Company: HFFG
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001628280-25-039583
Chunk: 18

Company: HF Foods Group Inc.
Filing Date: 2025-08-11
Form: 10-Q
Item: Item 1
Chunk 18
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 three and six months ended June 30, 2025 includes a discrete tax expense of $500 related to stock-based compensation shortfalls. For the three and six months ended June 30, 2024, the Company’s effective income tax rate of 87.2% and 129.6%, respectively, differed from the federal statutory tax rate primarily as a result of discrete tax items, permanent differences and state income taxes. The Company’s tax provision for the three and six months ended June 30, 2024 included a discrete tax expense of $1.0 million related to the Company’s SEC settlement and $0.1 million tax expense related to stock-based compensation shortfalls. Absent the discrete items, the estimated annual effective income tax rate from continuing operations for the three and six months ended June 30, 2024 was 25.5% and 25.1%, respectively.On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently evaluating the impact of the new legislation but does not expect it to have a material impact on its consolidated financial statements.

Note 11 - Related Party TransactionsThe Company makes regular purchases from and sales to various related parties. Related party affiliations were attributed to transactions conducted between the Company and those business entities partially or wholly owned by the Company, the Company’s officers and/or shareholders who owned no less than 10% shareholdings of the Company. The Company believes that Mr. Xiao Mou Zhang (“Mr. Zhang”), the former Chief Executive Officer through October 24, 2024, together with certain of his immediate family members are collectively beneficial owners of more than 10% of the Company’s outstanding common stock, and they have ownership interests in various related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors. Mr. Zhang does not have any involvement in negotiations with any of the above-mentioned related parties. The Company believes that Mr. Zhou Min Ni (“Mr. Ni”), the Company’s former Co-Ch