HFFG 10-K & 10-Q changes, risk factors and insider trading
HF Foods Group Inc. · Nasdaq · Wholesale-Groceries & Related Products · CIK 1680873 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
A significant cybersecurity incident involving our cybersecurity infrastructure may result from actions by our employees, suppliers, third-party administrators, or unknown third parties or through cyber-attacks. The risk of such an incident can exist whether software services are in our technology systems or are in cloud-based software services. 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. Any such incident could result in operational impairments, significant harm to our reputation and financial losses.see in full comparison
“If, 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.”see in full comparison
“On February 20, 2026, the U.S. 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. 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. …”see in full comparison
“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. 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.”see in full comparison
Impairment analysis requires significant judgment by management and the fair value of goodwill, amortizable intangible assets or other long-lived assets are sensitive to changes in key assumptions used in the projected cash flows, which include forecasted revenues and perpetual growth rates, among others, as well as current market conditions in both the United States and 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 yearsee in full comparison2024.2025. 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$38.8 million was recorded during the year ended December 31,2024.2025. Following the impairment test conducted as of December 31, 2025, the Company’s goodwill was fully impaired.
We rely on technology in our business and any cybersecuritysee in full comparisonincident,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.
Full comparison: every changed paragraph (19)
On February 20, 2026, the U.S. 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. 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.
Volatile fuel prices have a direct impact on the industry served by us. We require significant quantities of fuel for delivery vehicles and are exposed to the risk associated with fluctuations in the market price for fuel. 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 conditionsconditions, environmental concerns, and environmentalgeopolitical concerns.conflicts. The cost of fuel affects the price paid by us for products, as well as the costs we incur to deliver products to the customers. There is no guarantee that we will be able to pass along a portion of increased fuel costs to our customers in the future. 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 technology in our business and any cybersecurity incident,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.
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 vulnerabilities and construct increasingly sophisticated cybersecurity attacks. Any such disruption to these software and other technology systems, or the technology systems of third parties on which we rely, the failure of these systems to otherwise perform as anticipated, or the theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage, any or all of which could potentially adversely affect our customer service, decrease the volume of our business and/or result in increased costs and lower profits.
A significant cybersecurity incident involving our cybersecurity infrastructure may result from actions by our employees, suppliers, third-party administrators, or unknown third parties or through cyber-attacks. The risk of such an incident can exist whether software services are in our technology systems or are in cloud-based software services. 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. Any such incident could result in operational impairments, significant harm to our reputation and financial losses.
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. 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.
The appearance of conflicts of interest created by related-party transactions could impair the confidence of our investors. Our SpecialBoard Transactionsof Review CommitteeDirectors 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. 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.
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 (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,Feng trade name,” “ the Rong Cheng trade name” and “Great Wall,Wall Design®, and Great Wall Seafood™,” are valuable assets that reinforce our customers’ favorable perception of our products. Our trademark rights and related registrations may be challenged in the future and could be canceled or narrowed. Failure to protect our trademark rights could cause customer confusion or negatively affect customers’ perception of our brand and products, and eventually adversely affect our sales and profitability. Moreover, intellectual property disputes and proceedings and infringement claims may result in a significant distraction for management and significant expense, which may not be recoverable regardless of whether we are successful. Such proceedings may be protracted with no certainty of success, and an adverse outcome could subject us to liability, force us to cease use of certain trademarks or other intellectual property or force us to enter into licenses with others. Any one of these occurrences may have a material adverse effect on our business, results of operations and financial condition.
WeAs ownof December 31, 2025 we owned approximately 907,0000.9 million square feet of our distribution centers (or 71%67% of the total square feet), and the remainder (or 29%33% of the total square feet) iswas occupied under leasing arrangements. Our ability to re-negotiate favorable terms on an expiring lease or to negotiate favorable terms for a suitable alternate location, and our ability to negotiate favorable lease terms for additional locations, could depend on conditions in the real estate market, competition for desirable properties, our relationships with current and prospective landlords, and/or other factors that are not within our control. Any or all of these factors and conditions could negatively impact our growth and profitability.
Our success is substantially dependent on our senior management, directors and other key personnel. Our senior management, directors and other key personnel have been primarily responsible for determining the strategic direction of our business and for executing our growth strategy, and are integral to our brand, culture and reputation with suppliers and consumers. 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. WeWhen haveappropriate recentlywe appointedwill fourappoint new members to our board of directors as part of our continuous efforts to enhance our corporate governance and our future strategies and plans. OurNewly newappointed directors may have different professional experiences and industry knowledge from those individuals who previously served, and we expect they willmay 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. In addition, transition periods relating to such changes are often difficult as new personnel gain more detailed knowledge of our operations and management. If we do not integrate any new personnel successfully, including our new directors, we may be unable to manage and grow our business, and our financial condition and profitability may suffer as a result. Any departure of senior management, directors and other key personnel could be viewed in a negative light by investors and analysts, which may cause our stock price to decline.
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. 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. 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.
From time to time, we may be party to various claims and legal proceedings, as well as governmental and regulatory investigations and proceedings. We evaluate these claims and proceedings to assess the likelihood of unfavorable outcomes and to estimate, if probable and estimable, the amount of potential losses. Based on these assessments and estimates, we may establish reserves, as appropriate. 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.
CentralChanges to central bank policy interest rates remain elevateduncertain sinceand risingchanges into 2022.these rates can impact our business. Rising interest rates could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or both of which could negatively affect customer demand for our products and industry demand generally. Rising interest rates may cause credit market dislocations which can impact funding costs.
Impairment analysis requires significant judgment by management and the fair value of goodwill, amortizable intangible assets or other long-lived assets are sensitive to changes in key assumptions used in the projected cash flows, which include forecasted revenues and perpetual growth rates, among others, as well as current market conditions in both the United States and 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 2024.2025. 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$38.8 million was recorded during the year ended December 31, 2024.2025. Following the impairment test conducted as of December 31, 2025, the Company’s goodwill was fully impaired.
If, 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.
The Company’s former Chairman and Co-CEOCo-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. Ni has sufficient voting power to significantly influence matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. However, in June 2024, Mr. Ni entered into a settlement with the SEC, pursuant to which Mr. 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. 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. 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.
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. 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. 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 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. 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. 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 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.
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.
Management's Discussion & Analysis (MD&A)
New heading “Opening of a State-of-the-Art Distribution Warehouse in Powder Springs, GA”
Removed heading “Credit Facility Amended”
Removed heading “Business Combinations”
Largest changes
“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. 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. …”see in full comparison
“We estimate the fair value of assets acquired and liabilities assumed in a business combination. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement. Significant estimates in valuing certain intangible assets include, but are not limited to future expected revenues and cash flows, useful lives, discount rates, and selection of comparable companies. …”see in full comparison
Net cash provided by operating activities consists primarily of netsee in full comparisonincomeloss adjusted for non-cash items, including depreciation and amortization,assetgoodwill impairment charges, changes in deferred income taxes and others, and includes the effect of working capital changes.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.Net cash provided by operating activities increased by$24.3$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 outlayssuch as the increase of $18.6 million resulting from checks issued not presentedmainly forpaymentinventory purchases andwasincreasespartiallyinoffsetourbyaccountsdecreasedreceivableoperating income (excluding the $46.3 million non-cash goodwill impairment charge) and the $3.9 million SEC settlement payment.balances.
“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. …”see in full comparison
“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. 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.”see in full comparison
“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. A quantitative goodwill impairment analysis requires valuation of the respective reporting unit, which requires complex analysis and judgment. The results of the testing as of December 31, 2023, concluded that the estimated fair value exceeded carrying value by approximately 10%, and no impairment existed as of that date.”see in full comparison
Full comparison: every changed paragraph (54)
The following discussion and analysis provides information about our business, the results of operations, financial condition, liquidity and capital resources of HF Foods Group Inc. This information is intended to facilitate the understanding and assessment of significant changes and trends related to our results of operations and financial condition. This discussion and analysis should be read in conjunction with the consolidated financial statements and the accompanying notes presented elsewhere in this Annual Report on Form 10-K. DiscussionsThis 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 2022certain itemsfactors including, but not limited to, those discussed in Part I, Item 1A. Risk Factors. and year-to-year comparisons between 2023 and 2022 that are not includedelsewhere in this Annual Report on Form 10-K10-K. can be found inSee “PartCautionary IINote –Regarding ItemForward-Looking 7. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsStatements” of our Annual Report on Form 10-Kabove for thefurther year ended December 31, 2023, as filed with the SEC on March 26, 2024.explanation.
CEOCFO 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.
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.
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. 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. 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.
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. 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.
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.
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.
WeHF marketFoods is a leading marketer and distributedistributor Asian specialty food products, seafood,of 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.
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. 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.
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. 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.
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. 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. 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.
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. (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.
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. 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. We are dedicated to serving the vast array of Asian restaurants in need of high-quality and specialized food ingredients at competitive prices.
Gross profit is equal to net revenue minus cost of revenue. 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.
•Net revenue: Net revenue was $1,228.3 million in 2025, compared to $1,201.7 million in 2024, compared to $1,148.5 million in 2023, an increase of $53.2$26.6 million, or 4.6%.2.2%. ThisThe increase was primarily attributable to volume growth associated with new wholesale accounts, case count growth, product cost inflation and improved pricing in certainSeafood categories,and Meat & Poultry and volume growth in Commodity, partially offset by thevolume $13.3decreases millionwithin lossother in revenue from the exit of our chicken processing businesses during the second half of 2023.categories.
•Gross profit: Gross profit was $207.6 million in 2025 compared to $205.2 million in 2024 compared to $204.0 million in 2023,2024, an increase of $1.2$2.4 million, or 0.6%.1.2%. The increase was primarily attributable to increasedvolume netgrowth revenueand improved pricing in Seafood and Meat and Poultry and volume growth in Commodity, partially offset by increasedvolume costs.decreases in other categories. Gross profit margin of 17.1%16.9% for 20242025 decreased from 17.8%17.1% in the prior year.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 $3.0$3.7 million, or 1.5%,1.9%, in 20242025 compared to 2023,2024, mainly due to an increaseincreases in payrolldepreciation and related labor costsexpense of $4.3$2.3 million, occupancy expenses of $1.4 million, auto & truck expense of $1.4 million as well asand insurance costs of $1.1$1.2 million partially offset by a reduction in professional fees of $2.8 million. Distribution, selling and administrative expenses as a percentage of net revenue decreasedremained relatively consistent at 16.4% in 2025 compared 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.2024.
•Net loss attributable to HF Foods Group Inc.: Net loss attributable to HF Foods Group Inc. was $48.5$38.8 million in 20242025 compared to net loss of $2.2$48.5 million in 2023.2024. The increaseimprovement of $46.3$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 chargescharges, as well as an improvement in loss from operations of $46.3$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 2024.the prior year and an increase in fair value of interest rate swap expense year over year of $3.6 million.
Net revenue for the year ended December 31, 20242025 increased by $53.2$26.6 million, or 4.6%,2.2%, compared to the same period in 2023.2024. ThisThe increase was primarily attributable to volume growth associated with new wholesale accounts, case count growth, product cost inflation and improved pricing in certainSeafood categories,and Meat & Poultry and volume growth in Commodity, partially offset by thevolume $13.3decreases millionwithin lossother in revenue resulting from the exit of our chicken processing businesses during the second half of 2023.categories.
Gross profit was $205.2$207.6 million for the year ended December 31, 20242025 compared to $204.0$205.2 million in the same period in 2023,2024, an increase of $1.2$2.4 million, or 0.6%.1.2%. The gross profit increase was primarily attributable to increased net revenue partially offset by increased costs. Gross profit margin for the year ended December 31, 20242025 decreased slightly to 17.1%16.9% compared to 17.8%17.1% in the same period in 2023.2024.
Distribution, selling and administrative expenses of $198.0$201.8 million for the year ended December 31, 20242025 increased by $3.7 million, or 1.9%, in 2025 compared to prior$198.0 yearmillion in 2024, mainly due to increases in depreciation expense of $2.3 million, occupancy expenses of $195.1$1.4 million, auto & truck expense of $1.4 million primarilyand dueinsurance to an increasecosts of $4.3$1.2 million in payroll and related labor costs and an increase of $1.1 million in insurance costs, partially offset by a decreasereduction in professional fees of $2.8 million in professional fees.million. Distribution, selling and administrative expenses as a percentage of net revenue decreasedremained relatively consistent at 16.4% in 2025 compared 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.2024.
Interest expense for the year ended December 31, 20242025 decreasedincreased byslightly $0.1to million$11.47 or 0.5%,million, compared to $11.43 million for the year ended December 31, 2023,2024, primarilyan dueincrease toof $0.04 million or 0.4%. 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, partially offset by an increase in our average daily line of credit balance of $10.6 million combined with a slightly higherlower interest-rate environment. Average floating interest rates on our floating-rate debt for the year ended December 31, 20242025 increaseddecreased by approximately 0.2%0.9% on the line of credit and 0.1%0.9% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2023.2024. Our average daily line of credit balance increasedwas by$56.8 $10.6million million,for orthe 23.7%,year toended December 31, 2025, up from $55.5 million for the year ended December 31, 20242024, from $44.9 million for the year ended December 31, 2023, andwhile our average daily JPMorgan Chase mortgage-secured term loan balance decreased byto $5.1$98.5 million,million orfor 4.7%,the toyear ended December 31, 2025 from $103.6 million for the year ended December 31, 2024 from $108.6 million for the year ended December 31, 2023.2024.
Income Tax Expense (Benefit)
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. 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.
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. 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.
Net Loss Attributable to HF Foods GroupGroup, Inc.
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. 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. 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. Following the 2025 impairment, the Company has no remaining goodwill.
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. 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.
_________________ (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. 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.
_________________ (21) Represents costs associated with the launch and continued implementation of strategic projects including supply chain management improvements and technology infrastructure initiatives.
(2) Includes legal and consulting costs related to various corporate projects and other strategic initiatives.
(3) Includes contested proxy and related legal and consulting costs and facility closure costs.
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. We made this payment during the year ended December 31, 2024.
Management believes we have sufficient access to funds to meet our working capital requirements and debt obligations in the next twelve months. However, there are a number of factors that could potentially arise which might result in shortfalls in anticipated cash flow, such as the demand for our products, economic conditions, competitive pricing in the foodservice distribution industry, and our bank and suppliers being able to provide continued support. 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 acquisitioncapital investment plans, liquidating assets, obtaining additional debt or equity capital, or refinancing all or a portion of our debt.
As of December 31, 2024,2025, we have no off balanceoff-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.
Net cash provided by operating activities consists primarily of net incomeloss adjusted for non-cash items, including depreciation and amortization, assetgoodwill impairment charges, changes in deferred income taxes and others, and includes the effect of working capital changes. 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. Net cash provided by operating activities increased by $24.3$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 such as the increase of $18.6 million resulting from checks issued not presentedmainly for paymentinventory purchases and wasincreases partiallyin offsetour byaccounts decreasedreceivable operating income (excluding the $46.3 million non-cash goodwill impairment charge) and the $3.9 million SEC settlement payment.balances.
Net cash used in financing activities increasedremained byrelatively $5.0consistent million toat $10.9 million during the year ended December 31, 20242025 primarily due to the changehigher inoverall net proceeds from line of credit activityactivity, fromoffset netby proceedsoverall forlower theinterest yearrates endedas December 31, 2023compared to net payments for the year ended December 31, 2024.
Business Combinations
We account for our business combinations using the purchase method of accounting in accordance with ASC Topic 805 (“ASC 805”), Business Combinations. 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. 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. 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. The excess of (i) the total of cost of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over, (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.
We estimate the fair value of assets acquired and liabilities assumed in a business combination. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, its estimates are inherently uncertain and subject to refinement. Significant estimates in valuing certain intangible assets include, but are not limited to future expected revenues and cash flows, useful lives, discount rates, and selection of comparable companies. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. On the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations and comprehensive income (loss).
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. A quantitative goodwill impairment analysis requires valuation of the respective reporting unit, which requires complex analysis and judgment. The results of the testing as of December 31, 2023, concluded that the estimated fair value exceeded carrying value by approximately 10%, and no impairment existed as of that date.
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. The results of the testing at December 31, 2025, resulted in the conclusion that the estimated fair value of the Company’s single reporting unit was less than its carrying value, and its goodwill was impaired. A goodwill impairment charge was recorded in the consolidated statement of operations during the year ended December 31, 2025 of $38.8 million.
For the Decemberimpairment 31,tests 2024,conducted Septemberin 30, 20242025 and December 31, 2023 impairment tests,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. The income approach requires detailed forecasts of cash flows, including significant assumptions such as revenue growth rates, gross profit margins, distribution, selling and administrative expenses, among other assumptions, and an estimate of weighted-average cost of capital which we believe approximate the assumptions from a market participant’s perspective. The market approaches are primarily impacted by an enterprise value multiple of EBITDA. These estimates incorporate many uncertain factors which could be impacted by changes in market conditions, interest rates, growth rate, tax rates, costs, customer behavior, regulatory environment and other macroeconomic changes. In addition, we considered the reasonableness of the fair value of the reporting unit by assessing the implied enterprise value control premium based on our market capitalization and also considered the lack of liquidity in the Company’s common stock. The Company’s common stock is fairly thinly traded, with a higher level of internal stockholders than its peers, and no major analyst coverage. As a result, the implied value from the traded stock price is based on limited investment public interest. Our market capitalization is calculated using the number of common shares outstanding and common stock publicly traded price. We determined that the implied control premiumpremiums wasused 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.
See Note 87 - Goodwill and Acquired Intangible Assets to the consolidated financial statements in this Annual Report on Form 10-K for additional information.
Following the impairment test conducted as of December 31, 2025, the Company’s goodwill was fully impaired.
We performed sensitivity analyses on the key inputs and assumptions used in determining the estimated fair value of our reporting unit by utilizing changes in assumptions that would reasonably likely occur. Assuming all other assumptions and inputs used in the fair value analysis are held constant, for the December 31, 2024 impairment test, a 100 basis point increase in the discount rate assumption, a 1x decrease in the respective EBITDA multiple assumptions, a 25 basis point decrease in the gross profit margin assumption, and a 50 basis point decrease in the revenue growth rate assumption would result in a decrease in the fair value of our reporting unit of approximately $11.6 million, $31.0 million, $7.3 million, and $5.5 million, respectively, which would likely result in further impairment. These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline.
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.
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. Factors which may indicate potential impairment include a significant underperformance related to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows which the assets or asset groups are expected to generate. 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. The Company assessed whether the carrying amounts of the Company’s long-lived assets were impaired and determined no events or changes in circumstances indicated that the carrying amounts may not be recoverable.
No impairment of long-lived assets was recognized during the years ended December 31, 2025 or 2024.
No impairment of long-lived assets was recognized during the year ended December 31, 2024. We impaired machinery used in the operations within HF Foods Industrial, Inc. and recognized impairment expense of $1.2 million in distribution, selling and administrative expenses in the consolidated statements of operations during the year ended December 31, 2023. We impaired our acquired developed technology attributable to Syncglobal, Inc. and recognized impairment expense of $0.4 million in distribution, selling and administrative expenses in the consolidated statements of operations during the year ended December 31, 2022.
What changed in the latest 10-Q
Risk Factors
New heading “Our stockholder rights plan could delay or prevent a change of control that our stockholders may consider favorable and could adversely affect the market price of our common stock.”
Largest changes
“Our stockholder rights plan could delay or prevent a change of control that our stockholders may consider favorable and could adversely affect the market price of our common stock.”see in full comparison
“On June 11, 2026, our Board of Directors adopted a limited-duration stockholder rights plan and declared a dividend of one preferred share purchase right for each outstanding share of our common stock. The rights generally become exercisable if a person or group acquires beneficial ownership of 15% or more of our outstanding common stock in a transaction not approved by our Board, in which case holders other than the acquiring person would be entitled to purchase our common stock at a substantial discount, resulting in significant dilution to the acquiring person. …”see in full comparison
Full comparison: every changed paragraph (3)
There have been no material changes from the risk factors disclosed in Item 1A of our 2025 Annual Report.Report other than the below item.
Our stockholder rights plan could delay or prevent a change of control that our stockholders may consider favorable and could adversely affect the market price of our common stock.
On June 11, 2026, our Board of Directors adopted a limited-duration stockholder rights plan and declared a dividend of one preferred share purchase right for each outstanding share of our common stock. The rights generally become exercisable if a person or group acquires beneficial ownership of 15% or more of our outstanding common stock in a transaction not approved by our Board, in which case holders other than the acquiring person would be entitled to purchase our common stock at a substantial discount, resulting in significant dilution to the acquiring person. The rights plan is intended to protect stockholders from unreported group formation and unsolicited takeover efforts that our Board believes do not offer adequate value, but it may also have the effect of deterring, delaying, or preventing a change of control, including an acquisition that some or all of our stockholders might consider beneficial or that would result in a premium over the market price of our common stock. The existence of the rights plan may also limit the price that investors are willing to pay for our common stock, and could discourage proxy contests or make it more difficult for stockholders to replace members of our Board or management. The rights plan is scheduled to expire on June 10, 2027, unless earlier redeemed, exchanged, or terminated, and our Board may extend, amend, or terminate the plan.
Management's Discussion & Analysis (MD&A)
New heading “Results of Operations”
New heading “Comparison of Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025”
New heading “Distribution, Selling and Administrative Expenses”
New heading “Interest Expense”
New heading “Income Tax Benefit”
New heading “Net Income (Loss) Attributable to HF Foods Group, Inc.”
New heading “EBITDA and Adjusted EBITDA”
Largest changes
“Net income attributable to HF Foods Group Inc. was $3.8 million for the six months ended June 30, 2026, compared to a net loss of $0.4 million for the six months ended June 30, 2025. The $4.2 million improvement was primarily attributable to a $1.4 million gain on the Utah building sale, recognition of employee retention credit of $1.8 million including interest, the IEEPA tariff refund of $1.1 million, and a $3.4 million favorable year-over-year change in fair value of interest rate swap. …”see in full comparison
“Comparison of Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025”see in full comparison
Net income attributable to HF Foods Group, Inc. was $2.6 million for the three months ended June 30, 2026, compared to net income of $1.2 million for the three months endedsee in full comparisonMarchJune31, 2026, compared to net loss of $1.6 million for the three months ended March 31,30, 2025. The improvement was primarily driven bygain on salerecognition ofUtah$1.8buildingmillion employee retention credit including interest, the IEEPA tariff refund of $1.1 million, and a positive change in fair value of interest rate swap contracts by$2.0$1.4 million compared to 2025. These favorable variances were partially offset by $1.3 million decrease in income from operations and $0.7 million year-over-year change in net income attributable to noncontrolling interests.
Full comparison: every changed paragraph (42)
To position the business for long-term success, starting in 2024, we initiated a comprehensive, operational transformation plan in an effort to drive growth and cost savings. Our transformation is focused on four key areas, each of which we expect will positively impact future growth or cost savings. The components of our transformation wereare as follows:
•Centralized Purchasing: WeNow continuethat thewe’ve rollrolled out of our centralized purchasing program with seafood and poultry products and have yielded positive results with respect to margin expansion for the product category.categories, Wewe are now focusing on expanding the program to other categories.categories such as commodities.
•Fleet and Transportation: We have established a national fleet maintenance program.program Withinthat this,standardizes wetruck specifications across the organization. As part of this initiative, nearly 50% of our fleet is enrolled in national third-party fleet maintenance provider programs, ensuring consistent preventive maintenance, improved vehicle reliability, and reduced downtime. We have definedalso new truck specifications, initiatedlaunched a fleet replacement program for 50% of our current fleet,vehicles, implemented a national fuel savings programinitiative to maximize operating efficiency, and plan to outsource domestic inbound freight logistics to a third-party partnerprovider to adoptcreate a more cohesive national approach to our supply chain. ThisCollectively, isthese initiatives are expected to deliver substantialsignificant improvements toin the efficiency, reliability, and overall performance of our transportation system moving forward.network.
Comparison of Three Months Ended MarchJune 31,30, 2026 to Three Months Ended MarchJune 31,30, 2025
The following table sets forth a summary of our consolidated results of operations for the three months ended MarchJune 31,30, 2026 and 2025. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Net revenue for the three months ended MarchJune 31,30, 2026 increased by $13.6$8.9 million, or 4.5%,2.8%, compared to the same period in 2025. The increase was primarily due to volume growth and pricing improvement in Seafood followed by volume growth forin Commodity.Commodity, partially offset by price decreases in Meat & Poultry.
Gross profit was $50.5$55.0 million for the three months ended MarchJune 31,30, 2026 compared to $51.0$55.1 million in the same period in 2025, a decrease of $0.4$0.1 million, or 0.8%.0.2%. The gross profit decreased across most categories due to additional tariffs effective beginning in the third quarter of 2025. The decrease was primarilypartially dueoffset toby increasedthe salesIEEPA intariff lowerrefund marginreceived productsduring likethe Seafood and an uptick in landed costs.quarter. Gross profit margin for the three months ended MarchJune 31,30, 2026 of 16.2%17.0% declined compared to 17.1%17.5% in the same period in 2025.
Distribution, selling and administrative expenses decreasedincreased by $0.3$1.2 million, or 0.6%,2.4%, to $49.5$52.2 million, for the three months ended MarchJune 31,30, 2026. The increase is primarily due to an increase in auto & truck expense due to higher fuel cost, insurance, and professional services expenses. The increase is partially offset by lower personnel expenses. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 15.9%16.1% for the three months ended MarchJune 31,30, 2026 from 16.7%16.2% in the same period in 2025, primarily due to increased net revenue and lower professional fees and bad debt expenses, partially offset by increased depreciation and auto & truck expenses.2025.
Interest expense for the three months ended MarchJune 31,30, 2026 of $2.8$2.9 million increased slightly compared to $2.6$2.8 million for the three months ended MarchJune 31,30, 2025. Average floating interest rates on our floating-rate debt for the three months ended MarchJune 31,30, 2026 decreased by approximately 0.6%0.3% on our line of credit and 0.6%0.7% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2025. Our average daily line of credit balance increased by $8.0$12.1 million, or 16.4%,22.6%, to $56.7$65.7 million for the three months ended MarchJune 31,30, 2026 from $48.7$53.6 million for the three months ended MarchJune 31,30, 2025, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $6.7$8.2 million, or 6.7%,8.3%, to $93.7$91.0 million for the three months ended MarchJune 31,30, 2026 from $100.4$99.2 million for the three months ended MarchJune 31,30, 2025.
Income Tax BenefitExpense
Income tax benefitexpense was $0.4$0.2 million for the three months ended MarchJune 31,30, 2026, compared to an income tax benefitexpense of $0.9$0.5 million for the three months ended MarchJune 31,30, 2025,2025. The decrease in income tax expense was primarily due to aninvestment increasetax incredits recognized during the period, partially offset by higher income before income taxes, partially offset by investment tax credits.taxes.
Net income attributable to HF Foods Group, Inc. was $2.6 million for the three months ended June 30, 2026, compared to net income of $1.2 million for the three months ended MarchJune 31, 2026, compared to net loss of $1.6 million for the three months ended March 31,30, 2025. The improvement was primarily driven by gain on salerecognition of Utah$1.8 buildingmillion employee retention credit including interest, the IEEPA tariff refund of $1.1 million, and a positive change in fair value of interest rate swap contracts by $2.0$1.4 million compared to 2025. These favorable variances were partially offset by $1.3 million decrease in income from operations and $0.7 million year-over-year change in net income attributable to noncontrolling interests.
(2) Includes the gain recognized on the sale of the Utah facility in 2026 and legal and consulting expenses incurred in connection with various corporate projects and other strategic initiatives.
(3) Includes severance and related expenses for the Company’s transition of executive officers and organizational redesign.
Results of Operations
Comparison of Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025
The following table sets forth a summary of our consolidated results of operations for the six months ended June 30, 2026 and 2025. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.
The following table sets forth the components of our consolidated results of operations expressed as a percentage of net revenue for the periods indicated:
Net Revenue
Net revenue for the six months ended June 30, 2026 increased by $22.5 million, or 3.7%, compared to the same period in 2025. The increase was primarily attributable to volume growth and improved pricing in Seafood and Commodity, partially offset by price decrease in Meat & Poultry and volume decreases in Asian Specialty.
Gross Profit
Gross profit was $105.6 million for the six months ended June 30, 2026 compared to $106.1 million in the same period in 2025, an decrease of $0.5 million, or 0.5%. The gross profit decreased across most categories primarily due to additional tariff effective beginning the third quarter 2025. The decrease was offset by the IEEPA tariff refund received during the current quarter. Gross profit margin for the six months ended June 30, 2026 decreased slightly to 16.6% compared to 17.3% in the same period in 2025.
Distribution, Selling and Administrative Expenses
Distribution, selling and administrative expenses of $101.7 million for the six months ended June 30, 2026 increased by $0.9 million, or 0.9%, in 2026 compared to $100.8 million in 2025, mainly due to increases in auto & truck expenses of $2.0 million and insurance expense of $0.4 million partially offset by a reduction in personnel expense of $0.8 million and professional expenses of $0.6 million. Distribution, selling and administrative expenses as a percentage of net revenue decreased slightly to 16.0% in 2026 compared to 16.4% in 2025.
Interest Expense
Interest expense for the six months ended June 30, 2026 increased slightly to $5.73 million, compared to $5.43 million for the six months ended June 30, 2025, an increase of $0.30 million or 5.6%. The increase was driven by an increase in our average daily line of credit balance of $10.1 million, partially offset by a decrease in our average daily JPMorgan Chase mortgage-secured term loan balance of $7.5 million combined with a slightly lower interest-rate environment. Average floating interest rates on our floating-rate debt for the six months ended June 30, 2026 decreased by approximately 0.5% on the line of credit and 0.7% on the JPMorgan Chase mortgage-secured term loan, compared to 2025. Our average daily line of credit balance was $61.3 million for the six months ended June 30, 2026, up from $51.2 million for the six months ended June 30, 2025, while our average daily JPMorgan Chase mortgage-secured term loan balance decreased to $92.3 million for the six months ended June 30, 2026 from $99.8 million for the six months ended June 30, 2025.
Income Tax Benefit
Income tax benefit was $0.2 million for the six months ended June 30, 2026, compared to an income tax benefit of $0.4 million for the six months ended June 30, 2025. The change was primarily due to higher income before income taxes and discrete tax expense items related to stock-based compensation shortfalls and the remeasurement of deferred tax assets associated with executive compensation, partially offset by investment tax credits recognized during the period.
Net Income (Loss) Attributable to HF Foods Group, Inc.
Net income attributable to HF Foods Group Inc. was $3.8 million for the six months ended June 30, 2026, compared to a net loss of $0.4 million for the six months ended June 30, 2025. The $4.2 million improvement was primarily attributable to a $1.4 million gain on the Utah building sale, recognition of employee retention credit of $1.8 million including interest, the IEEPA tariff refund of $1.1 million, and a $3.4 million favorable year-over-year change in fair value of interest rate swap. These favorable variances were partially offset by a $1.4 million decrease in operating income, a $0.2 million unfavorable change in income taxes, and a $0.8 million year-over-year change in net income attributable to noncontrolling interests.
EBITDA and Adjusted EBITDA
The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure:
_________________ (1) Represents costs associated with the launch and continued implementation of strategic projects including supply chain management improvements and technology infrastructure initiatives.
(2) Includes legal and consulting costs related to various corporate projects and other strategic initiatives, for the six months ended June 30, 2026 it includes the gain on the sale of the Utah facility.
As of MarchJune 31,30, 2026, we had cash of approximately $11.1$18.1 million, checks issued not presented for payment of $5.0$5.6 million and access to approximately $55.2$39.7 million in additional funds through our $125.0 million line of credit, subject to a borrowing base calculation. 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.
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. 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 MarchJune 31,30, 2026.
As of MarchJune 31,30, 2026, 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.
The following table summarizes cash flow data for the threesix months ended MarchJune 31,30, 2026 and 2025:
Net cash provided by operating activities consists primarily of net income (loss) adjusted for non-cash items, including depreciation and amortization, changes in deferred income taxes and others, and includes the effect of working capital changes. Net cash provided by operating activities increased by $8.3$3.6 million primarily due to higher income, driven by an increase in non-cashother expense add-backsincome, and increasesfavorable changes in accountsaccrued payableexpenses. balances,These favorable impacts were partially offset by lower non-cash expense add-backs, which reduced the timingadjustments added back to net income in the determination of workingoperating capitalcash outlays mainly for inventory purchases and increases in our accounts receivable balances.flows.
Net cash used in investing activities increased by $7.6$9.5 million primarily due to increased capital project spendspending including the purchases of warehouse buildings which were previously leased in the threesix months ended MarchJune 31,30, 2026, partially offset by proceeds from the sale of the Utah property (see Note 4 - Balance Sheet Components for additional information).
Net cash provided by financing activities of $11.5 million during the six months ended June 30, 2026 as compared to $2.7 million net cash used in financing activities remained relatively consistent at $1.7 million duringfor the threesix months ended MarchJune 31,30, 20262025 was primarily due to the higher overall net proceeds from line of credit activity, offset by overall lower interest rates as compared to the three months ended March 31, 2025.rates.
We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2025 Annual Report includes a summary of the critical accounting policies and estimates we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies and estimates that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the threesix months ended MarchJune 31,30, 2026.
HFFG insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-07-07 | Taylor Jeffery L |
Grant/award | 21,390 | — | — |
| 2026-07-07 | Lam Dennis |
Grant/award | 21,390 | — | — |
| 2026-07-07 | Diaz Richard |
Grant/award | 21,390 | — | — |
| 2026-06-18 | Brown Taylor S. |
Grant/award | 21,164 | — | — |
| 2026-06-01 | Lin Xi |
Grant/award | 270,433 | — | — |
| 2026-06-01 | Chang Christine |
Grant/award | 81,130 | — | — |
| 2026-06-01 | Mcgarry Paul E |
Grant/award | 54,087 | — | — |
| 2026-04-15 | Lin Xi |
Grant/award | 19,262 | — | — |
| 2026-04-15 | Chang Christine |
Grant/award | 12,841 | — | — |
Well-known investors holding HFFG (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 497,803 | $701.9K | 0.0% | New position |
| Renaissance Technologies | 2026-06-30 | 109,800 | $154.8K | 0.0% | Reduced 14% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 90,218 | $127.2K | 0.0% | Added 378% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 74,477 | $105.0K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 33,357 | $47.0K | 0.0% | New position |