety offered by restaurants including those specializing in Asian cuisines. As consumers maintain strong engagement with restaurant dining, we expect demand for Asian and other foodservice operators to remain robust, supporting ongoing growth opportunities for our business.
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Distribution centers are empowered to cater to local and regional customers’ needs by customizing their specific product portfolio. With respect to customer care and satisfaction, we offer a refund policy without penalty, which many of our small competitors in the market segment and the direct store distributors are unable to provide.
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We develop and execute strategies and action plans designed to align sales and marketing efforts across channels. Our domestic sales team works closely with sales staff in China to help ensure consistent execution and swift follow-through. In addition, our distribution centers are empowered to meet local and regional customer needs by tailoring their product portfolios.
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Our distribution centers send their inventory procurement requests to buyers who are responsible for consolidation and fulfillment in the most cost-effective way. The consolidated procurement process allows HF Foods to establish a meaningful vendor relationship under one brand.
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Suppliers We manage procurement through a centralized purchasing process designed to improve purchasing efficiency, support consistent product availability, and enhance supplier relationships. Our distribution centers submit inventory replenishment requests through our information systems to designated buyers, who consolidate demand across locations and source products in a cost-effective manner.
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Utilizing brokers allows us to maintain lower costs due to the brokers’ volume. The key procurement team members closely monitor the supply market for seasonal products, such as vegetables, and makes procurement adjustments according to market conditions. In addition, they use a dual-sourcing method for their suppliers and can negotiate lower prices for comparable products.
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For smaller-volume purchases and certain specialty items, we also utilize brokers, which can provide access to additional suppliers and purchasing scale. Our procurement team monitors market conditions for seasonal and other price-sensitive products, including fresh produce, and adjusts purchasing decisions based on availability, pricing, and customer demand.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+7 added−10 removed113 unchanged
Biggest changeIf, in future periods, the financial performance of the reporting unit does not meet forecasted expectations, or a prolonged further decline occurs in the market price of our common stock, it may cause a change in the results of the impairment assessment and, as such, could result in further impairment of goodwill. 16 Risk Factors Relating to our Acquisition Strategy Our continued growth depends on future acquisitions of other distributors or wholesalers and enlarging our customer base.
Biggest changeRisk Factors Relating to our Acquisition Strategy Our continued growth depends on future acquisitions of other distributors or wholesalers and enlarging our customer base. The failure to achieve these goals could negatively impact our results of operations and financial condition.
Future economic conditions affecting disposable consumer income, such as employment levels, business conditions, changes in housing market conditions, the availability of consumer credit, inflation, interest rates, tax rates and fuel and energy costs, could reduce overall consumer spending. • Food cost and fuel cost inflation experienced by consumers can lead to reductions in the frequency of and the amount spent by consumers for food away from home purchases, which could negatively impact our business by reducing demand for our products. • Heightened uncertainty in the financial markets negatively affects consumer confidence and discretionary spending, which can cause disruptions with our customers and suppliers. • Liquidity issues and the inability of our customers to consistently access credit markets to obtain cash to support their operations can cause temporary interruptions in our ability to conduct day-to-day transactions involving the collection of funds from such customers. 10 • Liquidity issues and the inability of suppliers to consistently access credit markets to obtain cash to support their operations can cause temporary interruptions in our ability to obtain the foodservice products and supplies needed by us in the quantities and at the prices requested.
Future economic conditions affecting disposable consumer income, such as employment levels, business conditions, changes in housing market conditions, the availability of consumer credit, inflation, interest rates, tax rates and fuel and energy costs, could reduce overall consumer spending. • Food cost and fuel cost inflation experienced by consumers can lead to reductions in the frequency of and the amount spent by consumers for food away from home purchases, which could negatively impact our business by reducing demand for our products. • Heightened uncertainty in the financial markets negatively affects consumer confidence and discretionary spending, which can cause disruptions with our customers and suppliers. • Liquidity issues and the inability of our customers to consistently access credit markets to obtain cash to support their operations can cause temporary interruptions in our ability to conduct day-to-day transactions involving the collection of funds from such customers. • Liquidity issues and the inability of suppliers to consistently access credit markets to obtain cash to support their operations can cause temporary interruptions in our ability to obtain the foodservice products and supplies needed by us in the quantities and at the prices requested.
These related-party transactions create the possibility of conflicts of interest with regard to our management, including that: • we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; • our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; • our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time; and • such conflicts could cause an individual in our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours.
These related-party transactions create the possibility of conflicts of interest with regard to our management, including that: • we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions; • our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; 14 • our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time; and • such conflicts could cause an individual in our management to seek to advance his or her economic interests or the economic interests of certain related parties above ours.
Such acquisitions also involve numerous operational risks, including: • difficulties in integrating operations, technologies, services and personnel; 17 • the diversion of financial and management resources from existing operations; • the risk of entering new markets; • the potential loss of existing or acquired strategic operating partners following an acquisition; • the potential loss of key employees following an acquisition and the associated risk of competitive efforts from such departed personnel; • possible legal disputes with the acquired company following an acquisition; and • the inability to generate sufficient revenue to offset acquisition or investment costs.
Such acquisitions also involve numerous operational risks, including: • difficulties in integrating operations, technologies, services and personnel; • the diversion of financial and management resources from existing operations; • the risk of entering new markets; • the potential loss of existing or acquired strategic operating partners following an acquisition; • the potential loss of key employees following an acquisition and the associated risk of competitive efforts from such departed personnel; • possible legal disputes with the acquired company following an acquisition; and • the inability to generate sufficient revenue to offset acquisition or investment costs.
In addition, there is a very high level of competition among companies seeking to acquire these operating companies. Many established and well-financed entities are active in acquiring interests in companies that we may find to be desirable acquisition candidates. Many of these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do.
In addition, there is a very high level of competition among companies seeking to acquire these operating companies. Many established and well-financed entities are active in acquiring interests in companies that we may find to be desirable acquisition candidates. Many 17 of these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do.
If fuel costs remain elevated or increase further in the future, we may experience difficulties in passing all or a portion of these costs along to our customers, which may have a negative impact on our results of operations. We rely on third-party suppliers, and our business may be affected by interruption of supplies or increases in product costs.
If fuel costs remain elevated or increase further in the future, we may experience difficulties in passing all or a portion of these costs along to our customers, which may have a negative impact on our results of operations. 12 We rely on third-party suppliers, and our business may be affected by interruption of supplies or increases in product costs.
The U.S. has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher 9 tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business.
The U.S. has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business.
Our financial performance could be materially harmed as a result of any of these factors. 14 Potential labor disputes with employees and increases in labor costs could adversely affect our business. A considerable amount of our operating costs are attributable to labor costs and, therefore, our financial performance is greatly influenced by increases in wage and benefit costs.
Our financial performance could be materially harmed as a result of any of these factors. Potential labor disputes with employees and increases in labor costs could adversely affect our business. A considerable amount of our operating costs are attributable to labor costs and, therefore, our financial performance is greatly influenced by increases in wage and benefit costs.
The employment of unauthorized workers may subject us to fines or civil or criminal penalties, and if any of our workers are found to be unauthorized, we could experience adverse publicity that negatively impacts our brand and makes it more difficult to hire and keep qualified employees.
The employment of unauthorized workers may subject us to fines or civil or criminal penalties, and if any of our workers are found to be unauthorized, we could experience adverse publicity 15 that negatively impacts our brand and makes it more difficult to hire and keep qualified employees.
A significant cybersecurity incident could affect our data framework or cause a failure to protect the personal information of our customers, suppliers or employees, or sensitive and confidential information regarding our business and could give rise to legal 12 liability and regulatory action under data protection and privacy laws.
A significant cybersecurity incident could affect our data framework or cause a failure to protect the personal information of our customers, suppliers or employees, or sensitive and confidential information regarding our business and could give rise to legal liability and regulatory action under data protection and privacy laws.
The United States government and foreign governments may also take actions that may impact the purchase and production of goods, including imposing tariffs or other regulations on certain goods shipped, that may increase costs for goods 11 transported globally.
The United States government and foreign governments may also take actions that may impact the purchase and production of goods, including imposing tariffs or other regulations on certain goods shipped, that may increase costs for goods transported globally.
To the extent that business conditions may deteriorate, or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record impairment charges, which could be material. The Company completed its most recent annual impairment assessment for goodwill as of the last day of the fourth quarter of fiscal year 2024.
To the extent that business conditions may deteriorate, or if changes in key assumptions and estimates differ significantly from management’s expectations, it may be necessary to record impairment charges, which could be material. The Company completed its most recent annual impairment assessment for goodwill as of the last day of the fourth quarter of fiscal year 2025.
The price and supply of fuel can fluctuate significantly based on international, political and economic circumstances, as well as other factors outside our control, such as actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, regional production patterns, weather conditions and environmental concerns.
The price and supply of fuel can fluctuate significantly based on international, political and economic circumstances, as well as other factors outside our control, such as actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, regional production patterns, weather conditions, environmental concerns, and geopolitical conflicts.
The following discussion of risks is not all inclusive, but is designed to highlight what we believe are the most significant factors to consider when evaluating our business. The risks set forth in this Section 1A are presented as of December 31, 2024 and the period then ended.
The following discussion of risks is not all inclusive, but is designed to highlight what we believe are the most significant factors to consider when evaluating our business. The risks set forth in this Section 1A are presented as of December 31, 2025 and the period then ended.
Our management has concluded that (1) our internal controls over financial reporting were not effective as of December 31, 2024, (2) there existed material weaknesses in our internal control over financial reporting as of December 31, 2024, and (3) our disclosure controls and procedures were not effective as of December 31, 2024.
Our management has concluded that (1) our internal controls over financial reporting were not effective as of December 31, 2025, (2) there existed material weaknesses in our internal control over financial reporting as of December 31, 2025, and (3) our disclosure controls and procedures were not effective as of December 31, 2025.
Ni is enjoined from directly or indirectly participating in the management of, or otherwise exercising any control or influence over the Company; provided, however, that such injunction does not prevent Mr. Ni from voting, purchasing or selling shares of the Company on his own behalf.
Ni is enjoined from directly or indirectly participating in the management of, or otherwise exercising any control or influence over the Company; provided, however, that such injunction does not prevent Mr. Ni from voting, purchasing or selling shares of the Company on his own behalf. Despite the settlement with the SEC, the possibility that Mr.
In the event we determine to take such action, our customers may reduce their orders from us, which could negatively affect our business, profitability and operating results. We are closely monitoring these developments and evaluating strategies to mitigate potential impacts.
In the event we determine to take such action, our customers may reduce their orders from us, which could negatively affect our business, profitability and operating results. We are closely monitoring these developments and evaluating strategies to mitigate potential impacts. On February 20, 2026, the U.S.
Our new directors have different professional experiences and industry knowledge from those individuals who previously served, and we expect they will have different views on the issues that will determine our future strategies and plans. Such changes to strategic or operating goals may ultimately be unsuccessful.
Newly appointed directors may have different professional experiences and industry knowledge from those individuals who previously served, and may have different views on the issues that will determine our future strategies and plans. Such changes to strategic or operating goals may ultimately be unsuccessful.
These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our assessments and estimates. For more information related to our litigation and regulatory proceedings, see Part I, Item 3.
These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our assessments and estimates. For more information related to our litigation and regulatory proceedings, see Part I, Item 3. Legal Proceedings to this Annual Report on Form 10-K.
The loss of the services of any senior management, directors or other key personnel could have a material adverse effect on our business and prospects. We have recently appointed four new members to our board of directors as part of our continuous efforts to enhance our corporate governance and our future strategies and plans.
The loss of the services of any senior management, directors or other key personnel could have a material adverse effect on our business and prospects. When appropriate we will appoint new members to our board of directors as part of our continuous efforts to enhance our corporate governance and our future strategies and plans.
Legal Proceedings to this Form 10-K. 15 Even when not merited, the defense of these lawsuits or legal proceedings, including potential securities litigation and/or other legal actions, is expensive and may divert management’s attention, and we may incur significant expenses in defending these lawsuits or legal proceedings.
Even when not merited, the defense of these lawsuits or legal proceedings, including potential securities litigation and/or other legal actions, is expensive and may divert management’s attention, and we may incur significant expenses in defending these lawsuits or legal proceedings.
Further, even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image.
Further, even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image. Litigation may materially adversely affect our business, financial condition and results of operations.
Anti-takeover provisions contained in our amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt. Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors.
Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors.
The loss of a number of customers could adversely affect our business, financial condition, and results of operations. We rely on technology in our business and any cybersecurity incident, other technology disruption or delay in implementing new technology could negatively affect our business and our relationships with customers.
The loss of a number of customers could adversely affect our business, financial condition, and results of operations. We rely on technology in our business and any cybersecurity incident (including artificial intelligence (“AI”) -enabled threads), AI-related operational errors, other technology disruption or delay in implementing new technology could negatively affect our business and our relationships with customers.
Our ability to meet our labor needs, while controlling wage and labor-related costs, is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force of the regions in which we are located, unemployment levels within those regions, prevailing wage rates, changing demographics, health and other insurance costs and changes in employment legislation.
Our ability to meet our labor needs, while controlling wage and labor-related costs, is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force of the regions in which we are located, unemployment levels within those regions, prevailing wage rates, changing demographics, health and other insurance costs and changes in employment legislation. 11 In the event of increasing wage rates, if we fail to increase our wages competitively, the quality of our workforce could decline, causing our customer service to suffer, while increasing our wages could cause our profits to decrease.
The failure to achieve these goals could negatively impact our results of operations and financial condition. Historically, a portion of our growth has come through acquisitions, and our growth strategy depends, in large part, on acquiring other distributors or wholesalers to access untapped market regions and enlarge our customer base.
Historically, a portion of our growth has come through acquisitions, and our growth strategy depends, in large part, on acquiring other distributors or wholesalers to access untapped market regions and enlarge our customer base.
The results of the assessment indicated carrying value in excess of fair value of the reporting unit, and as such, a goodwill impairment charge of $46.3 million was recorded during the year ended December 31, 2024.
The results of the assessment indicated carrying value in excess of fair value of the reporting unit, and as such, a goodwill impairment charge of $38.8 million was recorded during the year ended December 31, 2025. Following the impairment test conducted as of December 31, 2025, the Company’s goodwill was fully impaired.
There may also be adverse publicity associated with litigation that may decrease consumer confidence in our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may materially and adversely affect our business, financial condition, cash flows and results of operations.
There may also be adverse publicity associated with litigation that may decrease consumer confidence in our business, regardless of whether the allegations are valid or whether we are ultimately found liable.
These technology systems are vulnerable to disruption from circumstances beyond our control, including fire, natural disasters, power outages, systems failures, security breaches, espionage, cyber-attacks, viruses, theft and inadvertent releases of information.
These technology systems are vulnerable to disruption from circumstances beyond our control, including fire, natural disasters, power outages, systems failures, security breaches, espionage, cyber-attacks, viruses, theft and inadvertent releases of information. The risk of cybersecurity attacks may increase as AI capabilities improve and are increasingly used to identify 13 vulnerabilities and construct increasingly sophisticated cybersecurity attacks.
Changes in consumer eating habits (such as a decline in consuming food away from home, a decline in portion sizes, or a shift in preferences toward western foods) could reduce demand for our products.
We provide foodservice distribution to Asian restaurants, primarily takeout restaurants, which focus on serving Asian food to American families. Changes in consumer eating habits (such as a decline in consuming food away from home, a decline in portion sizes, or a shift in preferences toward western foods) could reduce demand for our products.
Zhou Min Ni has significant influence over the Company and may have interests that conflict with those of our other shareholders. The Company’s former Chairman and Co-CEO Zhou Min Ni, directly and indirectly through the trustee of the trusts established for the benefit of his family, beneficially owns approximately 22% of our common stock. As a result, Mr.
The Company’s former Chairman and Co-Chief Executive Officer, Zhou Min Ni, directly and indirectly through the trustee of the trusts established for the benefit of his family, beneficially owns approximately 22% of our common stock. As a result, Mr.
The Cooperation Agreement is limited to Despite the settlement with the SEC and the Cooperation Agreement, the possibility that Mr. Ni may sell all or a large portion of his common stock in a short period of time could adversely affect the trading price of our common stock. Further, upon the expiration of the Cooperation Period, the interests of Mr.
Ni may sell all or a large portion of his common stock in a short period of time could adversely affect the trading price of our common stock. Additionally, the interests of Mr. Ni may not align with the interests of other holders of our common stock, and he may vote against the Company’s interests. Mr.
In addition, substantial costs and resources may be required to rectify any internal control deficiencies. If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our common stock could decline significantly, and our business and financial condition could be adversely affected.
If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our common stock could decline significantly, and our business and financial condition could be adversely affected. 18 Zhou Min Ni has significant influence over the Company and may have interests that conflict with those of our other shareholders.
Intrusions and other incidents have occurred, and may occur again, in our systems and in the systems of our suppliers and third-party administrators. Any such incident could result in operational impairments, significant harm to our reputation and financial losses.
Any such incident could result in operational impairments, significant harm to our reputation and financial losses.
We own approximately 907,000 square feet of our distribution centers (or 71% of the total square feet), and the remainder (or 29% of the total square feet) is occupied under leasing arrangements.
As of December 31, 2025 we owned approximately 0.9 million square feet of our distribution centers (or 67% of the total square feet), and the remainder (or 33% of the total square feet) was occupied under leasing arrangements.
The appearance of conflicts of interest created by related-party transactions could impair the confidence of our investors. Our Special Transactions Review Committee regularly reviews these transactions. Notwithstanding this, it is possible that a conflict of interest could have an adverse effect on our business, financial condition and results of operations.
Notwithstanding this, it is possible that a conflict of interest could have an adverse effect on our business, financial condition and results of operations. For more information on our related party transactions, see Note 13 - Related Party Transactions in our consolidated financial statements in this Annual Report on Form 10-K.
For more information on our related party transactions, see Note 13 - Related Party Transactions in our consolidated financial statements in this Annual Report on Form 10-K. 13 We may be unable to protect or maintain our intellectual property, which could result in customer confusion, a negative perception of our brand and adversely affect our business.
We may be unable to protect or maintain our intellectual property, which could result in customer confusion, a negative perception of our brand and adversely affect our business. We believe that our intellectual property has substantial value and has contributed significantly to the success of our business.
Ni may not align with the interests of other holders of our common stock, and he may vote against the Company’s interests. Mr. Ni’s significant beneficial ownership may also adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.
Ni’s significant beneficial ownership may also adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. Anti-takeover provisions contained in our amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
We believe that our intellectual property has substantial value and has contributed significantly to the success of our business. In particular, our “HF” logo trademarks and our trade names including “Han Feng,” “Rong Cheng” and “Great Wall,” are valuable assets that reinforce our customers’ favorable perception of our products.
In particular, our “HF” logo trademarks (HF FOODS™, HF FOODS Stylized (B&W)™, HF FOODS Stylized (Color)™, HF Design (B&W)®, HF Design (Color)®) and our trade names including “the Han Feng trade name,” “ the Rong Cheng trade name” and “Great Wall Design®, and Great Wall Seafood™,” are valuable assets that reinforce our customers’ favorable perception of our products.
An increase in interest rates could adversely affect our cash flow and financial condition. Central bank policy interest rates remain elevated since rising in 2022.
As a result, litigation may materially and adversely affect our business, financial condition, cash flows and results of operations. 16 An increase in interest rates could adversely affect our cash flow and financial condition. Changes to central bank policy interest rates remain uncertain and changes to these rates can impact our business.
Removed
In the event of increasing wage rates, if we fail to increase our wages competitively, the quality of our workforce could decline, causing our customer service to suffer, while increasing our wages could cause our profits to decrease.
Added
Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). This decision introduces uncertainty regarding potential refund processes and future trade policy actions that could affect the Company’s cost structure and supply chain planning.
Removed
Changes in consumer eating habits could materially and adversely affect our business, financial condition, and results of operations. We provide foodservice distribution to Asian restaurants, primarily takeout restaurants, which focus on serving Asian food to American families.
Added
The ultimate impact of tariffs and other trade policies on the Company’s business will depend on several factors, including future measures implemented by the U.S. government and the governments of other countries, the overall magnitude and duration of these measures and the Company’s ability to mitigate these effects.
Removed
Our product liability insurance plans may not continue to be available at a reasonable cost or, if available, may not be adequate to cover all of our liabilities.
Added
Intrusions and other incidents have occurred, and may occur again, in our systems and in the systems of our suppliers and third-party administrators. In addition, generative AI tools may inadvertently expose, misuse, or incorporate our confidential, personal, or third-party data, which could result in data leakage, intellectual property risks, privacy violations, or contractual breaches.
Removed
We generally seek contractual indemnification and insurance coverage from parties supplying products to us, but this indemnification or insurance coverage is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by such suppliers.
Added
Additionally, we currently utilize certain AI tools, and as we increase our use of AI tools, the risk of unauthorized access to our data and of making errors or erroneous decisions based on our reliance on the AI tool will increase.
Removed
If we do not have adequate insurance or contractual indemnification available, product liability relating to defective products could materially adversely affect our results of operations and financial condition. Litigation may materially adversely affect our business, financial condition and results of operations.
Added
Evolving and uncertain AI laws, standards, and governance expectations could impose new compliance obligations, restrictions, audit requirements, or liabilities, and our failure to comply could result in fines, remediation costs, or reputational harm. Changes in consumer eating habits could materially and adversely affect our business, financial condition, and results of operations.
Removed
Additionally, on November 18, 2024, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with Zhou Min Ni, Raymond Ni, Fai Lam, in his capacity as Trustee of the Irrevocable Trust for Raymond Ni, Amanda Ni, in her capacity as Trustee of each of the Irrevocable Trust for Amanda Ni, the Irrevocable Trust for Ivy Ni and the Irrevocable Trust for Tina Ni, Weihui Kwok, Yuanyuan Wu, and Maodong Xu (each, a “Stockholder Related Party,” and collectively, the “Stockholder Related Parties”), effective November 21, 2024.
Added
The appearance of conflicts of interest created by related-party transactions could impair the confidence of our investors. Our Board of Directors regularly reviews these transactions. The Company’s Compliance Department also distributes conflict of interest surveys to relevant individuals on its purchasing and management team and has a robust supplier and vendor due diligence program.
Removed
Pursuant to the Cooperation Agreement, the Stockholder Related Parties have agreed, for the period beginning on the effective date of the Cooperation Agreement through the date that is sixty days after the 2025 annual meeting of stockholders of the Company (the “Cooperation Period”), to vote the shares of voting securities of the Company that each Stockholder Related Party has the right to vote, or to direct the vote of, in a manner proportional to the vote of the Company’s disinterested stockholders.
Added
In addition, substantial costs and resources may be required to rectify any internal control deficiencies.
Removed
Notwithstanding the foregoing, the Stockholder Related Parties are permitted to vote a greater number of shares of the Company’s voting securities in accordance with recommendations by the Company’s Board of Directors on all director nominations and other proposals or business that may be 18 the subject of stockholder action at any meeting of the Company’s stockholders, or in connection with any consent solicitation of the Company’s stockholders.
Removed
The Cooperation Agreement further provides that, during the Cooperation Period, each Stockholder Related Party will be subject to customary standstill restrictions, including, among others, with respect to proxy solicitations, stockholder proposals and extraordinary transactions, and purchases and certain sales of Company voting securities.
Removed
In addition, in April 2023, we implemented a stockholder rights plan, also called a “poison pill,” that may have the effect of discouraging or preventing a change of control by, among other things, making it uneconomical for a third party to acquire us without the consent of our board of directors.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeA significant cybersecurity incident may result from actions by our employees, suppliers, third-party administrators, or unknown third parties or through cyber-attacks and could affect our data framework or cause a failure to protect the personal information of our customers, suppliers or employees, or sensitive and confidential information regarding our business and 19 could give rise to legal liability and regulatory action under data protection and privacy laws.
Biggest changeA significant cybersecurity incident may result from actions by our employees, suppliers, third-party administrators, or unknown third parties or through cyber-attacks and could affect our data framework or cause a failure to protect the personal information of our customers, suppliers or employees, or sensitive and confidential information regarding our business and could give rise to legal liability and regulatory action under data protection and privacy laws.
Our information security program is managed by our Senior Vice President of People and Technology, who has twenty-five years of experience in IT leadership across a variety of industries including manufacturing, distribution, defense, and financial services, whose team is responsible for maintaining our enterprise-wide cybersecurity strategy, policies, standards, architecture and processes.
Our information security program is managed by our Senior Vice President of People and Technology, who has over twenty-five years of experience in IT leadership across a variety of industries including manufacturing, distribution, defense, and financial services, whose team is responsible for maintaining our enterprise-wide cybersecurity strategy, policies, standards, architecture and processes.
To date, there have not been any cybersecurity threats or incidents that have materially affected, or are reasonably likely to materially affect, the Company, including its financial condition, results of operations, or business strategies. Governance Our Board of Directors oversees our overall risk management strategy.
To date, there have not been any cybersecurity threats or incidents that have materially affected, or 19 are reasonably likely to materially affect, the Company, including its financial condition, results of operations, or business strategies. Governance Our Board of Directors oversees our overall risk management strategy.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease office space for a corporate location in Los Angeles, California. The Company entered into a lease on September 30, 2024 for a new Atlanta, Georgia based distribution center which commenced on February 1, 2025 for a term of 10 years and five months, exclusive of renewal options.
Biggest changeWe also lease office space for a corporate location in Los Angeles, California. 20 Opening of a State-of-the-Art Distribution Warehouse in Powder Springs, GA On December 18, 2025, the Company officially opened its newest 182,000 square foot distribution center located outside Atlanta, in Powder Springs, Georgia.
Additionally, we own a 118,000 square foot distribution facility in North Carolina which we are preparing for operations to commence in 2025. 20 We lease our corporate headquarters located in Las Vegas, Nevada, consisting of approximately 5,000 square feet with a term of 6.5 years that began on March 17, 2021.
Additionally, we own a 118,000 square foot distribution facility in North Carolina which we are preparing for operations to commence in 2026. We lease our corporate headquarters located in Las Vegas, Nevada, consisting of approximately 13,000 square feet with a term of 6.5 years that began on March 17, 2021.
ITEM 2. PROPERTIES. We operate sixteen distribution centers with a total of approximately 1.3 million square feet of warehouse space, including approximately 400,000 square feet of cold storage, for distribution, warehousing inventory, service and administrative functions.
ITEM 2. PROPERTIES We operate sixteen distribution centers with a total of approximately 1.4 million square feet of warehouse space, including approximately 404,000 square feet of cold storage, for distribution, warehousing inventory, service and administrative functions.
We own approximately 907,000 square feet of our distribution centers (or 71% of the total square feet), and the remainder (or 29% of the total square feet) is occupied under leasing arrangements. The following table sets forth the approximate aggregate square footage by state for these distribution facilities as of December 31, 2024.
We own approximately 0.9 million square feet of our distribution centers (or 67% of the total square feet), and the remainder (or 33% of the total square feet) is occupied under leasing arrangements. The following table sets forth the approximate aggregate square footage by state for these distribution facilities as of December 31, 2025.
Location Number of Facilities Total Square Feet Arizona 1 68,000 California 4 351,000 Colorado 1 56,000 Florida 1 130,000 Georgia 1 100,000 Illinois 1 140,000 North Carolina 1 172,000 Texas 2 60,000 Utah 2 94,000 Washington 1 70,000 Virginia 1 44,000 Total 16 1,285,000 We also operate three cross-docks which are located in Nevada, Ohio and Oregon.
Location Number of Facilities Total Square Feet Arizona 1 68,000 California 4 355,000 Colorado 1 56,000 Florida 1 136,000 Georgia (a) 1 182,000 Illinois 1 140,000 North Carolina 1 172,000 Texas 2 60,000 Utah 2 93,000 Virginia 1 44,000 Washington 1 70,000 Total 16 1,376,000 _______________ (a) These figures do not include one facility located in Atlanta, GA that was being vacated due to the transition to a new location.
Added
The lease on the vacated facility expired as of December 31, 2025. We also operate a 50,000 square foot specialty oil manufacturing and packaging facility in Kansas and four cross-docks which are located in California, Nevada, Ohio and Oregon.
Added
This brand-new facility includes warehouse, freezer, cooler, and office space and provides significant opportunities for expanding our existing operations in Atlanta and the surrounding cities and states. The Company plans to incorporate automated material handling and warehouse management technologies at the facility to support operating efficiency.
Added
The new distribution center will continue to service over 1,000 customers from HF Food’s previous Atlanta location and is now open to deliver more business throughout Georgia, Alabama, Mississippi, and Tennessee. The distribution center is located at 4795 Innovative Highway, Powder Springs, GA 30127, and currently employs over 50 individuals with plans to expand operations throughout 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES. Not applicable. 21 PART II.
Biggest changeSee Note 17 - Commitments and Contingencies for additional information. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 21 PART II.
Removed
On October 13, 2023, the Company received a “Wells Notice” from the staff of the SEC (the “Wells Notice”) relating to the previously disclosed formal, non-public SEC investigation (the “SEC Investigation”) of allegations that the Company and certain of its current and former directors and officers violated the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements.
Removed
On June 6, 2024, the SEC announced that it had accepted an Offer of Settlement submitted by the Company in order to resolve the SEC Investigation.
Removed
Under the settlement, without admitting or denying the SEC’s findings in this matter, the Company consented to the entry of an administrative civil cease-and-desist order by the SEC (the “Order”) with respect to violations of Sections 17(a) of the Securities Act, and of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Securities Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13a-15(a), and 14a-9 thereunder, resulting from the materially false and misleading disclosures and other fraudulent conduct implemented by its former Chairman and Chief Executive Officer Zhou Min Ni and former Chief Financial Officer Jian Ming “Jonathan” Ni.
Removed
During the quarter ended June 30, 2024 the Company agreed to and paid a civil monetary penalty of $3.9 million, which was recorded in other income (expense), net in the Company’s condensed consolidated statements of operations and comprehensive income (loss).
Removed
The Order states that, in determining to accept the Company’s Offer of Settlement, the SEC considered the numerous remedial actions promptly undertaken by the Company and its cooperation during the investigation. The Company’s resolution follows charges brought by the SEC against the two former executives in a District Court action filed on June 3, 2024.
Removed
As a result of the SEC’s district court complaint against them, the two former executives agreed to pay civil fines and disgorgement, and agreed to be subject to officer and director bars.
Removed
Zhou Min Ni also agreed to a conduct-based injunction which enjoins him from directly or indirectly participating in the management of, or otherwise exercising any control of influence over the Company. The Special Litigation Committee of the Board of Directors previously obtained a monetary settlement from the former executives that was ratified by the Delaware Chancery Court. ITEM 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−1 removed3 unchanged
Biggest changeThe number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. Dividends We have not paid any cash dividends on our common stock to date.
Biggest changeHolders of Record As of March 9, 2026, there were 33 shareholders of record of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.
The graph assumes an investment of $100 in our common stock and each of the indices on December 31, 2019.
The graph assumes an investment of $100 in our common stock and each of the indices on December 31, 2020.
Issuer Purchases of Equity Securities None. 22 Stock Performance Graph The following graph compares the cumulative total return on our common stock with the cumulative total returns on the Standard & Poor’s 500 Composite Stock Price Index (“S&P 500”), and the Standard and Poor’s 500 Food & Staples Retailing Industry Index from December 31, 2019 to December 31, 2024.
Issuer Purchases of Equity Securities None. 22 Stock Performance Graph The following graph compares the cumulative total return on our common stock with the cumulative total returns on the Standard & Poor’s 500 Composite Stock Price Index (“S&P 500”), and the Standard and Poor’s 500 Food & Beverage Select Industry Index from December 31, 2020 to December 31, 2025.
The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and our general financial condition. The payment of any dividends will be within the discretion of our Board of Directors at such time.
Dividends We have not paid any cash dividends on our common stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and our general financial condition. The payment of any dividends will be within the discretion of our Board of Directors at such time.
The cumulative total return on our common stock as presented is not necessarily indicative of future performance. 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/29/2023 12/31/2024 HF Foods Group Inc. $100 $39 $43 $21 $27 $16 S&P 500 $100 $118 $152 $125 $158 $197 S&P 500 Food and Staples Retailing Index $100 $116 $146 $131 $151 $204 ITEM 6. [RESERVED] 23
The cumulative total return on our common stock as presented is not necessarily indicative of future performance. 12/31/2020 12/31/2021 12/30/2022 12/29/2023 12/31/2024 12/31/2025 HF Foods Group Inc. $100 $113 $54 $71 $43 $29 S&P 500 $100 $127 $102 $127 $157 $182 S&P 500 Food and Beverage Select Industry Index $100 $114 $111 $112 $116 $109 ITEM 6. [RESERVED] 23
Removed
Holders of Record As of March 12, 2025, there were 52,737,650 shares of our common stock outstanding held by 33 shareholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

39 edited+23 added−33 removed29 unchanged
Biggest changeEBITDA and Adjusted EBITDA The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure: Year Ended December 31, ($ in thousands) 2024 2023 Change Net loss $ (48,102) $ (2,662) $ (45,440) Interest expense 11,425 11,478 (53) Income tax expense 1,965 41 1,924 Depreciation and amortization 26,677 25,918 759 EBITDA (8,035) 34,775 (42,810) Lease guarantee income (5,548) (377) (5,171) Change in fair value of interest rate swap contracts (1,693) 1,580 (3,273) Stock-based compensation expense 2,088 3,352 (1,264) SEC settlement 3,900 — 3,900 Goodwill impairment charges 46,303 — 46,303 Settlement gain (1) — (10,000) 10,000 Other asset impairment charges — 1,200 (1,200) Business transformation costs (2) 1,223 929 294 Other non-routine expense (3) 874 3,124 (2,250) Executive transition and organizational redesign (4) 2,929 — 2,929 Adjusted EBITDA $ 42,041 $ 34,583 $ 7,458 _________________ (1) As discussed in Note 17 - Commitments and Contingencies to the consolidated financial statements in this Annual Report on Form 10-K, the Company recovered approximately $10.0 million related to the Settlement Agreement.
Biggest changeEBITDA and Adjusted EBITDA The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure: Year Ended December 31, ($ in thousands) 2025 2024 Change Net loss $ (39,311) $ (48,102) $ 8,791 Interest expense, net 11,431 11,425 6 Income tax expense (benefit) (5,970) 1,965 (7,935) Depreciation and amortization 28,382 26,677 1,705 EBITDA (5,468) (8,035) 2,567 Lease guarantee income — (5,548) 5,548 Change in fair value of interest rate swap contracts 1,870 (1,693) 3,563 Stock-based compensation expense 1,759 2,088 (329) SEC settlement — 3,900 (3,900) Goodwill impairment charges 38,815 46,303 (7,488) Business transformation costs (1) 3,637 1,223 2,414 Other non-routine expense (2) 1,378 874 504 Executive transition and organizational redesign (3) 2,964 2,929 35 Adjusted EBITDA $ 44,955 $ 42,041 $ 2,914 _________________ (1) Represents costs associated with the launch and continued implementation of strategic projects including supply chain management improvements and technology infrastructure initiatives.
Factors that may be considered a change in circumstances, indicating that the carrying value of our goodwill may not be recoverable, include a sustained decline in stock price and market capitalization, reduced future cash flow estimates and slower growth rates in our industry.
Factors that may 29 be considered a change in circumstances, indicating that the carrying value of our goodwill may not be recoverable, include a sustained decline in stock price and market capitalization, reduced future cash flow estimates and slower growth rates in our industry.
Cost of revenue primarily includes inventory costs (net of supplier consideration), inbound freight, customs clearance fees and other miscellaneous expenses. Cost of revenue generally changes as we incur higher or lower costs from suppliers and as the customer and product mix changes.
Cost of revenue primarily includes inventory costs (net of supplier consideration), inbound freight, tariffs, customs clearance fees and other miscellaneous expenses. Cost of revenue generally changes as we incur higher or lower costs from suppliers and as the customer and product mix changes.
If the future cash flow from operations and other capital resources is insufficient to fund our liquidity needs, we may have to resort to reducing or delaying our expected acquisition plans, liquidating assets, obtaining additional debt or equity capital, or refinancing all or a portion of our debt.
If the future cash flow from operations and other capital resources is insufficient to fund our liquidity needs, we may have to resort to reducing or delaying our expected capital investment plans, liquidating assets, obtaining additional debt or equity capital, or refinancing all or a portion of our debt.
As of December 31, 2024, we have no off balance sheet arrangements that currently have or are reasonably likely to have a material effect on our consolidated financial position, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.
As of December 31, 2025, we have no off-balance sheet arrangements that currently have or are reasonably likely to have a material effect on our consolidated financial position, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.
See Note 8 - Goodwill and Acquired Intangible Assets to the consolidated financial statements in this Annual Report on Form 10-K for additional information. Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each impairment test date.
See Note 7 - Goodwill and Intangible Assets to the consolidated financial statements in this Annual Report on Form 10-K for additional information. Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each impairment test date.
Gross Profit Gross profit was $205.2 million for the year ended December 31, 2024 compared to $204.0 million in the same period in 2023 , an increase of $1.2 million, or 0.6% . The gross profit increase was primarily attributable to increased net revenue partially offset by increased costs.
Gross Profit Gross profit was $207.6 million for the year ended December 31, 2025 compared to $205.2 million in the same period in 2024 , an increase of $2.4 million, or 1.2% . The gross profit increase was attributable to increased net revenue partially offset by increased costs.
We determined that the implied control premium was reasonable which corroborates our fair value estimates. We categorize the fair value determination as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.
We determined that the implied control premiums used in each analysis were reasonable which corroborates our fair value estimates. We categorize the fair value determination as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.
For additional information on EBITDA and Adjusted EBITDA, see the section entitled “EBITDA and Adjusted EBITDA” below. 25 Financial Review Highlights for 2024 included: • Net revenue: Net revenue was $1,201.7 million in 2024, compared to $1,148.5 million in 2023, an increase of $53.2 million, or 4.6%.
For additional information on EBITDA and Adjusted EBITDA, see the section entitled “EBITDA and Adjusted EBITDA” below. Financial Review Highlights for 2025 included: 25 • Net revenue: Net revenue was $1,228.3 million in 2025, compared to $1,201.7 million in 2024, an increase of $26.6 million, or 2.2%.
For the December 31, 2024, September 30, 2024 and December 31, 2023 impairment tests, we 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.
For the impairment tests conducted in 2025 and 2024, we used a combination of an income approach or a 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.
Net Loss Attributable to HF Foods Group Inc. Net loss attributable to HF Foods Group Inc. was $48.5 million for the year ended December 31, 2024 , compared to net loss of $2.2 million for the year ended December 31, 2023.
Net loss attributable to HF Foods Group Inc. was $38.8 million for the year ended December 31, 2025, compared to a net loss of $48.5 million for the year ended December 31, 2024.
Investing Activities Net cash used in investing activities increased by $11.0 million primarily due to increased capital project spend in the year ended December 31, 2024.
Investing Activities Net cash used in investing activities increased by $7.8 million primarily due to increased capital project spend in the year ended December 31, 2025.
Liquidity and Capital Resources As of December 31, 2024, we had cash of approximately $14.5 million, checks issued not presented for payment of $5.7 million and access to approximately $36.1 million in additional funds through our $100.0 million line of credit, subject to a borrowing base calculation.
Liquidity and Capital Resources As of December 31, 2025, we had cash of approximately $8.6 million, checks issued not presented for payment of $1.7 million and access to approximately $61.2 million in additional funds through our $125.0 million line of credit, subject to a borrowing base calculation.
Gross profit margin for the year ended December 31, 2024 decreased to 17.1% compared to 17.8% in the same period in 2023.
Gross profit margin for the year ended December 31, 2025 decreased slightly to 16.9% compared to 17.1% in the same period in 2024.
Average floating interest rates on our floating-rate debt for the year ended December 31, 2024 increased by approximately 0.2% on the line of credit and 0.1% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2023.
Average floating interest rates on our floating-rate debt for the year ended December 31, 2025 decreased by approximately 0.9% on the line of credit and 0.9% on the JPMorgan Chase mortgage-secured term loan, compared to 2024.
However, our ability to repay our current obligations will depend on the future realization of our current assets. Management has considered the historical experience, the economy, the trends in the foodservice distribution industry to determine the expected collectability of accounts receivable and the realization of inventories as of December 31, 2024.
Management has considered the historical experience, the economy, the trends in the foodservice distribution industry to determine the expected collectability of accounts receivable and the realization of inventories as of December 31, 2025.
The following table summarizes cash flow data for the years ended December 31, 2024 and 2023: Year Ended December 31, (In thousands) 2024 2023 Change Net cash provided by (used in) operating activities $ 22,636 $ (1,648) $ 24,284 Net cash used in investing activities (12,548) (1,514) (11,034) Net cash used in financing activities (10,853) (5,895) (4,958) Net decrease in cash and cash equivalents $ (765) $ (9,057) $ 8,292 Operating Activities Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, asset impairment charges, changes in deferred income taxes and others, and includes the effect of working capital changes.
The following table summarizes cash flow data for the years ended December 31, 2025 and 2024: Year Ended December 31, (In thousands) 2025 2024 Change Net cash provided by operating activities $ 25,480 $ 22,636 $ 2,844 Net cash used in investing activities (20,373) (12,548) (7,825) Net cash used in financing activities (10,933) (10,853) (80) Net decrease in cash and cash equivalents $ (5,826) $ (765) $ (5,061) Operating Activities Net cash provided by operating activities consists primarily of net loss adjusted for non-cash items, including depreciation and amortization, goodwill impairment charges, changes in deferred income taxes and others, and includes the effect of working capital changes.
If property and equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds their fair value. No impairment of long-lived assets was recognized during the year ended December 31, 2024.
If property and equipment and intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds their fair value. The testing for impairment of long-lived assets occurs prior to any testing related to goodwill.
If the quantitative analysis indicates the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. 30 As a result of our 2023 financial performance in comparison to previous forecasts, combined with our level of stock price, we performed a quantitative impairment assessment as of December 31, 2023.
If the quantitative analysis indicates the carrying value of a reporting unit exceeds its fair value, we measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
Distribution, Selling and Administrative Expenses Distribution, selling and administrative expenses of $198.0 million for the year ended December 31, 2024 increased compared to prior year expenses of $195.1 million primarily due to an increase of $4.3 million in payroll and related labor costs and an increase of $1.1 million in insurance costs, partially offset by a decrease of $2.8 million in professional fees.
Distribution, Selling and Administrative Expenses Distribution, selling and administrative expenses of $201.8 million for the year ended December 31, 2025 increased by $3.7 million, or 1.9%, in 2025 compared to $198.0 million in 2024, mainly due to increases in depreciation expense of $2.3 million, occupancy expenses of $1.4 million, auto & truck expense of $1.4 million and insurance costs of $1.2 million partially offset by a reduction in professional fees of $2.8 million.
Year Ended December 31, ($ in thousands) 2024 2023 Change Net revenue $ 1,201,667 $ 1,148,493 $ 53,174 Cost of revenue 996,473 944,462 52,011 Gross profit 205,194 204,031 1,163 Distribution, selling and administrative expenses 198,026 195,062 2,964 Goodwill impairment charges 46,303 — 46,303 (Loss) income from operations (39,135) 8,969 (48,104) Interest expense 11,425 11,478 (53) Other expense (income), net 2,818 (1,091) 3,909 Change in fair value of interest rate swap contracts (1,693) 1,580 (3,273) Lease guarantee income (5,548) (377) (5,171) Loss before income taxes (46,137) (2,621) (43,516) Income tax expense 1,965 41 1,924 Net loss and comprehensive loss (48,102) (2,662) (45,440) Less: net income (loss) attributable to noncontrolling interests 409 (488) 897 Net loss and comprehensive loss attributable to HF Foods Group Inc. $ (48,511) $ (2,174) $ (46,337) 26 The following table sets forth the components of our consolidated results of operations expressed as a percentage of net revenue for the periods indicated: Year Ended December 31, 2024 2023 Net revenue 100.0 % 100.0 % Cost of revenue 82.9 % 82.2 % Gross profit 17.1 % 17.8 % Distribution, selling and administrative expenses 16.5 % 17.0 % Goodwill impairment charges 3.9 % — % (Loss) income from operations (3.3) % 0.8 % Interest expense 0.9 % 1.0 % Other expense (income), net 0.2 % (0.1) % Change in fair value of interest rate swap contracts (0.1) % 0.1 % Lease guarantee income (0.5) % — % Loss before income taxes (3.8) % (0.2) % Income tax expense 0.2 % — % Net loss and comprehensive loss (4.0) % (0.2) % Less: net income (loss) attributable to noncontrolling interests — % — % Net loss and comprehensive loss attributable to HF Foods Group Inc.
Year Ended December 31, ($ in thousands) 2025 2024 Change Net revenue $ 1,228,282 $ 1,201,667 $ 26,615 Cost of revenue 1,020,706 996,473 24,233 Gross profit 207,576 205,194 2,382 Distribution, selling and administrative expenses 201,762 198,026 3,736 Goodwill impairment charges 38,815 46,303 (7,488) Loss from operations (33,001) (39,135) 6,134 Interest expense 11,467 11,425 42 Other expense (income), net (1,057) 2,818 (3,875) Change in fair value of interest rate swap contracts 1,870 (1,693) 3,563 Lease guarantee income — (5,548) 5,548 Loss before income taxes (45,281) (46,137) 856 Income tax expense (benefit) (5,970) 1,965 (7,935) Net loss and comprehensive loss (39,311) (48,102) 8,791 Less: net income (loss) attributable to noncontrolling interests (468) 409 (877) Net loss and comprehensive loss attributable to HF Foods Group Inc. $ (38,843) $ (48,511) $ 9,668 26 The following table sets forth the components of our consolidated results of operations expressed as a percentage of net revenue for the periods indicated: Year Ended December 31, 2025 2024 Net revenue 100.0 % 100.0 % Cost of revenue 83.1 % 82.9 % Gross profit 16.9 % 17.1 % Distribution, selling and administrative expenses 16.4 % 16.5 % Goodwill impairment charges 3.2 % 3.9 % Loss from operations (2.7) % (3.3) % Interest expense 0.9 % 0.9 % Other expense (income), net (0.1) % 0.2 % Change in fair value of interest rate swap contracts 0.2 % (0.1) % Lease guarantee income — % (0.5) % Loss before income taxes (3.7) % (3.8) % Income tax expense (benefit) (0.5) % 0.2 % Net loss and comprehensive loss (3.2) % (4.0) % Less: net income (loss) attributable to noncontrolling interests — % — % Net loss and comprehensive loss attributable to HF Foods Group Inc.
Interest Expense Interest expense for the year ended December 31, 2024 decreased by $0.1 million or 0.5% , compared to the year ended December 31, 2023, primarily due to a decrease in our average daily JPMorgan Chase mortgage-secured term loan balance of $5.1 million, partially offset by an increase in our average daily line of credit balance of $10.6 million combined with a slightly higher interest-rate environment.
The increase was driven by an increase in our average daily line of credit balance of $1.3 million, partially offset by a decrease in our average daily JPMorgan Chase mortgage-secured term loan balance of $5.1 million combined with a slightly lower interest-rate environment.
Cash is required to pay purchase costs for inventory, salaries, fuel and trucking expenses, selling expenses, rental expenses, income taxes, other operating expenses and to service debts. 28 We believe that our cash flow generated from operations is sufficient to meet our normal working capital needs for at least the next twelve months.
We have funded working capital and other capital requirements primarily by cash flow from operations and bank loans. Cash is required to pay purchase costs for inventory, salaries, fuel and trucking expenses, selling expenses, rental expenses, income taxes, other operating expenses and to service debts.
Gross profit margin of 17.1% for 2024 decreased from 17.8% in the prior year. • Distribution, selling and administrative expenses : Distribution, selling and administrative expenses increased by $3.0 million, or 1.5%, in 2024 compared to 2023, mainly due to an increase in payroll and related labor costs of $4.3 million as well as insurance costs of $1.1 million partially offset by a reduction in professional fees of $2.8 million.
Gross profit margin of 16.9% for 2025 decreased from 17.1% in the prior year due to a shift in sales mix from Asian Specialty with higher margin to Meat and Poultry and Commodity with lower margins. • Distribution, selling and administrative expenses : Distribution, selling and administrative expenses increased by $3.7 million, or 1.9%, in 2025 compared to 2024, mainly due to increases in depreciation expense of $2.3 million, occupancy expenses of $1.4 million, auto & truck expense of $1.4 million and insurance costs of $1.2 million partially offset by a reduction in professional fees of $2.8 million.
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 our common stock, it may cause a change in the results of the impairment assessment and, as such, could result in further impairment of goodwill. 31 Impairment of Long-lived Assets We assess our long-lived assets such as property and equipment and intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
Impairment of Long-lived Assets We assess our long-lived assets such as property and equipment and intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
With sixteen distribution centers and three cross-docks and a fleet of over 400 vehicles, our distribution network now spans 46 states covering approximately 95% of the contiguous United States.
We operate a national distribution platform comprised of sixteen distribution centers and four cross-docks, supported by a fleet of over 400 vehicles, which collectively spans 46 states and covers approximately 95% of the contiguous United States.
These principles require management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, cash flow and related disclosure of contingent assets and liabilities.
Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. These principles require management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, cash flow and related disclosure of contingent assets and liabilities.
(4) Includes severance and related expenses for the Company’s transition of executive officers and organizational redesign.
(2) Includes legal and consulting costs related to various corporate projects and other strategic initiatives. (3) Includes severance and related expenses for the Company’s transition of executive officers and organizational redesign.
We are dedicated to serving the vast array of Asian restaurants in need of high-quality and specialized food ingredients at competitive prices. 24 How to Assess HF Foods’ Performance In assessing our performance, we consider a variety of performance and financial measures, including principal growth in net revenue, gross profit, distribution, selling and administrative expenses, as well as certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA.
While Asian restaurants remain our core customer base, we intend to selectively broaden our customer reach into other ethnic and specialty foodservice segments over time as we execute our long-term growth strategy. 24 How to Assess HF Foods’ Performance In assessing our performance, we consider a variety of performance and financial measures, including principal growth in net revenue, gross profit, distribution, selling and administrative expenses, as well as certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA.
Our average daily line of credit balance increased by $10.6 million, or 23.7%, to $55.5 million for the year ended December 31, 2024 from $44.9 million for the year ended December 31, 2023, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $5.1 million, or 4.7%, to $103.6 million for the year ended December 31, 2024 from $108.6 million for the year ended December 31, 2023. 27 Income Tax Expense Income tax expense was $2.0 million for the year ended December 31, 2024, compared to $41,000 for the year ended December 31, 2023.
Our average daily line of credit balance was $56.8 million for the year ended December 31, 2025, up from $55.5 million for the year ended December 31, 2024, while our average daily JPMorgan Chase mortgage-secured term loan balance decreased to $98.5 million for the year ended December 31, 2025 from $103.6 million for the year ended December 31, 2024.
The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Results of Operations Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024 The following table sets forth a summary of our consolidated results of operations for the years ended December 31, 2025 and 2024. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.5% in 2024 from 17.0% in 2023, primarily due to lower professional fees and increased net revenue, partially offset by increased payroll and related labor costs and insurance costs. • Net loss attributable to HF Foods Group Inc .: Net loss attributable to HF Foods Group Inc. was $48.5 million in 2024 compared to net loss of $2.2 million in 2023.
Distribution, selling and administrative expenses as a percentage of net revenue remained relatively consistent at 16.4% in 2025 compared to 16.5% in 2024. • Net loss attributable to HF Foods Group Inc .: Net loss attributable to HF Foods Group Inc. was $38.8 million in 2025 compared to net loss of $48.5 million in 2024.
Accordingly, we believe these are the most critical to fully understand and evaluate our financial condition and results of operations. Business Combinations We account for our business combinations using the purchase method of accounting in accordance with ASC Topic 805 (“ASC 805”), Business Combinations .
Accordingly, we believe these are the most critical to fully understand and evaluate our financial condition and results of operations. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination.
(4.0) % (0.2) % Net Revenue Net revenue for the year ended December 31, 2024 increased by $53.2 million, or 4.6%, compared to the same period in 2023.
(3.2) % (4.0) % Net Revenue Net revenue for the year ended December 31, 2025 increased by $26.6 million, or 2.2%, compared to the same period in 2024. T he increase was primarily attributable to volume growth and improved pricing in Seafood and Meat & Poultry and volume growth in Commodity, partially offset by volume decreases within other categories.
This increase was primarily attributable to volume growth associated with new wholesale accounts, case count growth, product cost inflation and improved pricing in certain categories, partially offset by the $13.3 million loss in revenue from the exit of our chicken processing businesses during the second half of 2023. • Gross profit : Gross profit was $205.2 million in 2024 compared to $204.0 million in 2023, an increase of $1.2 million, or 0.6%.
The increase was primarily attributable to volume growth and improved pricing in Seafood and Meat & Poultry and volume growth in Commodity, partially offset by volume decreases within other categories. • Gross profit : Gross profit was $207.6 million in 2025 compared to $205.2 million in 2024, an increase of $2.4 million, or 1.2%.
Pursuant to the agreement, we will pay the swap counterparty a fixed rate of 4.11% in exchange for floating payments based on CME Term SOFR. Our liquidity is also affected by the entry of an administrative civil cease-and-desist order by the SEC, whereby we agreed to payment of a civil monetary penalty of $3.9 million.
Pursuant to the agreement, we will pay the swap counterparty a fixed rate of 4.11% in exchange for floating payments based on CME Term SOFR. 28 Management believes we have sufficient access to funds to meet our working capital requirements and debt obligations in the next twelve months.
Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.5% for the year ended December 31, 2024 from 17.0% in the same period in 2023, primarily due to lower professional fees and increased net revenue, partially offset by increased payroll and related labor costs and insurance costs.
Distribution, selling and administrative expenses as a percentage of net revenue remained relatively consistent at 16.4% in 2025 compared to 16.5% in 2024. Interest Expense Interest expense for the year ended December 31, 2025 increased slightly to $11.47 million, compared to $11.43 million for the year ended December 31, 2024, an increase of $0.04 million or 0.4%.
On October 24, 2024, Xi (Felix) Lin was appointed to serve as Interim Chief Executive Officer, effective immediately, and continued to serve as the Company’s Chief Operating Officer and President. On December 17, 2024, the Board of Directors of HF Foods Group Inc. appointed Felix Lin to serve as the Company’s Chief Executive Officer and President, effective January 1, 2025.
Effective October 15, 2025, Paul McGarry, who previously served as the Company’s Vice President and Corporate Controller was appointed Interim Chief Financial Officer. Effective January 27, 2026, the Board of Directors appointed Mr. McGarry to serve as the Company’s Chief Financial Officer.
Financing Activities Net cash used in financing activities increased by $5.0 million to $10.9 million during the year ended December 31, 2024 primarily due to the change in line of credit activity from net proceeds for the year ended December 31, 2023 to net payments for the year ended December 31, 2024. 29 Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP.
Financing Activities Net cash used in financing activities remained relatively consistent at $10.9 million during the year ended December 31, 2025 primarily due to the higher overall net proceeds from line of credit activity, offset by overall lower interest rates as compared to the year ended December 31, 2024.
Removed
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in “ Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 26, 2024.
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This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those discussed in Part I, Item 1A. Risk Factors . and elsewhere in this Annual Report on Form 10-K.
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Recent Developments CEO Transition On October 24, 2024, the Board of Directors of the Company terminated Xiao Mou (Peter) Zhang as Chief Executive Officer of the Company, without cause, effective immediately. In connection with Mr. Zhang’s departure, the Company entered into a Severance Agreement and General Release (the “Severance Agreement”) with Mr. Zhang on November 21, 2024.
Added
See “Cautionary Note Regarding Forward-Looking Statements” above for further explanation. Recent Developments CFO Transition On October 15, 2025 (the “Separation Date”), Cindy Yao, departed from the Company as its Chief Financial Officer. In connection with Ms. Yao’s departure, the Company entered into a Separation Agreement (the “Separation Agreement”) with Ms. Yao effective November 6, 2025.
Removed
Pursuant to the Severance Agreement, which includes a general release of claims by Mr. Zhang against the Company, Mr. Zhang will be entitled to receive standard severance benefits provided to a Chief Executive Officer under the Company’s Amended and Restated Severance Plan. Mr. Zhang continues to serve as a Director on the Board of Directors.
Added
Opening of a State-of-the-Art Distribution Warehouse in Powder Springs, GA On December 18, 2025, the Company officially opened its newest 182,000 square foot distribution center located outside Atlanta, in Powder Springs, Georgia. This brand-new facility includes warehouse, freezer, cooler, and office space and provides significant opportunities for expanding our existing operations in Atlanta and the surrounding cities and states.
Removed
Credit Facility Amended On February 12, 2025, the Company amended certain terms and conditions of the JPM Credit Agreement, by, among other things, (i) increasing the Revolving Commitment (as defined in the Credit Agreement) from $100.0 million to $125.0 million, (ii) joining three new subsidiaries of the Company to the Credit Agreement, each as a “Borrower” thereunder, (iii) joining Wells Fargo Bank, N.A. to the JPM 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.
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The Company plans to incorporate automated material handling and warehouse management technologies at the facility to support operating efficiency. The new distribution center will continue to service over 1,000 customers from HF Food’s previous Atlanta location and is now open to deliver more business throughout Georgia, Alabama, Mississippi, and Tennessee.
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Business Overview We market and distribute Asian specialty food products, seafood, fresh produce, frozen and dry food, and non-food products primarily to Asian restaurants and other foodservice customers throughout the United States. HF Foods was formed through a merger between two complementary market leaders, HF Foods Group Inc. and B&R Global.
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The distribution center is located at 4795 Innovative Highway, Powder Springs, GA 30127, and currently employs over 50 individuals with plans to expand operations throughout 2026. Business Overview HF Foods is a leading marketer and distributor of fresh produce, frozen and dry food, and non-food products to Asian restaurants and other foodservice customers throughout the United States.
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On December 30, 2021, HF Foods acquired a leading seafood supplier, the Great Wall Group, resulting in the addition of three distribution centers, located in Illinois and Texas (the “Great Wall Acquisition”). On April 29, 2022, HF Foods acquired substantially all of the assets of Sealand Food, Inc.
Added
We serve approximately 15,000 customer locations through a high-frequency, service-oriented distribution model designed to meet the operational needs of independent restaurants, including timely delivery and consistent product availability.
Removed
(the “Sealand Acquisition”), one of the largest frozen seafood suppliers servicing the Asian restaurant market along the eastern seaboard, from Massachusetts to Florida, as well as Pennsylvania, West Virginia, Ohio, Kentucky, and Tennessee. See Note 7 - Acquisitions to the consolidated financial statements in this Annual Report on Form 10-K for additional information regarding recent acquisitions.
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We believe we are differentiated by our deep cultural and language understanding of the Asian restaurant community, long-standing relationships with growers and suppliers, and specialized sourcing capabilities across North America, South America, and Asia.
Removed
Capitalizing on our deep understanding of Asian cultures, strong relationships with growers and suppliers of food products primarily in North America, South America, and Asia, with over 1,000 employees, and supported by two outsourced call centers in China, we have become a trusted partner serving approximately 15,000 customer locations throughout the United States.
Added
These strengths are reinforced by nearly 1,000 employees and a centralized outsourced call center in China, which supports order taking and customer service in customers’ primary language and enables coordinated marketing and promotional campaigns.
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The increase was primarily attributable to increased net revenue partially offset by increased costs.
Added
Our product portfolio is supported by long-term partnerships with both domestic and international suppliers, which we believe enhances our ability to provide a broad and differentiated assortment at competitive prices.
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The increase of $46.3 million was primarily driven by goodwill impairment charges of $46.3 million in 2024. Results of Operations Comparison of Year Ended December 31, 2024 to Year Ended December 31, 2023 The following table sets forth a summary of our consolidated results of operations for the years ended December 31, 2024 and 2023.
Added
Our supplier relationships and market knowledge strengthen our purchasing and negotiating position and support continuity of supply, including improving our ability to manage potential supply chain disruptions, reduce stockouts, obtain pricing concessions, and maintain reliable delivery schedules.
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This increase was primarily attributable to volume growth associated with new wholesale accounts, case count growth, product cost inflation and improved pricing in certain categories, partially offset by the $13.3 million loss in revenue resulting from the exit of our chicken processing businesses during the second half of 2023.
Added
The increase was primarily attributable to volume growth and improved pricing in Seafood and Meat and Poultry and volume growth in Commodity, partially offset by volume decreases in other categories.
Removed
The increase in income tax expense of $1.9 million was due to non-deductible items including the impact of the Company’s goodwill impairment charges, SEC settlement, and state taxes, partially offset by the change in valuation allowance, tax credits, the expiration of the statute of limitations in relation to unrecognized tax benefits, and other tax adjustments during the year ended December 31, 2024.
Added
The improvement of $9.7 million was primarily driven by an increase in income tax benefit of $7.9 million, due to the result of current year goodwill impairment charges, as well as an improvement in loss from operations of $6.1 million compared to 2024 which was offset by one time gain from the termination of a lease guarantee liability of $5.5 million within other income in the prior year and an increase in fair value of interest rate swap expense year over year of $3.6 million.
Removed
The increase in loss of $46.3 million was primarily driven by goodwill impairment charges of $46.3 million recorded during the year ended December 31, 2024.
Added
Income Tax Expense (Benefit) 27 Income tax benefit was $6.0 million for the year ended December 31, 2025, compared to an income tax expense of $2.0 million for the year ended December 31, 2024.
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The Company accounted for the settlement as a recovery of previously recorded expenses related to the litigation. The Company has adjusted for the $10.0 million recovery. (2) Represents costs associated with the launch of strategic projects including supply chain management improvements and technology infrastructure initiatives. (3) Includes contested proxy and related legal and consulting costs and facility closure costs.
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The $7.9 million increase in income tax benefit was primarily driven by lower nondeductible goodwill impairment charges in 2025, as well as the impact of the SEC settlement recognized in 2024. Net Loss Attributable to HF Foods Group, Inc.
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We have funded working capital and other capital requirements primarily by cash flow from operations and bank loans.
Added
The $9.7 million improvement in net loss was primarily attributable to a $7.9 million favorable change in income taxes, a $6.1 million improvement in loss from operations due to a lower goodwill impairment charge in 2025 compared to 2024.
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We made this payment during the year ended December 31, 2024. Management believes we have sufficient funds to meet our working capital requirements and debt obligations in the next twelve months.
Added
These favorable variances were partially offset by the absence of the $5.5 million non-recurring gain recognized in the prior year from the termination of a lease guarantee liability, which was recorded in other income, and by a $3.6 million unfavorable year-over-year change in the fair value of the Company’s interest rate swap.
Removed
Checks issued not presented for payment was reclassified from financing to operating activities for both the current and prior year which resulted in a $1.2 million increase to net cash provided by operating activities in the current year and a $17.5 million decrease in the prior year.
Added
Following the 2025 impairment, the Company has no remaining goodwill.
Removed
Net cash provided by operating activities increased by $24.3 million primarily due to the timing of working capital outlays such as the increase of $18.6 million resulting from checks issued not presented for payment and was partially offset by decreased operating income (excluding the $46.3 million non-cash goodwill impairment charge) and the $3.9 million SEC settlement payment.
Added
We believe that our cash flow generated from operations is sufficient to meet our normal working capital needs for at least the next twelve months. However, our ability to repay our current obligations will depend on the future realization of our current assets.
Removed
The purchase method of accounting requires that the consideration transferred be allocated to the assets, including separately identifiable assets and liabilities we acquired, based on their estimated fair values.
Added
Net cash provided by operating activities increased by $2.8 million primarily due to an increase in non-cash expense add-backs and increases in accounts payable balances, offset by the timing of working capital outlays mainly for inventory purchases and increases in our accounts receivable balances.
Removed
The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date.
Added
As a result of declines in the stock price during the fourth quarter of 2025, the Company performed a quantitative impairment assessment as of December 31, 2025.
Removed
Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe currently are able to obtain adequate supplies of diesel fuel, and average prices in 2024 decreased in comparison to average prices in the same period in 2023, decreasing 10.8% on average. However, it is impossible to predict the future availability or price of diesel fuel.
Biggest changeWe currently are able to obtain adequate supplies of diesel fuel, and average prices for 2025 decreased in comparison to average prices in 2024, decreasing 2.6% on average. However, it is impossible to predict the future availability or price of diesel fuel.
Our floating rate debt interest is based on the floating 1-month SOFR plus a predetermined credit adjustment rate plus the bank spread. The remaining 64.1% of our debt is on a fixed rate or a floating rate with hedging.
Our floating rate debt interest is based on the floating 1-month SOFR plus a predetermined credit adjustment rate plus the bank spread. The remaining 64.3% of our debt is on a fixed rate or a floating rate with hedging.
We do not actively hedge the price fluctuation of diesel fuel in general. Instead, we seek to minimize fuel cost risk through delivery route optimization and fleet utilization improvement. 32
We do not actively hedge the price fluctuation of diesel fuel in general. Instead, we seek to minimize fuel cost risk through delivery route optimization and fleet utilization improvement. 31
See Note 9 - Derivative Financial Instruments to the consolidated financial statements in this Annual Report on Form 10-K for additional information.
See Note 8 - Derivative Financial Instruments to the consolidated financial statements in this Annual Report on Form 10-K for additional information.
As of December 31, 2024, our aggregate floating rate debt’s outstanding principal balance without hedging was $59.7 million, or 35.9% of total debt, consisting primarily of our revolving line of credit (see Note 10 - Debt to the consolidated financial statements in this Annual Report on Form 10-K).
As of December 31, 2025, our aggregate floating rate debt’s outstanding principal balance without hedging was $57.9 million, or 35.7% of total debt, consisting primarily of our revolving line of credit (see Note 9 - Long-Term Debt to the consolidated financial statements in this Annual Report on Form 10-K).

Other HFFG 10-K year-over-year comparisons