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ORGANIZATION AND BUSINESS DESCRIPTION
 3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION AND BUSINESS DESCRIPTION ORGANIZATION AND BUSINESS DESCRIPTION
Organization and General
HF Foods Group Inc. and subsidiaries (collectively “HF Group”, or the “Company”) markets and distributes fresh produce, frozen and dry food, and non-food products to primarily Asian restaurants and other food service customers throughout the Southeast, Pacific and Mountain West regions in the United States.
The Company was originally incorporated in 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.
Reorganization of HF Holding
HF Group Holding Corporation (“HF Holding”) was incorporated in the State of North Carolina on October 11, 2017 as a holding company to acquire and consolidate the various operating entities under one roof. On January 1, 2018, HF Holding entered into a Share Exchange Agreement (the “Exchange Agreement”) with the controlling shareholders of the 11 entities listed below in exchange for all of HF Holding’s outstanding shares. Upon completion of the share exchanges, these entities became either wholly-owned or majority-owned subsidiaries of HF Holding.
•Han Feng, Inc. (“Han Feng”)
•Truse Trucking, Inc. (“TT”)
•Morning First Delivery, Inc. (“MFD”)
•R&N Holdings, LLC (“R&N Holdings”)
•R&N Lexington, LLC (“R&N Lexington”)
•Kirnsway Manufacturing, Inc. (“Kirnsway”)
•Chinesetg, Inc. (“Chinesetg”)
•New Southern Food Distributors, Inc. (“NSF”)
•B&B Trucking Services, Inc. (“BB”)
•Kirnland Food Distribution, Inc. (“Kirnland”)
•HG Realty LLC (“HG Realty”)
In accordance with Financial Accounting Standards Board’s (“FASB") Accounting Standards Codification (“ASC”) 805-50-25, the transaction consummated through the Exchange Agreement has been accounted for as a transaction among entities under common control since the same shareholders controlled all these 11 entities prior to the execution of the Agreement. Furthermore, ASC 805-50-45-5 indicates that the financial statements and financial information presented for prior years also shall be retrospectively adjusted to furnish comparative information.
In accordance with ASC 805-50-30-5, when accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests should initially recognize the assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of the transfer. If the carrying amounts of the assets and liabilities transferred differ from the historical cost of the parent of the entities under common control, then the financial statements of the receiving entity should reflect the transferred assets and liabilities at the historical cost of the parent of the entities under common control. Accordingly, the Company has recorded the assets and liabilities transferred from the above entities at their carrying amount.
The following table summarizes all the existing entities under HF Holding after the above-mentioned reorganization, together with new entities formed after the Atlantic Transactions as described below:
NameDate of formation /
incorporation		Place of formation /
incorporation		Percentage
of legal
ownership
by HF Group		Principal activities
Parent:
HF HoldingOctober 11, 2017North Carolina, USA100%Holding Company
Subsidiaries:
Han FengJanuary 14, 1997North Carolina, USA100%Foodservice distributor
KirnlandApril 11, 2006Georgia, USA66.7%Foodservice distributor
NSFDecember 17, 2008Florida, USA100%Foodservice distributor
HF Foods Industrial, L.L.C. ("HF Foods Industrial")December 10, 2019North Carolina, USA60%Food processing company
ChinesetgJuly 12, 2011New York, USA100%Design and printing services provider
KirnswayMay 24, 2006North Carolina, USA100%Design and printing services provider
BBSeptember 12, 2001Florida, USA100%Logistic service provider
MFDApril 15, 1999North Carolina, USA100%Logistic service provider
TTAugust 6, 2002North Carolina, USA100%Logistic service provider
HG RealtyMay 11, 2012Georgia, USA100%Real estate holding company
R&N Charlotte, LLC
("R&N Charlotte")		July 10, 2019North Carolina, USA100%Real estate holding company
R&N HoldingsNovember 21, 2002North Carolina, USA100%Real estate holding company
R&N LexingtonMay 27, 2010North Carolina, USA100%Real estate holding company
273 Fifth Avenue, L.L.C. ("273 Co")October 10, 2020Delaware, USA100%Real estate lease holding company
Reverse Acquisition of HF Holding
On August 22, 2018, Atlantic consummated a reverse acquisition transaction resulting in HF Holding became the surviving entity (the “Atlantic Merger”) and a wholly owned subsidiary of Atlantic (the “Atlantic Acquisition”). The stockholders of HF Holding bec the majority shareholders of Atlantic, and the Company changed its name to HF Foods Group, Inc. (Collectively, these transactions are referred to as the “Atlantic Transactions”).
At closing, Atlantic issued the HF Holding stockholders an aggregate of 19,969,831 shares of its common stock, equal to approximately 88.5% of the aggregate issued and outstanding shares of Atlantic’s common stock. The pre-Transaction stockholders of Atlantic owned the remaining 11.5% of the issued and outstanding shares of common stock of the combined entity.
Following the consummation of the Atlantic Transactions on August 22, 2018, there were 22,167,486 shares of common stock issued and outstanding, consisting of (i) 19,969,831 shares issued to HF Holding’s stockholders pursuant to the Atlantic Merger Agreement, (ii) 400,000 shares redeemed by one of Atlantic’s shareholders in conjunction with the Atlantic Transactions, (iii) 10,000 restricted shares issued to one of Atlantic’s shareholders in conjunction with the Atlantic Transactions, and (iv) 2,587,655 shares originally issued to the pre-Transactions stockholders of Atlantic.
The Atlantic Acquisition was treated as a reverse acquisition under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). For accounting purposes, HF Holding was considered to be acquiring Atlantic in this transaction. Therefore, the aggregate consideration paid in connection with the business combination was allocated to Atlantic’s tangible and intangible assets and liabilities based on their fair market values. The assets and liabilities and results of operations of Atlantic were consolidated into the results of operations of HF Holding as of the completion of the business combination.
HF Holding Entities Organized Post-Atlantic Merger
On July 10, 2019, the Company, through its subsidiary Han Feng, formed a new real estate holding company, R&N Charlotte. R&N Charlotte owns a 4.66 acre tract of land with appurtenant 115,570 square foot office/warehouse/industrial facility located in Charlotte, North Carolina.
On December 10, 2019, the Company, through its subsidiary Han Feng, formed a new food processing company, HF Foods Industrial, as owner of 60% of member interests.
On October 1, 2020, the Company, through its subsidiary HF Group Holding, formed a wholly-owned new real estate lease holding company, 273 Co.
Business Combination with B&R Global Holdings Inc. ("B&R Global")
On November 4, 2019, HF Group consummated a merger transaction resulting in B&R Global becoming a wholly owned subsidiary of the Company. At closing, the Company acquired 100% of the controlling interest of B&R Global, in exchange for the issuance of 30,700,000 shares of Common Stock of the Company to the shareholders of B&R Global. Pursuant to the B&R Merger Agreement, the aggregate fair value of the consideration paid by HF Group in the Business Combination was $576,699,494, based on the closing share price of the Company’s common stock at the date of Closing.
B&R Global was formed in 2014 as a holding company to acquire and consolidate the various operating entities (listed below) under one roof. Through its subsidiaries, B&R Global supplies foodservice items to approximately 5,000 restaurants across 11 Western states. The merger with HF Group, created what the Company believes is the largest food distributor to Asian restaurants in the United States. The combined entity now has 13 distribution centers strategically located in 8 states across the Southeast, Pacific and Mountain West regions of the United States and serves over 10,000 restaurants across 22 states with a fleet of over 300 refrigerated vehicles, a workforce of over 780 employees and subcontractors. The Company is also supported by two call centers in China which provide round-the-clock sales and service supports to its customers, who mainly converse in Mandarin or Chinese dialects.
The following table summarizes the entities under B&R Global in the Business Combination:
NameDate of formation /
incorporation		Place of formation /
incorporation		Percentage
of legal
ownership
by B&R
Global		Principal activities
Parent:
B&R GlobalJanuary 3, 2014Delaware, USA—Holding Company
Subsidiaries:
B&L Trading, LLC (“BNL”)July 18, 2013Washington, USA100%Foodservice distributor
Capital Trading, LLC (“UT”)March 10, 2003Utah, USA100%Foodservice distributor
Great Wall Seafood LA, LLC (“GW”)March 7, 2014California, USA100%Foodservice distributor
Min Food, Inc. (“MIN”)May 29, 2014California, USA60.25%Foodservice distributor
Monterey Food Service, LLC (“MS”)September 14, 2017California, USA65%Foodservice distributor
Mountain Food, LLC (“MF”)May 2, 2006Colorado, USA100%Foodservice distributor
Ocean West Food Services, LLC (“OW”)December 22, 2011California, USA67.5%Foodservice distributor
R & C Trading L.L.C. (“RNC”)November 26, 2007Arizona, USA100%Foodservice distributor
Rongcheng Trading, LLC (“RC”)January 31, 2006California, USA100%Foodservice distributor
Win Woo Trading, LLC (‘WW”)January 23, 2004California, USA100%Foodservice distributor
Irwindale Poultry, LLC (“IP”)December 27, 2017California, USA100%Poultry processing company
Lin’s Farms, LLC (“LNF”)July 2, 2014Utah, USA100%Poultry processing company
Kami Trading, Inc. (“KAMI”)November 20, 2013California, USA100%Import service provider
American Fortune Foods, Inc. (“AF”)February 19, 2014California, USA100%Logistic and import service provider
B&R Group Logistics Holding, LLC (“BRGL”)July 17, 2014Delaware, USA100%Logistic service provider
Best Choice Trucking, LLC (“BCT”)January 1, 2011California, USA100%Logistic service provider
Fuso Trucking Corp. (“FUSO”)January 20, 2015California, USAVIE*Logistic service provider
GM Food Supplies, Inc. (“GM”)March 22, 2016California, USA100%Logistic service provider
Golden Well, Inc. (“GWT”)November 8, 2011California, USA100%Logistic service provider
Happy FM Group, Inc. (“HFM”)April 9, 2014California, USA100%Logistic service provider
Hayward Trucking, Inc. (“HRT”)September 5, 2012California, USA100%Logistic service provider
KYL Group, Inc. (“KYL”)April 18, 2014Nevada, USA100%Logistic service provider
Lin’s Distribution Inc., Inc. (“LIN”)February 2, 2010Utah, USA100%Logistic service provider
MF Food Services, Inc. (“MFS”)December 21, 2017California, USA100%Logistic service provider
New Berry Trading, LLC (“NBT”)September 5, 2012California, USA100%Logistic service provider
Royal Service, Inc. (“RS”)December 29, 2014Oregon, USA100%Logistic service provider
Royal Trucking Services, Inc. (“RTS”)May 19, 2015Washington, USA100%Logistic service provider
Yi Z Service, LLC (“YZ”)October 2, 2017California, USA100%Logistic service provider
*At the acquisition date and as of March 31, 2021, B&R Global consolidates FUSO, which is considered as a variable interest entity (“VIE”) under U.S. GAAP, due to its pecuniary and contractual interest in this entity as a result of the funding arrangements outlined in the entity.
Acquisition of Real Estate Companies
On January 17, 2020, the Company completed the transactions contemplated by that certain membership interest purchase agreement dated the same date (the “Purchase Agreement”) by and among its subsidiary B&R Global, B&R Group Realty Holding, LLC ("BRGR"), and nine subsidiary limited liability companies wholly owned by BRGR (the “BRGR Subsidiaries”) (the “Realty Acquisition”). Pursuant to the Purchase Agreement, B&R Global acquired all equity membership interests in the BRGR Subsidiaries, which own 10 warehouse facilities that were being leased by the Company for its operations in California, Arizona, Utah, Colorado, Washington, and Montana for purchase consideration of $101,269,706. Consideration for Realty
Acquisition was funded by (i) $75.6 million in mortgage-backed term loans financed under the Second Amended Credit Agreement (see Note 11 for additional information), (ii) issuance by B&R Global of a $7.0 million Unsecured Subordinated Promissory Note (the “Note”) to BRGR, and (iii) payment of $18.7 million from funds drawn from the Company’s revolving credit facility.
The following table summarizes B&R Global’s additional wholly owned subsidiaries as a result of the Realty Acquisition:
NameDate of formation /
incorporation		Place of formation /
incorporation		Percentage of legal
ownership by B&R Global		Principal activities
A & Kie, LLC ("AK")March 26, 2010Arizona, USA100%Real estate holding company
B & R Realty, LLC ("BRR")August 28, 2013California, USA100%Real estate holding company
Big Sea Realty, LLC ("BSR")April 3, 2013Washington, USA100%Real estate holding company
Fortune Liberty, LLC ("FL")November 22, 2006Utah, USA100%Real estate holding company
Genstar Realty, LLC ("GSR")February 27, 2012California, USA100%Real estate holding company
Hardin St Properties, LLC ("HP")December 5, 2012Montana, USA100%Real estate holding company
Lenfa Food, LLC ("LF")February 14, 2002Colorado, USA100%Real estate holding company
Lucky Realty, LLC ("LR")September 3, 2003California, USA100%Real estate holding company
Murray Properties, LLC ("MP")February 27, 2013Utah, USA100%Real estate holding company