Company: HFFG
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0001680873-25-000006
Chunk: 3

Company: HF Foods Group Inc.
Filing Date: 2025-03-17
Form: 10-K
Item: Item 7
Chunk 3
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,662)$(45,440)Interest expense11,42511,478(53)Income tax expense1,965411,924Depreciation and amortization26,67725,918759EBITDA(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 2,0883,352(1,264)SEC settlement3,900—3,900Goodwill impairment charges46,303—46,303Settlement gain (1)—(10,000)10,000Other asset impairment charges—1,200(1,200)Business transformation costs (2)1,223929294Other non-routine expense (3)8743,124(2,250)Executive transition and organizational redesign (4)2,929—2,929Adjusted EBITDA$42,041$34,583$7,458

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(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.

(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.

(4)    Includes severance and related expenses for the Company’s transition of executive officers and organizational redesign.

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. 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.

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We believe that our cash flow generated from operations is sufficient to meet our normal working capital needs for at least the