~~The accompanying notes are an integral part of the unaudited condensed financial statements.~~

~~Atlantic Acquisition Corp.~~NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION

HF Foods Group Inc. (“HF Group”, or the “Company”) markets and distributes fresh produces, frozen and dry food, and non- food products to primarily Asian restaurants and other foodservice customers throughout the Southeast, Pacific and Mountain West regions in the United States.

The ~~accompanying notes are an integral part of the unaudited condensed financial statements.~~

~~Atlantic Acquisition Corp. (the “Company”)~~Company was originally incorporated in Delaware on May 19, 2016 as a ~~blank check~~special purpose acquisition company ~~whose objective is~~under the name Atlantic Acquisition Corp. (“Atlantic”), in order to acquire, through a merger, share exchange, asset acquisition, ~~stock~~share purchase, recapitalization, reorganization or ~~other~~ similar ~~Business Combination,~~business combination with one or more businesses or ~~entities (a “Business Combination”~~entities.

HF Group Holding Corporation (“HF Holding”). The Company’s efforts to identify a prospective target business will not be limited to any particular industry or geographic region, although the Company initially intends to focus on target businesses being operated by and/or serving ethnic minorities was incorporated in the ~~United States, especially within Asian-American communities.~~State of North Carolina on October 11, 2017. Effective January 1, 2018, HF Holding entered into a Share Exchange Agreement (the “Agreement”) whereby the controlling shareholders of the following 11 entities contributed their respective stocks to HF Holding 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.

~~At September 30, 2017, the Company had not yet commenced any operations. All activity through September 30, 2017 relates to the Company’s formation and the public offering described below.~~

The registration statement for the Company’s initial public offering (the “Public Offering” as described in Note 3) was declared effective by the United States Securities and Exchange Commission (“SEC”) on August 8, 2017. On August 14, 2017, the Company consummated the Public Offering of 4,000,000 units at $10.00 per unit (the “Public Units’) and sold to initial shareholders and Chardan Capital Markets, LLC 320,000 units at $10.00 per unit (the “Private Units”) in a private placement (Note 4). The Company received net proceeds of approximately $41,476,000 from the sale of the Public Units, the Private Units and the proceeds from the note.

On August 16, 2017, the underwriters exercised the over-allotment option in part. The closing of the sale 425,000 over-allotment option Units generating gross proceeds of $4,250,000 took place on August 21, 2017. Simultaneously with the sale of the over-allotment units, the Company consummated the private sale of an additional 21,250 Private Units, generating gross proceeds of $212,500.

Upon the closing of the Public Offering and the private placement (including the shares sold upon exercise of the over-allotment option), an aggregate of $45,135,000 was placed in a trust account (the “Trust Account”) with American Stock Transfer & Trust LLC acting as trustee. The funds held in the Trust Account can be invested in United States government treasury bills, bonds or notes, having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act until the earlier of (i) the consummation of the Company’s initial Business Combination and (ii) the Company’s failure to consummate a Business Combination within 18 months from the closing of the Public Offering. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax obligations.

Pursuant to Nasdaq listing rules, the Company’s Initial Business Combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80% of the value of the funds in the Trust Account (excluding any deferred underwriter’s fees and taxes payable on the income earned on the Trust Account), which the Company refers to as the 80% test, at the time of the execution of a definitive agreement for our initial Business Combination, although the Company may structure a Business Combination with one or more target businesses whose fair market value significantly exceeds 80% of the trust account balance. If the Company is no longer listed on Nasdaq, it will not be required to satisfy the 80% test.

The Company currently anticipates structuring a Business Combination to acquire 100% of the equity interests or assets of the target business or businesses. The Company may, however, structure a Business Combination where the Company merges directly with the target business or where the Company acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but the Company will only complete such Business Combination if the post-transaction company owns 50% or more of the outstanding voting securities of the target or otherwise owns a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% test.

The Company will either seek stockholder approval of any Business Combination at a meeting called for such purpose at which stockholders may seek to convert their shares into their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, or provide stockholders with the opportunity to sell their shares to the Company by means of a tender offer for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. These shares have been recorded at redemption value and are classified as temporary equity, inIn accordance with Financial Accounting Standards ~~Board~~Board’s (“~~FASB”)~~FASB) Accounting Standards Codification (“ASC”) ~~Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with~~805-50-25, the transaction consummated through the Agreement has been accounted for as a ~~Business Combination only if it will have net tangible assets of at least $5,000,001 upon consummation~~transaction among entities under common control since the same shareholders controlled all these 11 entities prior to the execution of the ~~Business Combination~~Agreement. The consolidated financial statements of the Company have been prepared to report results of operations for the period in which the transfer occurred as though the transfer of net assets or exchange of equity interests had occurred at the beginning of the period presented, in this case January 1, 2018. Results of operations for the period presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period. By eliminating the effects of intra-entity transactions in determining the results of operations for the period before the combination, those results were on substantially the same basis as the results of operations for the period after the date of combination. The effects of intra-entity transactions on current assets, current liabilities, revenue, and ~~solely if stockholder approval is sought,~~cost of sales for periods presented and on retained earnings at the beginning of the periods presented are eliminated to the extent possible. 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.

On July 10, 2019, the Company, through its subsidiary Han Feng, Inc., formed a new real estate holding company, R & N Charlotte, LLC (“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.

The following table summarizes the entities under HF Foods Group Inc. after the above-mentioned reorganization:

Effective August 22, 2018, Atlantic consummated the transactions contemplated by a merger agreement (the “Atlantic Merger Agreement”), dated as of March 28, 2018, by and among Atlantic, HF Group Merger Sub Inc., a Delaware subsidiary formed by Atlantic, HF Holding, the stockholders of HF Holding, and Zhou Min Ni, as representative of the stockholders of HF Holding. Pursuant to the Atlantic Merger Agreement, HF Holding merged with HF Merger Sub and HF Holding became the surviving entity (the “Atlantic Merger”) and a wholly owned subsidiary of Atlantic (the “Atlantic Acquisition”). Additionally, upon the closing of the transactions contemplated by the Atlantic Merger Agreement (the “Atlantic Closing”), (i) the stockholders of HF Holding became the holders of a majority of the ~~outstanding common~~ shares ~~of the Company voted are voted in favor of the Business Combination.~~

Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 25% or more of the common shares sold in the Public Offering. Accordingly, all shares purchased by a holder in excess of 25% of the shares sold in the Public Offering will not be converted to cash. In connection with any stockholder vote required to approve any Business Combination, the Initial Stockholders will agree (i) to vote any of their respective shares, including the common shares sold to the Initial Stockholders in connection with the organization of the Company (the “Initial Shares”), common shares included in the Private Units to be sold in the Private Placement, and any common shares which were initially issued in connection with the Public Offering, whether acquired in or after the effective date of the Public Offering, in favor of the initial Business Combination and (ii) not to convert such respective shares into a pro rata portion of the Trust Account or seek to sell their shares in connection with any tender offer the Company engages in.

Pursuant to the Company’s Certificate of Incorporation, if the Company is unable to complete its initial Business Combination within 18 months from the date of the Public Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of common stock of Atlantic, and (ii) Atlantic changed its name to HF Foods Group Inc. (Collectively, these transactions are referred to as the ~~Company’s board of directors, dissolve and liquidate. However, if~~“Atlantic Transactions”).

At closing on August 22, 2018, Atlantic issued the Company anticipates that it may not be able to consummate its initial Business Combination within 18 months, the Company may, but is not obligated to, extend the period of time to consummate a Business Combination up to two times, each by an additional three months (for a total of up to 24 months to complete a Business Combination). Pursuant to the terms of the Company’s amended and restated articles of incorporation and the trust agreement to be entered into between the Company and American Stock Transfer & Trust Company, LLC, in order to extend the time available for the Company to consummate its initial Business Combination, the Company’s insiders or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the Trust Account $800,000, or $920,000 if the underwriters’ over-allotment option is exercised in full ($0.20 per share in either case), on or prior to the date of the applicable deadline, up toHF Holding stockholders an aggregate of ~~$1,600,000 (or $1,840,000 if the underwriters’ over-allotment option is exercised in full), or $0.40 per share. The insiders will receive a non-interest bearing, unsecured promissory note~~19,969,831 shares of its common stock, equal to the amount of any such deposit that will not be repaid in the event that the Company is unable to close a Business Combination unless there are funds available outside the Trust Account to do so. Such notes would either be paid upon consummation of our initial Business Combination, or, at the lender’s discretion, converted upon consummation of our Business Combination into additional private units at a price of $10.00 per unit. The Company’s stockholders have approved the issuanceapproximately 88.5% of the ~~private units upon conversion~~aggregate issued and outstanding shares of ~~such notes, to~~Atlantic’s common stock. The pre- Transaction stockholders of Atlantic owned the ~~extent~~remaining 11.5% of the ~~holder wishes to so convert such notes at~~issued and outstanding shares of common stock of the ~~time of~~combined entity.

Following the consummation of ~~our initial Business Combination. In~~ the ~~event that the Company receives notice from its insiders five days prior~~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 ~~applicable deadline~~Atlantic Merger Agreement, (ii) 400,000 shares redeemed by one of ~~their intent~~Atlantic’s shareholders in conjunction with the Atlantic Transactions, (iii) 10,000 restricted shares issued to ~~effect an extension,~~one of Atlantic’s shareholders in conjunction with the ~~Company intends to issue a press release announcing such intention at least three days prior~~Atlantic Transactions, and (iv) 2,587,655 shares originally issued to the applicable deadline. In addition, the Company intends to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. The Company’s insiders and their affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete its initial Business Combination. To the extent that some, but not all,pre-Transactions stockholders of the Company’s insiders, decide to extend the period of time to consummate its initial Business Combinations, such insiders (or their affiliates or designees) may deposit the entire amount required. If the Company is unable to consummate an initial Business Combination and is forced to redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, each holder will receive a pro rata portion of the amount then in the Trust Account. Holders of rights will receive no proceeds in connection with the liquidation. The Initial Stockholders and the holders of Private Units will not participate in any redemption distribution with respect to their initial shares and Private Units, including the common stock included in the Private Units.Atlantic.

To the extent the Company is unable to consummate a Business Combination, it will pay the costs of liquidation from the remaining assets outside of the Trust Account. If such funds are insufficient, Wai Fun Cheng, Ren Hua Zheng, Richard Xu and Tom W. Su have committed to pay the funds necessary to complete such liquidation and have agreed not to seek repayment of such expenses.

~~Emerging Growth Company~~

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) permits emerging growth companies to delay complying with new or revised financial accounting standards that do not yet apply to private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act). The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

~~Note 2 — Significant Accounting Policies~~

~~Basis of presentation~~

The ~~accompanying unaudited condensed financial statements are presented~~Atlantic Acquisition was treated as a reverse acquisition under the acquisition method of accounting in ~~conformity~~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 ~~pursuant~~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.

Business Combination with B&R Global

Effective November 4, 2019, HF Group consummated the transactions contemplated by a merger agreement (the “B&R Merger Agreement”), dated as of June 21, 2019, by and among the Company, B&R Merger Sub Inc., a Delaware corporation (“Merger Sub”), B&R Global, the stockholders of B&R Global (the ”B&R Global Stockholders”), and Xiao Mou Zhang, as representative of the stockholders (the “Business Combination”). Upon the closing of the transactions contemplated by the B&R Merger Agreement (the “Closing”), Merger Sub merged with and into B&R Global, resulting in B&R Global becoming a wholly owned subsidiary of HF Group. HF Group acquired 100% of the controlling interest of B&R Global, in exchange for 30,700,000 shares of HF Group Common Stock. Pursuant to the ~~rules and regulations~~B&R Merger Agreement, the aggregate fair value of the ~~Securities~~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.

Founded in 1999, B&R Global supplies approximately 6,800 restaurants across 11 Western states, and ~~Exchange Commission~~combined with HF Group, creates what we believe is the largest food distributors to Asian restaurants in the United States. The combined entity now has 14 distribution centers strategically located in nine states across the East and West Coasts of the United States and a fleet of over 340 refrigerated vehicles. With 960 employees supported by two call centers in China, HF Group now serves over 10,000 restaurants in 21 states and provides round-the-clock sales and service support 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:

Name	Date of formation / incorporation	Place of formation / incorporation	Percentage of legal ownership by B&R Global	Principal activities
Parent:
B&R Global	January 3, 2014	Delaware, USA	—	Holding Company
Subsidiaries:
Rongcheng Trading, LLC (“RC”)	January 31, 2006	California, USA	100%	Food service distributor
Capital Trading, LLC (“UT”)	March 10, 2003	Utah, USA	100%	Food service distributor
Win Woo Trading, LLC (‘WW”)	January 23, 2004	California, USA	100%	Food service distributor
Mountain Food, LLC (“MF”)	May 2, 2006	Colorado, USA	100%	Food service distributor
R & C Trading L.L.C. (“RNC”)	November 26, 2007	Arizona, USA	100%	Food service distributor
Great Wall Seafood LA, LLC (“GW”)	March 7, 2014	California, USA	100%	Food service distributor
B&L Trading, LLC (“BNL”)	July 18, 2013	Washington, USA	100%	Food service distributor
Min Food, Inc. (“MIN”)	May 29, 2014	California, USA	60.25%	Food service distributor
B&R Group Logistics Holding, LLC (“BRGL”)	July 17, 2014	Delaware, USA	100%	Food service distributor
Ocean West Food Services, LLC (“OW”)	December 22, 2011	California, USA	67.5%	Food service distributor
Monterey Food Service, LLC (“MS”)	September 14, 2017	California, USA	65%	Food service distributor
Irwindale Poultry, LLC (“IP”)	December 27, 2017	California, USA	100%	Poultry processing
Best Choice Trucking, LLC (“BCT”)	January 1, 2011	California, USA	100%	Logistic service provider
KYL Group, Inc. (“KYL”)	April 18, 2014	Nevada, USA	100%	Logistic service provider
American Fortune Foods Inc. (“AF”)	February 19, 2014	California, USA	100%	Logistic and import service provider
Happy FM Group, Inc. (“HFM”)	April 9, 2014	California, USA	100%	Logistic service provider
GM Food Supplies, Inc. (“GM”)	March 22, 2016	California, USA	100%	Logistic service provider
Lin’s Distribution, Inc., Inc. (“LIN”)	February2, 2010	Utah, USA	100%	Logistic service provider
Lin’s Farms, LLC (“LNF”)	July 2, 2014	Utah, USA	100%	Poultry processing
New Berry Trading, LLC (“NBT”)	September 5, 2012	California, USA	100%	Logistic service provider
Hayward Trucking, Inc. (“HRT”)	September 5, 2012	California, USA	100%	Logistic service provider
Fuso Trucking Corp. (“FUSO”)	January 20, 2015	California, USA	VIE*	Logistic service provider
Yi Z Service LLC (“YZ”)	October2, 2017	California, USA	100%	Logistic service provider
Golden Well Inc. (“GWT”)	November 8, 2011	California, USA	100%	Logistic service provider
Kami Trading Inc. (“KAMI”)	November 20, 2013	California, USA	100%	Import service provider
Royal Trucking Services, Inc. (“RTS”)	May 19, 2015	Washington, USA	100%	Logistic service provider
Royal Service Inc. (“RS”)	December 29, 2014	Oregon, USA	100%	Logistic service provider
MF Food Services Inc. (“MFS”)	December 21, 2017	California, USA	100%	Logistic service provider

*At the acquisition date and as of March 31, 2020, B&R Global consolidates FUSO, which is considered as a variable interest entity (“~~SEC”~~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 ("B&R Group Realty"), and nine subsidiary limited liability companies wholly owned by B&R Group Realty (the “B&R Realty Subsidiaries”) (the “Realty Acquisition”). Pursuant to the Purchase Agreement, B&R Global acquired all equity membership interests in the B&R Realty Subsidiaries, which own 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 the Acquisition was funded by (i) $75.6 million in mortgage-backed term loans financed under the Second Amended Credit Agreement (Note 10), (ii) issuance by B&R Global of a $7.0 million Unsecured Subordinated Promissory Note (the “Note”) to B&R Group Realty, and (iii) payment of $18.7 million from funds drawn from the Company’s revolving credit facility.

The ~~interim~~following table summarizes B&R Global’s additional wholly owned subsidiaries as a result of Realty Acquisition:

Name	Date of formation / incorporation	Place of formation / incorporation	Percentage of legal ownership by B&R Global	Principal activities
A & Kie, LLC	March 26, 2020	Arizona	100%	Real estate holding company
B & R Realty, LLC	August 28, 2013	California	100%	Real estate holding company
Big Sea Realty, LLC	April 3, 2013	Washington	100%	Real estate holding company
Fortune Liberty, LLC	November 22, 2006	Utah	100%	Real estate holding company
Genstar Realty, LLC	February 27, 2012	California	100%	Real estate holding company
Hardin St Properties, LLC	December 5, 2012	Montana	100%	Real estate holding company
Lenfa Food, LLC	February 14, 2002	Colorado	100%	Real estate holding company
Lucky Realty, LLC	September 3, 2003	California	100%	Real estate holding company
Murray Properties, LLC	February 27, 2013	Utah	100%	Real estate holding company

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with ~~GAAP for interim~~U.S. GAAP. The unaudited condensed consolidated financial statements include the financial statements of HF Group, its subsidiaries and ~~Article 8 of Regulation S-X. They do not include all~~the VIE. The VIE has been accounted for at historical cost and prepared on the basis as if common control had been established as of the ~~information and notes required by GAAP for complete~~beginning of the first period presented in the accompanying unaudited condensed consolidated financial statements. ~~In the opinion of management, all adjustments (consisting of normal recurring adjustments)~~All inter-company balances and transactions have been ~~made~~eliminated upon consolidation.

U.S. GAAP provides guidance on the identification of VIE and financial reporting for entities over which control is achieved through means other than voting interests. The Company evaluates each of its interests in an entity to determine whether or not the investee is a VIE and, if so, whether the Company is the primary beneficiary of such VIE. In determining whether the Company is the primary beneficiary, the Company considers if the Company (1) has power to direct the activities that ~~are necessary~~most significantly affect the economic performance of the VIE, and (2) receives the economic benefits of the VIE that could be significant to ~~present fairly~~ the VIE. If deemed the primary beneficiary, the Company consolidates the VIE.

As of March 31, 2020 and December 31, 2019, FUSO is considered to be a VIE. FUSO was established solely to provide exclusive services to the Company. The entity lacks sufficient equity to finance its activities without additional subordinated financial ~~position,~~support from the Company, and the Company has the power to direct the VIEs’ activities. In addition, the Company receives the economic benefits from the entity and has concluded that the Company is a primary beneficiary.

The carrying amounts of the assets, liabilities, the results of ~~its~~ operations and ~~its~~ cash ~~flows. Operating results as presented are not necessarily indicative~~flows of the ~~results~~VIE is included in the Company’s consolidated balance sheets, statements of income and statements of cash flows are as follows:

	March 31, 2020		December 31, 2019
Current assets	$	211,641	$	158,184
Non-current assets		262,009		301,803
Total assets	$	473,650	$	459,987
Current liabilities	$	765,080	$	805,666
Non-current liabilities		58,792		69,321
Total liabilities	$	823,872	$	874,987

	For the three months ended March 31
	2020		2019
Net revenue	$	666,428	$	-
Net income	$	64,778	$	-

	For the three months ended March 31
	2020			2019
Net cash provided by operating activities	$	314,224		$	-
Net cash used in financing activities		(222,137	)		-
Net increase in cash and cash equivalents	$	92,087		$	-

Noncontrolling Interests

U.S. GAAP requires that noncontrolling interests in subsidiaries and affiliates be reported in the equity section of a company’s balance sheet. In addition, the amounts attributable to ~~be expected for a full year.~~the net income (loss) of those subsidiaries are reported separately in the consolidated statements of operations.

~~Cash and Cash Equivalents~~

~~The Company considers all short-term investments with an original maturity~~As of ~~three months or less when purchased to be cash equivalents. There were no cash equivalents as of September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019, noncontrolling interest consisted of the following:

~~Deferred Offering Costs~~

Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were recorded deferred offering costs on the balance sheet and were charged to stockholders’ equity upon the completion of the Public Offering.

~~Fair value of financial instruments~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.

~~Loss Per Common Share~~

Basic earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding during the period, excluding ordinary shares subject to compulsory repurchase by the Company. Diluted earnings per common share is computed by dividing net earnings by the weighted average number of common shares outstanding, plus to the extent dilutive, the incremental number of common shares to settle rights and other ordinary share equivalents (currently none outstanding), as calculated using the treasury stock method. Shares of common stock subject to possible conversion at September 30, 2017, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic and diluted loss per shares since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of (1) rights sold in the Offering and private placement that convert into 476,625 shares of Class A common stock, and (2) 250,000 of Class A common stock and rights that convert into 25,000 shares of Class A common stock in the unit purchase option sold to the underwriter, in the calculation of diluted income per share, since the conversion of the rights into shares of common stock is contingent upon the occurrence of future events. As a result and the Company’s loss position, diluted loss per common share is the same as basic loss per common share for the periods ended September 30, 2017 and 2016.

Name of Entity	Percentage of noncontrolling interest		Ownership	March 31, 2020		December 31, 2019
Kirnland		33.30	%	$	1,333,963	$	1,292,623
OW		32.50	%		1,581,654		1,600,058
MS		35.00	%		487,005		459,126
MIN		39.75	%		918,575		896,980
Total				$	4,321,197	$	4,248,787

~~Use~~Uses of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during ~~the~~each reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include, but are not limited to, allowance for doubtful accounts, useful lives of property and equipment, lease assumptions, impairment of long-lived assets, long-term investments, goodwill, the purchase price allocation and fair value of noncontrolling interests with respect to business combinations, realization of deferred tax assets, and uncertain income tax positions.

Cash and Cash Equivalents

~~Concentration~~

The Company considers all highly liquid investments purchased with a maturity of ~~credit risk~~three or fewer months to be cash equivalents. As of March 31, 2020 and December 31, 2019, the Company had no cash equivalents.

~~Financial~~Accounts Receivable

Accounts receivable represent amounts due from customers in the ordinary course of business and are recorded at the invoiced amount and do not bear interest. Receivables are presented net of the allowance for doubtful accounts in the accompanying unaudited condensed consolidated balance sheets. The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for doubtful accounts based on a combination of factors. When the Company is aware of a customer’s inability to meet its financial obligation, a specific allowance for doubtful accounts is recorded, reducing the receivable to the net amount the Company reasonably expects to collect. In addition, allowances are recorded for all other receivables based on historic collection trends, write-offs and the aging of receivables. The Company uses specific criteria to determine uncollectible receivables to be written off, including, e.g., bankruptcy filings, the referral of customer accounts to outside parties for collection, and the length that accounts remain past due. As of March 31, 2020 and December 31, 2019, the allowances for doubtful accounts were $819,807 and $623,970, respectively.

Inventories

The Company’s inventories, consisting mainly of food and other food service-related products, are primarily considered as finished goods. Inventory costs, including the purchase price of the product and freight charges to deliver it to the Company’s warehouses, are net of certain cash or non-cash consideration received from vendors. The Company assesses the need for valuation allowances for slow-moving, excess and obsolete inventories by estimating the net recoverable value of such goods based upon inventory category, inventory age, specifically identified items, and overall economic conditions. Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. As of March 31, 2020, and December 31, 2019, the valuation allowance was $316,368 and $16,928, respectively.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Following are the estimated useful lives of the Company’s property and equipment:

	Estimated useful lives (years)
Buildings and improvements	7	-	39
Machinery and equipment	3	-	15
Motor vehicles	5	-	7

Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterment that extends the useful lives of property, plant and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in the unaudited condensed consolidated statements of operations in other income or expenses.

Business Combinations

The Company accounts for its 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 the Company 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.

The Company estimates the fair value of assets acquired and liabilities assumed in a business combination. While the Company uses its 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 the Company believes the assumptions and estimates it has 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, the Company records 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 the Company’s consolidated statements of operations.

Transaction costs associated with business combinations are expensed as incurred, and are included in general and administrative expenses in the Company’s consolidated statements of operations. The results of operations of the businesses that ~~potentially subject~~the Company acquired are included in the Company’s consolidated financial statements from the date of acquisition.

Goodwill

The Company opted to early adoption of Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The standard simplifies the subsequent measurement of goodwill by removing Step 2 of the current goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new standard, an impairment loss will be recognized in the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. The Company tests goodwill for impairment at least annually, in the fourth quarter, or whenever events or changes in circumstances indicate that goodwill might be impaired.

The Company reviews the carrying values of goodwill and identifiable intangibles whenever events or changes in circumstances indicate that such carrying values may not be recoverable and annually for goodwill and indefinite lived intangible assets as required by ASC Topic 350 (“ASC 350”), Intangibles — Goodwill and Other. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative analysis. If the quantitative analysis indicates the carrying value of a reporting unit exceeds its fair value, the Company measures any goodwill impairment losses as the amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Intangible Assets

Intangible assets are carried at cost and amortized on a straight-line basis over their estimated useful lives. The Company determines the appropriate useful life of its intangible assets by measuring the expected cash flows of acquired assets. The estimated useful lives of intangible assets are as follows:

Estimated useful lives

(years)

Tradenames

Customer relationships

Long-term Investments

The Company’s investments in unconsolidated entities consist of equity investment and investment without readily determinable fair value.

The Company follows ASC Topic 321 (“ASC 321”), Investments – Equity Securities, using the measurement alternative to measure investments in investees that do not have readily determinable fair value and over which the Company does not have significant influence at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any. The Company makes a qualitative assessment of whether the investment is impaired at each reporting date. If a qualitative assessment indicates that the investment is impaired, the Company has to estimate the investment’s fair value in accordance with the principles of ASC Topic 820 (“ASC 820”), Fair Value Measurements and Disclosures. If the fair value is less than the investment’s carrying value, the entity has to recognize an impairment loss in net income equal to the difference between the carrying value and fair value.

Investments in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC Topic 323 (“ASC 323”), Investments-Equity Method and Joint Ventures. Under the equity method, the Company initially records its investment at cost and the difference between the cost and the fair value of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill, which is included in the equity method investment on the consolidated balance sheets. The equity method goodwill is not subsequently amortized and is not tested for impairment under ASC 350. The Company subsequently adjusts the carrying amount of the investment to recognize the Company’s proportionate share of each equity investee’s net income or loss into earnings after the date of investment. The Company evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary.

The Company did not record any impairment loss on its long-term investments as of March 31, 2020 and December 31, 2019.

Impairment of Long-lived Assets Other Than Goodwill

The Company assesses its long-lived assets such as property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset 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 the assets 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 Company did not record any impairment loss on its long-lived assets as of March 31, 2020 and December 31, 2019.

Revenue Recognition

The Company recognizes revenue from the sale of products when title and risk of loss passes and the customer accepts the goods, which occurs at delivery. Sales taxes invoiced to customers and remitted to government authorities are excluded from net sales.

The Company follows ASU 2014-09 Revenue from Contracts with Customers (“ASC Topic 606”). The Company recognizes revenue that represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company to ~~concentration~~identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of ~~credit risk consist~~goods and services transfer to a customer. The majority of ~~cash accounts in a financial institution which, at times may exceed~~ the ~~Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes~~Company’s contracts have one single performance obligation as the ~~Company~~promise to transfer the individual goods is not ~~exposed to significant risks on such accounts.~~separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company’s revenue streams are recognized at a specific point in time.

The contract assets and contract liabilities are recorded on the consolidated balance sheets as accounts receivable and advances from customers as of March 31, 2020 and December 31, 2019. For three months ended March 31, 2020 and 2019, revenue recognized from performance obligations related to prior periods was insignificant. Revenue expected to be recognized in any future periods related to remaining performance obligations is insignificant.

The following table summarizes disaggregated revenue from contracts with customers by geographic locations:

	For the Three Months Ended
	March 31, 2020		March 31, 2019
North Carolina	$	29,717,516	$	35,259,767
Florida		19,085,809		23,130,742
Georgia		14,102,255		16,410,513
Arizona		10,011,749		-
California		67,664,956		-
Colorado		8,908,993		-
Utah		14,998,375		-
Washington		11,313,683		-
Total	$	175,803,336	$	74,801,022

Shipping and Handling Costs

Shipping and handling costs, which include costs related to the selection of products and their delivery to customers, are presented in distribution, selling and administrative expenses. Shipping and handling costs were $2,558,233 and $1,051,120 for the three months ended March 31, 2020 and 2019, respectively.

Income Taxes

The Company accounts for income taxes under ~~ASC 740 Income Taxes (“ASC 740”). ASC 740~~the asset and liability method, which requires the recognition of deferred tax assets and liabilities for ~~both~~ the expected ~~impact~~future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax ~~basis~~bases of assets and liabilities ~~and~~by using enacted tax rates in effect for the year in which the differences are expected ~~future~~to reverse. The effect of a change in tax ~~benefit~~rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be ~~derived from~~realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax ~~loss and~~assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax ~~credit carry forwards.~~asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 ~~additionally requires~~(“ASC 740”), Income Taxes, on the basis of a ~~valuation allowance to be established when~~two-step process in which (1) the Company determines whether it is more likely than not that ~~all or a portion~~the tax positions will be sustained on the basis of ~~deferred~~the technical merits of the position and (2) for those tax ~~assets will~~positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company does not ~~be realized.~~believe that there were any uncertain tax positions at March 31, 2020 and December 31, 2019.

~~ASC 740 also clarifies~~

Leases

On January 1, 2019, the ~~accounting~~Company adopted ASU 2016-02, Leases (Topic 842). For all leases that were entered into prior to the effective date of Topic 842, the Company elected to apply the package of practical expedients. Based on this guidance the Company did not reassess the following: (1) whether any expired or existing contracts are or contain leases; (2) the lease classification for ~~uncertainty in income taxes recognized in an enterprise’s financial statements~~any expired or existing leases; and ~~prescribes~~(3) initial direct costs for any existing leases. The adoption of Topic 842 did not have a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company is required to file income tax returns in the United States (federal) and in various state and local jurisdictions. Basedmaterial impact on the Company’s ~~evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition~~consolidated statements of operations.

The adoption of Topic 842 resulted in the ~~Company’s financial statements. Since~~presentation of $21.2 million of operating lease assets and operating lease liabilities on the ~~Company was incorporated on May 19, 2016, the evaluation was performed~~consolidated balance sheet as of January 1, 2019. See Note 12 for the 2016 tax year, which will be the only period subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.additional information.

The Company ~~was incorporated~~determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of finance lease liabilities, and finance lease liabilities, non-current on the consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Earnings Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260 (“ASC 260”), Earnings per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti- dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There is no anti-dilutive effect for the three months ended March 31, 2020 and 2019.

Fair Value of Financial Instruments

The Company follows the provisions of ASC Topic 820 (“ASC 820”), Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions about what assumptions market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the ~~State~~unaudited condensed consolidated balance sheets for cash, accounts receivable, advances to suppliers, other current assets, accounts payable, bank overdraft, income tax payable, advances from customers – related parties, current portion of ~~Delaware~~long-term debt, current portion of obligations under finance and ~~is required to pay franchise taxes to~~operating leases, and accrued expenses and other liabilities approximate their fair value based on the ~~State~~short-term maturity of ~~Delaware on an annual basis.~~these instruments.

Concentrations and Credit Risk

Credit risk

Accounts receivable are typically unsecured and derived from revenue earned from customers, and thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.

Concentration risk

There were no receivables from any one customer representing more than 10% of the Company’s consolidated gross accounts receivable at March 31, 2020 and December 31, 2019.

For the three months ended March 31, 2020 and 2019, no supplier accounted for more than 10% of the total cost of revenue. As of March 31, 2020, two suppliers accounted for 56% and 15% of total advance payments outstanding and these two suppliers accounted for 79% and 21% of advance payments to related parties, respectively. As of December 31, 2019, two suppliers accounted for 34% and 15% of total advance payments outstanding and these two suppliers accounted for 70% and 30% of advance payments to related parties, respectively.

Recent Accounting Pronouncements

~~Management~~In June 2016, the FASB issued ASU 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 16-13 was further amended in November 2019 in “Codification Improvements to Topic 326, Financial Instruments-Credit losses”. This guidance is effective for fiscal years beginning after December 15, 2019, including those interim periods within those fiscal years. For emerging growth companies, the effective date is has been extended to fiscal years beginning after December 31, 2022. The Company is currently assessing the impact of adopting this standard, but based on a preliminary assessment, does not ~~believe that any recently issued, but not yet effective, accounting standards if currently adopted would~~expect the adoption of this guidance to have a material ~~effect~~impact on ~~the accompanying~~its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13 (“ASU 2018-13”), Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes, modifies and adds certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 eliminates certain disclosures related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. ASU 2018-13 is effective for the Company for annual and interim reporting periods beginning January 1, 2020. The Company adopted ASU 2018-13 on January 1, 2020 and the adoption did not have any material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to managerial accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently assessing the impact of adopting this standard, but based on a preliminary assessment, does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

~~Note~~NOTE 3 ~~— Public Offering~~- ACCOUNTS RECEIVABLE, NET

~~Public Unit~~Accounts receivable, net consisted of the following:

	As of March 31, 2020			As of December 31, 2019
Accounts receivable	$	27,030,267		$	50,651,104
Less: allowance for doubtful accounts		(819,807	)		(623,970	)
Accounts receivable, net	$	26,210,460		$	50,027,134

Movement of allowance for doubtful accounts is as follows:

	For the Three Months Ended
	March 31, 2020			March 31, 2019
Beginning balance	$	623,970		$	658,104
Provision for doubtful accounts		231,274			(99,678	)
Less: write off/recovery		(35,437	)		(3,373	)
Ending balance	$	819,807		$	555,053

NOTE 4- NOTES RECEIVABLE

On ~~August 14, 2017,~~September 30, 2018, the Company entered into a line of credit promissory note agreement with Feilong Trading, Inc, which is a supplier to the Company. Pursuant to the promissory note agreement, Feilong Trading, Inc. was permitted to borrow up to $4,000,000 from time to time. The note bore interest at the rate of 5% per annum on the unpaid balance, compounded monthly. On September 30, 2019, the entire outstanding balance of $3,622,505 was sold ~~4,000,000 Public Units at a price~~to Mr. Zhou Min Ni in exchange for 272,369 shares of ~~$10.00 per Public Unit in the Public Offering. Each Public Unit consists of one ordinary share~~common stock of the Company, ~~$0.0001 par value per share (the “Public Shares”),~~which shares were received and ~~one right (the “Public Rights”). Each Public Right entitles the holder to receive one-tenth (1/10) of an ordinary share upon consummation of an initial Business Combination.~~

Ifrecorded as treasury stock by the Company does not complete its Business Combination within the necessary time period described in Note 1, the Public Rights will expire and be worthless. Since the Company is not required to net cash settle the Rights and the Rights are convertible upon the consummation of an initial Business Combination, the Management determined that the Rights are classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale are allocated to Public Shares and Rights based on the relative fair value of the securities in accordance with ASC 470-20-30. The value of the Public Shares and Rights will be based on the closing price paid by investors.

At the closing of the Public Offering and over-allotment option, the Company paid an upfront underwriting discount of $1,200,000 and $127,500, 3.0% of the per unit offering price to the underwriter, respectively, with an additional fee of $1,000,000 and $106,250 (the “Deferred Discount”), 2.5% of the gross offering proceeds payable upon the Company’s completion of the Business Combination, respectively. The Deferred Discount will become payable to the underwriter from the amounts held in the Trust Account solely in the event the Company completes its Business Combination. In the event that the Company does not close a Business Combination, the underwriter has waived its right to receive the Deferred Discount. The underwriter is not entitled to any interest accrued on the Deferred Discount. Total offering costs were $1,851,217, which consist of $1,327,500 of underwriter’s commissions and $523,717 of other offering costs.

~~Purchase Option~~

On August 14, 2017, the Company sold the underwriters, for $100, a unit purchase option to purchase up to a total of 250,000 Units exercisable at $10.50 per Unit (or an aggregate exercise price of $2,625,000) commencing on the later of the consummation of a Business Combination and six months from February 8, 2018. The unit purchase option expires August 8, 2022. The units issuable upon exercise of this option are identical to the Units being offered in the Public Offering. The Company has agreed to grant to the holders of the unit purchase option, demand and “piggy back” registration rights for periods of five and seven years, respectively, from the effective date of the Public Offering, including securities directly and indirectly issuable upon exercise of the unit purchase option.

The Company has accounted for the fair value of the unit purchase option, inclusive of the receipt of a $100 cash payment, as an expense of the Public Offering resulting in a charge directly to stockholders’ equity. The Company estimates that the fair value of this unit purchase option is $610,265 using a Black-Scholes option-pricing model adjusted for the likelihood of a completed Business Combination. The fair value of the unit purchase option to be granted to the placement agent is estimated as of the date of grant using the following assumptions: (1) expected volatility of 51.14%, (2) risk-free interest rate of 1.77% and (3) expected life of five years, (4) estimated possibility of 55% for consummation of initial Business Combination.

~~Note 4 — Private Placement~~

On August 14, 2017 (see Note 7) Certain of the Company’s shareholders, and Chardan Capital Markets, LLC purchased an aggregate of 320,000 Private Units at $10.00 per Private Unit of which 17,500 units were issued for the conversion of the MaySeptember 30, ~~2017 note payable by one of our directors (see Note5). They also purchased an additional 21,250 Private Units from the Company at a price of $10.00 per Private Unit at the closing of~~2019. In connection with the sale of ~~425,000 Units in connection with~~this note receivable, the ~~exercise~~Company also required 89,882 additional shares of common stock of the ~~over-allotment option. Chardan Capital Markets, LLC purchased 20,000~~Company owned by Mr. Ni to be placed in an escrow account for a period of ~~the 320,000 Private Units issued simultaneously with the close of the Public Offering, and 2,125 of the 21,250 Private Units issued simultaneously with the exercise of overallotment option.~~

The Private Units are identical to the Units sold in the Public Offering. Additionally, the holders of the Private Units have agreed (A) to vote the shares underlying their Private Units in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s amended and restated certificate of incorporation with respect to the Company’s pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company provides dissenting Public Stockholders with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any shares underlying the Private Units into the right to receive cash from the Trust Account in connection with a stockholder vote to approve an initial Business Combination or a vote to amend the provisions of the Company’s amended and restated certificate of incorporation relating to shareholders’ rights or pre-Business Combination activity or sell their sharesone year (the “Escrow Period”), which will be delivered to the Company in ~~connection with a tender offer the Company engages~~part or in and (D) that the shares underlying the Private Units shall not participate in any liquidating distribution upon winding up if a Business Combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to transferees that agree to the same terms and restrictions) until the completion of an initial Business Combination.

~~Note 5 — Related Party Transactions~~

On June 9, 2016, the Company issued a $175,000 principal amount unsecured promissory note to the Company’s former President and Director. On May 30, 2017, the Company issued a separate $175,000 principal amount unsecured promissory note to one of the Company’s current directors. The proceed from the Company’s current director was wired into an escrow account and used to repay the original outstanding $175,000 loan due to the Company’s former President on June 1, 2017. The new note was non-interest bearing and was payable on the consummation of the Public Offering. On August 14, 2017, a $175,000 loan from the director was converted into Private Units as part of the Private Placement at a price of $10.00 per Private Unit and 17,500 units were issued to this director.

All expenses incurred by the Company prior to an initial Business Combination may be paid only from the net proceeds of the Public Offering and related private placements not held in the Trust Account. Thus, in order to meet the Company’s working capital needs following the consummation of the Public Offeringfull, if the funds not held in the Trust Account, Wai Fun Cheng, Ren Hua Zheng, Richard Xu, Tom W. Su may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. Up to $500,000 of the notes may, at the lender’s discretion, be converted upon consummation of an initial Business Combination into additional private units at a price of $10.00 per unit (“Working Capital Units”). If the Company does not complete an initial Business Combination, the loans will only be repaid with funds not held in the Trust Account, to the extent available.

~~Note 6 — Commitments~~

~~Deferred Underwriter Commission~~

The Company is obligated to pay the Deferred Discount of 2.5% of the gross Public Offering proceeds, in the amount of $1,106,250, to the underwriter upon the Company’s consummation of the Business Combination. The underwriter is not entitled to any interest accrued on the Deferred Discount, and has waived its right to receive the Deferred Discount if the Company does not close a Business Combination.

~~Registration Rights~~

The Initial Stockholders are entitled to registration rights with respect to their Initial Shares and the purchasers of the Private Units are entitled to registration rights with respect to the Private Units (and underlying securities), pursuant to a registration rights agreement signed on the effective date of the Public Offering. The holders of the majority of the initial shares are entitled to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Private Units (or underlying securities) are entitled to demand that the Company register these securities at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination.

~~Engagement of B. Riley & Co. LLC~~

The Company plans to engage B. Riley & Co. LLC (“B. Riley”) to provide certain advisory services to it. In consideration for such services, the Company’s management team has agreed to transfer 20,000 insider shares to B. Riley upon the consummation of the initial Business Combination. Such shares will be subject to the same restrictions and escrow arrangement as the other insider shares. The value of the service provided by B. Riley will be accounted at the fair value at the date of transfer as operating expenses and a credit to additional paid-in capital upon the transfer of the shares.

~~Note 7 — Stockholders’ Equity~~

~~Preferred Shares~~

The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2017, there are no preferred shares issued or outstanding.

~~Common Stock~~

~~The Company is authorized to issue 30,000,000 shares of common stock with a par value of $0.0001 per share.~~

On June 9, 2016, 1,150,000 shares of the Company’s common stock were sold at a price of approximately $0.02 per share for an aggregate of $25,000. On May 25, 2017, the Company repurchased and canceled the initial shareholder shares. On May 30, 2017, the Company issued an additional 1,150,000 shares for $25,000, or approximately $0.02 per share, which amount was wired into an escrow account and was directly used to pay for the May 25, 2017 repurchase. All of these shares were placed in escrow on the date of the closing of the Public Offering until (1) with respect to 50% of the shares, the earlier of six months after the date of the consummation of an initial Business Combination and the date on which theweighted average closing price of the Company’s common stock ~~equals~~for the 250-trading-day period immediately preceding the expiration of the Escrow Period is less than $13.30.

NOTE 5 – LONG-TERM INVESTMENTS

Long-term investments consisted of the following:

	Ownership as of March 31, 2020		As of March 31, 2020		As of December 31, 2019
Pt. Tamron Akuatik Produk Industri		12%	$	1,800,000	$	1,800,000
Asahi Food, Inc.		49%		531,337		496,276
Long-term investments			$	2,331,337	$	2,296,276

The investment in Pt. Tamron Akuatik Produk Industri is accounted for using the measurement alternative under ASC 321, which is measured at cost, less any impairment, plus or ~~exceeds $12.50 per~~minus changes resulting from observable price changes in orderly transactions for identical or similar investments, if any. The investment in Asahi Food, Inc. is accounted for under the equity method due to the fact that the Company has significant influence but does not exercise full control over this investee. The Company believes there was no impairment as of March 31, 2020 and December 31, 2019 for these investments.

NOTE 6 - PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:

	As of March 31, 2020			As of December 31, 2019
Land	$	50,744,295		$	2,010,253
Buildings and improvements		80,690,964			26,903,528
Machinery and equipment		14,431,258			13,412,961
Motor vehicles		24,235,114			23,841,730
Subtotal		170,101,631			66,168,472
Less: accumulated depreciation		(30,160,238	)		(28,630,325	)
Property and equipment, net	$	139,941,393		$	37,538,147

The Company acquired $102,331,567 of property and equipment from acquisition of assets from B&R Realty Group on January 17, 2020. See Note 8 for additional information.

Depreciation expense was $1,651,505 and $707,396 for the three months ended March 31, 2020 and 2019, respectively.

NOTE 7 – BUSINESS COMBINATION WITH B&R GLOBAL

Effective November 4, 2019, HF Group acquired 100% of the controlling interest of B&R Global, in exchange for 30,700,000 shares of HF Group Common Stock. HF Group is considered as both the legal and accounting acquirer based on the fact that there was no change of control in connection with this business combination. The aggregate fair value of the consideration paid by HF Group in the business combination is $576,699,494 and is based on the closing share ~~(as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after~~price of the Company’s ~~initial Business Combination and (2) with respect to the remaining 50% of the insider shares, six months after~~common stock at the date of Closing.

The information included herein has been prepared based on the ~~consummation~~allocation of ~~an initial~~the purchase price using estimates of the fair value of assets acquired and liabilities assumed which were determined with the assistance of independent valuations using quoted market prices, discounted cash flow, and estimates made by management. The purchase price allocation is subject to further adjustment until all pertinent information regarding the assets and liabilities acquired are fully evaluated by the Company, not to exceed one year as permitted under ASC 805.

The following table presents the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:

Cash	$	7,017,467
Accounts receivable, net		30,934,831
Accounts receivable - related parties, net		3,393,930
Inventories, net		56,451,885
Other current assets		2,332,063
Other current assets - related parties		498,211
Advances to suppliers, net		97,964
Property and equipment, net		11,042,601
Deposit		281,282
Deposit – related parties		591,380
Long-term investments		2,289,389
Right-of-use assets		17,791,681
TANGIBLE ASSETS ACQUIRED		132,722,684

Lines of credit		35,567,911
Accounts payable		24,884,247
Accounts payable - related parties		1,528,139
Bank overdraft		12,082,094
Accrued expenses		778,779
Other payables		185,938
Other payables – related party		733,448
Customer deposits		38,510
Long-term debt		3,284,159
Lease liabilities		17,791,680
Deferred tax liabilities arising from acquired intangible assets		51,413,633
TANGIBLE LIABILITIES ASSUMED		148,288,538
NET TANGIBLE LIABILITIES ASSUMED		(15,565,854	)

Identifiable intangible assets		188,503,000
Goodwill		406,703,348
INTANGIBLE ASSETS ACQUIRED		595,206,348

Noncontrolling interests		2,941,000
Total consideration	$	579,640,494

The Company recorded acquired intangible assets of $188,503,000. These intangible assets include tradenames of $29,303,000 and customer relationships of $159,200,000. The associated goodwill and intangible assets are not deductible for tax purposes.

The amounts of revenue and earnings of B&R Global included in the Company’s consolidated statement of income for the three months ended March 31, 2020 are as follows:

	For the three months ended March 31, 2020

Net Revenue	$	112,897,756

Net Income	$	(340,298,022	)

The following table presents the Company’s unaudited pro forma results for the three months ended March 31, 2019, as if the Business Combination ~~or earlier,~~had occurred on January 1, 2019. The unaudited pro forma financial information presented includes the effects of adjustments related to the amortization of acquired intangible assets, and excludes other non-recurring transaction costs directly associated with the acquisition such as legal and other professional service fees. Statutory rates were used to calculate income taxes.

	For the three months ended March 31,
	2019
Pro forma Net revenue	$	208,955,366
Pro forma Net income		2,924,375	⁽¹⁾
Pro forma Net income attributable to HF Group		2,678,359	⁽¹⁾

Pro forma earnings per common share - basic and diluted	$	0.05

Pro forma weighted average shares - basic and diluted		52,867,486

(1)	Includes intangibles asset amortization expense of $2,722,575 for the three months ended March 31, 2019.

NOTE 8 – ACQUISITION OF B&R REALTY SUBSIDIARIES

On January 17, 2020, B&R Global acquired all equity membership interests in ~~either case, if, subsequent to an initial Business Combination,~~the B&R Realty subsidiaries, which own warehouse facilities that were being leased by B&R Global for its operations in California, Arizona, Utah, Colorado, Washington, and Montana. Co-CEO of the Company, ~~consummates a liquidation, merger, share exchange or other similar transaction~~Xiao Mou Zhang, managed and owned an 8.91% interest in B&R Group Realty. The total purchase price for the acquisition was $101,269,706, which ~~results in all~~is based on fair market value appraisals of the ~~Company’s stockholders having~~properties owned by the ~~right to exchange their shares for cash, securities or other property.~~ B&R Realty subsidiaries.

The ~~escrow share arrangement does not require the continued employment~~Company notes that substantially all of ~~the stockholders who received the shares or the insiders. At the closing of the Business Combination,~~ the fair value of the ~~escrow arrangement~~gross assets acquired is concentrated in a group of similar assets (land and buildings in which the buildings are all used for warehousing and distribution purposes). As such, the acquisition of Selling B&R Global Realty Subsidiaries would be ~~both charged~~deemed an asset acquisition under ASC 805-10-55, and ~~credited~~the total purchase price is allocated on a relative fair value basis to ~~additional paid-in capital.~~the net assets acquired.

AtConsideration for the 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 to B&R Group Realty maturing on January 17, 2030, and (iii) payment of $18.7 million from funds drawn from the Company’s revolving credit facility. The reissuance of the mortgage-backed term loans released B&R Group Realty from its obligations to the lenders under the First Amended Credit Agreement (See Note 10 for additional information) and predecessor financing arrangements.

The following table presents the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition:

Cash	$	265,639
Automobile		33,690
Prepaids		39,193
Land		48,734,042
Buildings		53,563,835
ASSETS ACQUIRED		102,636,399

Accounts payable and Accrued Expenses		1,366,693
LIABILITIES ASSUMED		1,366,693
NET ASSETS ACQUIRED	$	101,269,706

NOTE 9 - GOODWILL AND ACQUIRED INTANGIBLE ASSETS

Goodwill

The changes in HF Group’s carrying amount of goodwill by segment are presented below:

	HF Group		B&R Global		Total
Balance at December 31, 2019	$	-	$	406,703,348	$	406,703,348
Balance at March 31, 2020⁽¹⁾	$	-	$	68,511,941	$	68,511,941

The Company had booked approximately $406.7 million of goodwill from business combination with B&R Global on December 31, 2019. The Company tests goodwill for impairment annually in the fourth quarter, or more frequently if events or circumstances indicate it could be impaired. Potential impairment indicators include (but are not limited to) macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events, specific events affecting the reporting unit or sustained decrease in share price.

During the first quarter of fiscal 2020, as a result of significant declines in the Company’s business due to COVID-19 pandemic, the Company determined that B&R Global reporting unit was very sensitive to these declines and that it was more likely than not that an impairment may exist. The Company, therefore, performed an analysis of the fair value of B&R Global reporting unit as of March 31, 2020 using a discounted cash flow for goodwill impairment testing purposes. Based on this analysis, the Company determined that the carrying value of its B&R Global reporting unit exceeded its fair value by $338.2 million. As a result, the company recorded the amount as impairment charges during the first quarter of fiscal 2020.

The Company estimated the fair values of B&R Global reporting unit using the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital (WACC), future revenue, profitability, perpetual growth rates and fair values of assets and liabilities. The fair value conclusions as of March 31, 2020 for the reporting unit are highly sensitive to changes in the WACC, which considered observable data about guideline publicly traded companies, an estimated market participant’s expectations about capital structure and risk premiums. The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. The Company also observed the WACC applied on March 31, 2020 increased from the one on acquisition date, mainly driven by the increased risk and volatility observed in the market. Volatility has primarily been due to concerns about demand for food distribution services, as restaurant activity in much of the country has been reduced to takeout and delivery offerings. Furthermore, increased uncertainty about the unwinding of these restrictions and levels of consumer spending are driving the uncertainty and subsequent volatility.

In addition, the fair value of the goodwill is sensitive to the changes in the assumptions used in the projected cash flows, which include forecasted revenues, perpetual growth rates, among others, all of which require significant judgments by management. The company has used recent historical performance, current forecasted financial information, and broad-based industry and economic statistics as a basis to estimate the key assumptions utilized in the discounted cash flow model. These key assumptions are inherently uncertain and require a high degree of estimation and judgment and are subject to change based on future changes, industry and global economic and geo-political conditions, and the timing and success of the implementation of current strategic initiatives. The impact of the COVID-19 pandemic on estimated future cash flows is uncertain and will largely depend on the outcome of future events, which could result in further goodwill impairments going forward. The company will complete its annual impairment test in the fourth quarter of fiscal 2020.

Acquired Intangible Assets

In connection with the Business Acquisition of B&R Global, HF Group acquired $188,503,000 of intangible assets, primarily representing tradenames and customer relationships, which have an estimated weighted-average amortization period of approximately 10 years and 20 years respectively. The components of the intangible assets are as follows:

	At March 31, 2020							At December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Tradenames	$	29,303,000	$	(1,220,958	)		28,082,042	$	29,303,000	$	(488,383	)		28,814,617
Customer relationships		159,200,000		(3,316,667	)		155,883,333		159,200,000		(1,326,667	)		157,873,333
Total	$	188,503,000	$	(4,537,625	)		183,965,375	$	188,503,000	$	(1,815,050	)		186,687,950

Since COVID-19 has had a adverse impact on the Company’s customers, which was a triggering event, the Company performed interim long-lived asset quantitative impairment tests as of March 30, 2020. All intangible assets were tested for recoverability at the asset group level. ASC 360 defines the recoverability of these assets as measured by comparison of their (or asset group) carrying amounts to future undiscounted cash flows the assets (or asset group) are expected to generate. Based on the test for recoverability using undiscounted cash flows attributable to the asset (or asset group), the sum of the undiscounted cash flows exceeded the carrying value of the measured asset (or asset group). As such, no impairment was recorded for the finite lived assets.

HF Group’s amortization expense for intangible assets was $2,722,575 for the three months ended March 31, 2020 and nil for the three months ended March 31, 2019, respectively. Estimated future amortization expense for intangible assets is presented below:

Twelve months ending March 31,
2021	$	10,890,300
2022		10,890,300
2023		10,890,300
2024		10,890,300
2025		10,890,300
Thereafter		129,513,875
Total	$	183,965,375

NOTE 10 - LINES OF CREDIT

On July 1, 2016, Han Feng, HF Group’s main operating entity, entered into a line of credit agreement with East West Bank. The line of credit agreement provided for a revolving credit of $14,500,000. The line of credit was secured by virtually all assets of Han Feng, the premises and an adjoining undeveloped parcel of land owned by R&N Holding, and premises owned by R&N Lexington. The principal and all accrued unpaid interest were originally due in May 2018 and then extended to May 27, 2019, in order to provide an uninterrupted credit facility while the renewal of the line of credit is being reviewed by the bank. Interest was based on the prime rate less 0.15%, but in no event less than 3.25% per annum, and was payable monthly. On April 18, 2019, this $5,156,018 obligation was repaid in full with proceeds from the Credit Agreement with East West Bank entered into on April 18, 2019, as described below.

On November 14, 2012, NSF, another operating entity, entered into a line of credit agreement with Bank of America. The line of credit agreement provided for a revolving credit of $4,000,000. The line of credit was secured by three real properties owned by NSF, and guaranteed by the two shareholders of the Company, as well as BB, a subsidiary of the Company. The maximum borrowings were determined by certain percentages of eligible accounts receivable and inventories. The principal and all accrued unpaid interest were originally due in January 2018 and subsequently extended to February 2020. Interest was based on the LIBOR rate plus 2.75%. On April 18, 2019, this $954,984 obligation was paid off in full with proceeds from the Credit Agreement with East West Bank entered into on April 18, 2019, as described below.

On April 18, 2019, the Company, Han Feng, NSF and Kirnland entered into a Credit Agreement (the “Credit Agreement”) with East West Bank. The Credit Agreement provided for a $25 million secured line of credit facility available to be used in one or more revolving loans to the Company’s domestic subsidiaries that were parties to the Credit Agreement for working capital and general corporate purposes. Han Feng, NSF and Kirnland (the “Borrower Subsidiaries”) were the borrowers and the Company and each of its other material subsidiaries were guarantors of all the obligations under the Credit Agreement. The original maturity of the line of credit was August 18, 2021. Contemporaneously with the execution of the Credit Agreement, existing senior debt of the Borrower Subsidiaries in the amount of $6,111,692 was paid from revolving loans drawn on the line of credit. Under the Credit Agreement, the Borrower subsidiaries were to pay interest on the principal amounts drawn on the line of credit at a rate per annum equal to (a) 0.375% below the Prime Rate in effect from time to time, or (b) 2.20% above the LIBOR Rate in effect from time to time, depending on the rate elected at the time a borrowing request is made, but in no event would the interest rate of any revolving loan at any time be less than 4.214% per annum (4.625% at September 30, ~~2016, there~~2019). The outstanding balance on the line of credit at September 30, 2019 was $11,864,481. The Credit Agreement contained certain financial covenants which, among other things, required Han Feng to maintain certain financial ratios. On November 4, 2019, the line of credit was paid off from borrowings under the Amended and Restated Credit Agreement entered into in connection with the closing of the merger with B&R Global as described below. The outstanding balance paid off, including accrued interest, was $13,864,481.

On November 4, 2019, the Company entered into an Amended and Restated Credit Agreement with JP Morgan Chase Bank, N.A. (“JP Morgan”). The Amended and Restated Credit Agreement provides for a $100 million asset-secured revolving credit facility maturing on November 4, 2022, with an option to renew at the bank’s discretion. The line of credit is collateralized by all assets of the Company and is also guaranteed by B&R Group Realty and B&R Realty Subsidiaries, which are related parties of the Company. The Amended and Restated Credit Agreement contains financial covenants requiring the Company on a consolidated basis to maintain a Fixed Charge Coverage Ratio of 1.10 to 1.00, determined as of the end of each fiscal quarter for the four fiscal quarter periods then ended. As of March 31, 2020, the Company was in compliance with the covenants under the credit agreement.

On January 17, 2020, the Company, its wholly-owned subsidiary, B&R Global, and certain of the wholly-owned subsidiaries and affiliates of the Company (collectively with the Company, the “Borrowers”), as borrowers, and certain material subsidiaries of the Company as guarantors, entered into a Second Amended and Restated Credit Agreement (the “Second Amended Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), as Administrative Agent, and certain lender parties thereto, including Comerica Bank. The Second Amended Credit Agreement provides for (a) a $100 million asset-secured revolving credit facility maturing on November 4, 2022 (the “Facility”), and (b) mortgage-secured Term Loans of $75.6 million. The Second Amended Credit Agreement amends and restates the existing $55.0 million of real estate term loans evidenced by that certain Amended and Restated Credit Agreement, dated as of November 4, 2019, among the Company, B&R Global, its affiliates and JP Morgan Chase Bank, N.A., as Administrative Agent and sole lender (the “First Amended Credit Agreement”). As of January 17, 2020, the existing balance of revolving debt under the First Amended Credit Agreement, $41.2 million, was rolled over, and an additional $18.7 million available to the Company under the Facility was drawn. The Company and B&R used the $75.6 million in mortgage-secured term loans and $18.7 million drawn from the revolving credit facility to fund in part the acquisition of 10 warehouse facilities owned by the Selling B&R Group Realty Subsidiaries, which the Company has been leasing for its operations in California, Arizona, Utah, Colorado, Washington, and Montana. The outstanding principal balance on the line of credit as of March 31, 2020 was $43.1 million.

NOTE 11 - LONG-TERM DEBT

Long-term debt at March 31, 2020 and December 31, 2019 is as follows:

Bank name	Maturity	Interest rate at March 31, 2020			As of March 31, 2020			As of December 31, 2019
East West Bank – (a)	August 2027 - September 2029	3.83%	-	4.25%	$	6,942,702		$	6,989,016
Capital Bank – (b)	October 2027		3.85%			4,919,094			4,967,075
Bank of America – (c)	April 2021 – December 2029	3.75%	-	5.51%		5,696,670			4,263,663
J.P. Morgan Chase (d)	February 2023 – January 2030		3.46%			77,516,030			2,702,371
BMO Harris Bank – (e)	April 2022 - January 2024	5.87%	-	5.99%		397,378			508,564
Peoples United Bank – (e)	April 2020 – January 2023	6.69%	-	7.53%		981,749			1,114,993
Other finance companies – (e)	May 2020 – March 2024	3.9%	-	6.14%		639,323			716,315
Total debt						97,092,946			21,261,997
Less: current portion						(6,941,738	)		(2,726,981	)
Long-term debt					$	90,151,208		$	18,535,016

The terms of the various loan agreements related to long-term bank borrowings contain certain restrictive financial covenants which, among other things, require the Company to maintain specified ratios of debt to tangible net assets and debt service coverage. As of March 31, 2020, and December 31, 2019, the Company was in compliance with such covenants.

The loans outstanding were ~~1,150,000~~guaranteed by the following properties, entities or individuals, or otherwise secured as shown:

(a)

Guaranteed by two shareholders of the Company, as well as five subsidiaries of the Company, Han Feng, TT, MFD, R&N Holding and R&N Lexington. Also secured by assets of Han Feng and R&N Lexington and R&N Holding, two real properties of R&N Holding, and a parcel of real property owned by R&N Lexington. Balloon payment of $2,293,751 is due in 2027 and another balloon payments of $3,007,239 is due in 2029.

(b)	Guaranteed by two shareholders, as well as Han Feng, a subsidiary of the Company. Also secured by a real property owned by HG Realty. Balloon payment for this debt is $3,116,687.

(c)	Guaranteed by two shareholders, as well as two subsidiaries of the Company, NSF and BB. Secured by real property, equipment and fixtures, inventories, receivables and all other personal property owned by NSF. Balloon payment for this long-term debt is $1,382,046.

(d)

Real estate term loan with a principal balance of $75,007,690 is secured by assets held by nine subsidiaries of the Company, AK, BRR, BSR, FL, GSR, HP, LF, LR, and MP. Equipment term loan with a principal balance of $2,508,340 is secured by specific vehicles and equipment as defined in loan agreements.

(e)	Secured by vehicles.

The future maturities of long-term debt as of March 31,2020 are as follows:

Twelve months ending March 31,
2021	$	6,941,738
2022		5,597,456
2023		5,128,522
2024		4,020,194
2025		3,698,486
Thereafter		71,706,550
Total	$	97,092,946

NOTE 12 - LEASES

On January 1, 2019, the Company adopted ASU 2016-02, Leases (ASC Topic 842). For all leases that were entered into prior to the effective date of Topic 842, the Company elected to apply the package of practical expedients. The Company leases office space and warehouses under non-cancelable operating leases, with terms typically ranging from one to five years, as well as operating and finance leases for vehicles and delivery trucks, forklifts and computer equipment with various expiration dates through 2021. The Company determines whether an arrangement is or includes an embedded lease at contract inception.

Operating lease assets and lease liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. Lease expense is recognized on a straight-line basis over the lease term. For finance leases, the Company also recognizes a finance lease asset and finance lease liability at inception, with lease expense recognized as interest expense and amortization of the lease payment.

Operating Leases

The components of lease expense were as follows:

	For the Three Months Ended
	March 31, 2020			March 31, 2019
Operating lease cost	$	503,057		$	164,752

Weighted Average Remaining Lease Term (Months)
Operating leases		36			31

Weighted Average Discount Rate
Operating leases		4.1	%		5.1	%

Finance Leases

The components of lease expense were as follows:

	For the Three Months Ended
	March 31, 2020		March 31, 2019
Finance leases cost:
Amortization of right-of-use assets	$	139,687	$	145,879
Interest on lease liabilities		27,903		32,327
Total finance leases cost	$	167,590	$	178,206

Supplemental cash flow information related to finance leases was as follows:

	For the Three Months Ended
	March 31, 2020		March 31, 2019

Operating cash flows from finance leases		27,903		32,327

Supplemental balance sheet information related to leases was as follows:

	March 31, 2020			December 31, 2019

Finance Leases
Property and equipment, at cost	$	2,793,731		$	2,793,731
Accumulated depreciation		(1,432,817	)		(1,293,130	)
Property and equipment, net	$	1,360,914		$	1,500,601

Weighted Average Remaining Lease Term (Months)
Finance leases		51			54

Weighted Average Discount Rate
Finance leases		7.52	%		7.51	%

Maturities of lease liabilities were as follows

Twelve months ending March 31,	Operating Leases			Finance Leases
2021	$	395,354		$	373,715
2022		288,902			352,151
2023		245,773			334,224
2024		78,784			295,250
2025		-			162,142
Total Lease Payments		1,008,813			1,517,482
Less Imputed Interest		(125,261	)		(249,599	)
Total	$	883,552		$	1,267,883

On July 2, 2018, AnHeart entered into two separate leases for two buildings located in Manhattan, New York, at 273 Fifth Avenue and 275 Fifth Avenue, for 30 years and 15 years, respectively, which are net leases, meaning that AnHeart is required to pay all costs associated with the buildings, including utilities, maintenance and repairs. HF Holding provided a guaranty for all rent and related costs of the leases, including costs associated with the construction of a two-story structure at 273 Fifth Avenue and rehabilitation of the building at 275 Fifth Avenue.

On February 23, 2019, HF Group executed an agreement to transfer all of its ownership interest in AnHeart to Jianping An, a resident of New York, for a sum of $20,000. The transfer of ownership was completed on May 2, 2019. However, the transfer of ownership does not release HF Holding’s guaranty of AnHeart’s obligations or liabilities under the original lease agreements. Under the terms of the sale of AnHeart stock to Ms. An, and in consideration of the Company’s ongoing guaranty of AnHeart’s performance of the lease obligations, AnHeart granted to the Company a security interest in all AnHeart assets, together with a covenant that the Company will be assigned the leases, to be exercised if AnHeart defaults. Further, AnHeart has tendered an unconditional guaranty of all AnHeart liabilities arising from the leases, in favor of the Company, executed by Minsheng Pharmaceutical Group Company, Ltd., a Chinese manufacturer and distributor of herbal medicines.

NOTE 13 – SUPPLEMENTAL CASH FLOWS INFORMATION

Supplemental cash flow disclosures and noncash investing and financing activities are as follows:

	For the Three Months Ended
	March 31, 2020		March 31, 2019
Supplemental disclosure of cash flow data:
Cash paid for interest	$	814,077	$	379,969
Cash paid for income taxes	$	93,315		-
Supplemental disclosure of non-cash investing and financing activities
Issuance of promissory note for the acquisition of B&R Realty Subsidiaries	$	7,000,000	$	-

NOTE 14 - TAXES

Corporate Income Taxes (“CIT”)

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on deferred foreign income. The Act also created a new minimum tax on certain future foreign earnings. The Company expects the new federal income tax rate will significantly lower the Company’s income tax expenses going forward. The Company does not expect the repatriation tax and new minimum tax on certain future foreign earnings to have any impact on the Company’s operations since it currently has no foreign income and does not expect to generate any foreign income in the future.

(i)

The provision for income taxes of the Company for the three months ended March 31, 2020 and 2019 consists of the following:

	For the Three Months Ended
	March 31, 2020			March 31, 2019
Current income taxes:
Federal	$	359,600		$	392,484
State		89,660			139,386
Current income taxes		449,260			531,870
Deferred income taxes (benefit):
Federal		(723,342	)		103,060
State		(208,129	)		12,709
Deferred income taxes (benefit)		(931,471	)		115,769
Total provision (benefit) for income taxes	$	(482,211	)	$	647,639

(ii)

Temporary differences and carryforwards of the Company that created significant deferred tax assets and liabilities are as follows:

	As of March 31, 2020			As of December 31, 2019
Deferred tax assets:
Allowance for doubtful accounts	$	405,255		$	373,438
Inventories		590,255			594,628
Federal NOL		228,637			228,637
State NOL		86,383			80,514
Basis in intangible assets		52,467			-
Accrued expenses		128,082			80,100
Total deferred tax assets		1,491,079			1,357,317
Deferred tax liabilities:
Property and equipment		(3,177,207	)		(3,270,536	)
Intangibles assets		(49,623,453	)		(50,327,833	)
Total deferred tax liabilities		(52,800,660	)		(53,598,369	)
Net deferred tax liabilities	$	(51,309,581	)	$	(52,241,052	)

The net deferred tax liabilities presented in the Company's unaudited condensed consolidated balance sheets were as follows：

	As of March 31, 2020			As of December 31, 2019
Deferred tax assets	$	69,236		$	78,993
Deferred tax liabilities		(51,378,817	)		(52,320,045	)
Net deferred tax liabilities	$	(51,309,581	)	$	(52,241,052	)

(iii)

Reconciliations of the statutory income tax rate to the effective income tax rate are as follows:

	For the Three Months Ended
	March 31, 2020			March 31, 2019
Federal statutory tax rate		21.0	%		21.0	%
State statutory tax rate		-			5.2	%
Impact of goodwill impairment loss – permanent difference		(20.8	)%		0.3	%
Effective tax rate		0.2	%		26.5	%

NOTE 15 – RELATED PARTY TRANSACTIONS

The Company records transactions with various related parties. The related party transactions as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019 are identified as follows:

Related party balances:

a.	Accounts receivable - related parties, net

Below is a summary of accounts receivable with related parties as of March 31, 2020 and December 31, 2019, respectively:

		As of March 31		As of December 31,
Name of Related Party		2020		2019
(a)	Allstate Trading Company Inc.	$	19,382	$	11,322
(b)	Enson Seafood GA Inc. (formerly “GA-GW Seafood, Inc.”)		439,108		348,833
(c)	Eagle Food Service LLC		1,494,220		979,591
(d)	Fortune One Foods Inc.		166,379		53,862
(e)	Eastern Fresh LLC		1,948,403		1,511,075
(f)	Enson Trading LLC		346,497		341,200
(g)	Hengfeng Food Service Inc.		849,022		477,541
(h)	N&F Logistic, Inc.		-		119,241
(i)	ABC Trading, LLC		448,917		238,513
(j)	UGO USA Inc.		71,587		-
(k)	Best Food Services, LLC		72,761		-
	Others		131,356		121,692
Total		$	5,987,632	$	4,202,870

(a)	Mr. Zhou Min Ni, the Chairman and Co-Chief Executive Officer of the Company, owns a 40% equity interest in this entity;
(b)	Mr. Zhou Min Ni owns a 50% equity interest in this entity.
(c)	Tina Ni, one of Mr. Zhou Min Ni’s family members, owns a 50% equity interest in this entity.
(d)	Mr. Zhou Min Ni owns a 17.5% equity interest in this entity.
(e)	Mr. Zhou Min Ni owns a 30% equity interest in this entity.
(f)	Mr. Zhou Min Ni owns a 25% equity interest in this entity.
(g)	Mr. Zhou Min Ni owns a 45% equity interest in this entity.
(h)	Mr. Zhou Min Ni owns a 25% equity interest in this entity.
(i)	Mr. Xiaomou Zhang, Co-Chief Executive Officer of the Company, owns 10.38% equity interest in this entity.
(j)	Mr. Zhou Min Ni owns a 30% equity interest in this entity.
(k)	Mr. Xiaomou Zhang owns 10.38% equity interest in this entity.

All accounts receivable from these related parties are current and considered fully collectible. No allowance is deemed necessary.

b.	Advances to suppliers - related parties, net

The Company periodically provides purchase advances to various vendors, including the related party suppliers. These advances are made in the normal course of business and are considered fully realizable.

Below is a summary of advances to related party suppliers as of March 31, 2020 and December 31, 2019, respectively:

	As of		As of
Name of Related Party	March 31, 2020		December 31, 2019
(1) Ocean Pacific Seafood Group	$	181,775	$	223,303
(2) Revolution Industry, LLC		683,041		521,832
Total	$	864,816	$	745,135

(1)	Mr. Zhou Min Ni owns a 25% equity interest in this entity.
(2)	The son of Mr. Zhou Min N, Raymond Ni, owns 100% of Revolution Industry, LLC.

c.	Notes receivable - related parties

The Company had previously made advances or loans to certain entities that are either owned by the controlling shareholders of the Company or family members of the controlling shareholders.

On January 1, 2018, the Company entered into a promissory note agreement with Enson Seafood. Pursuant to the promissory note agreement, the outstanding balances of $550,000 due from Enson Seafood as of December 31, 2017 were converted into promissory notes bearing annual interest of 5% commencing January 1, 2018. The principal plus interest was due no later than December 31, 2019. Interest was computed on the outstanding balance on the basis of the actual number of days elapsed in a year of 360 days.

On September 30, 2018, the Company signed a promissory note agreement with Enson Seafood in the principal amount of $2,000,000. The note accrued interest at the rate of 5% per annum on the unpaid balance, compounded monthly. The principal plus all accrued and unpaid interest was initially due no later than September 30, 2019, with an option to renew, and required Enson Seafood to make monthly payments of $171,215 for twelve months. On March 1, 2019, the Company and Enson Seafood extended the expiration date of the note until February 29, 2024 and Mr. Zhou Min Ni agreed to personally guarantee the note.

On January 1, 2018, the Company signed a promissory note agreement with NSG. Pursuant to the promissory note agreement, the outstanding balances of $5,993,552 due from NSG as of December 31, 2017 were converted into promissory notes bearing annual interest of 5% commencing January 1, 2018. The principal plus interest was required to be paid off no later than December 31, 2019. Interest was computed on the outstanding balance on the basis of the actual number of days elapsed in a year of 360 days.

On March 1, 2019, the Company entered into a new five year-term promissory note agreement with NSG that comprised a restatement and novation and superseded the note dated January 1, 2018. Pursuant to the new promissory note agreement, the outstanding balance of $5,941,031 together with interest at the rate of 5% per annum became payable in monthly installments until principal and accrued interest was paid in full on or before March 1, 2024.

On March 1, 2018, the Company entered into a promissory note agreement by which Revolution Automotive was loaned $483,628. Pursuant to this promissory note agreement, Revolution Automotive was required to make monthly payments of $5,000 for 60 months, including interest, with final payment of $284,453. The loan bore interest of 5% per annum. Interest was computed on the outstanding balance on the basis of the actual number of days elapsed in a year of 360 days. The principal plus interest was to be paid off no later than April 30, 2023.

On March 1, 2019, the Company and each of Enson Seafood and NSG agreed to extend the expiration date of their notes payable until February 29, 2024, and Mr. Zhou Min Ni agreed to personally guarantee these notes.

On September 30, 2019, the entire outstanding balance of all the above notes of $8,415,525 was sold to Mr. Zhou Min Ni in exchange for 632,746 shares of common stock ~~issued and outstanding. This amount included 150,000 shares that were subject to forfeiture to the extent the underwriter’s over-allotment option was not exercised in full.~~

~~On August 14, 2017,~~of the Company, ~~consummated the Public Offering of 4,000,000 units at $10.00 per unit (the “Public Units’)~~which shares were received and ~~sold to initial shareholders and Chardan Capital Markets, LLC 320,000 units at $10.00 per unit (the “Private Units”)~~recorded in a private placement (Note 4). The Company received net proceeds of approximately $41,476,000. On August 16, 2017, the underwriters exercised the over-allotment option in part. The closing of the sale 425,000 over-allotment option Units generating gross proceeds of $4,250,000 took place on August 21, 2017. Simultaneously with the sale of the over-allotment units,treasury stock by the Company ~~consummated the private sale~~as of an additional 21,250 Private Units, generating gross proceeds of $212,500. On August 22, 2017, the underwriters canceled the remainder of the over-allotment option. In connection with the cancellation of the remainder of the over-allotment option, the Company canceled an aggregate of 43,753 shares of common stock issued to the Company’s initial stockholders.

At September 30, ~~2017, there were 1,977,564 shares of common stock issued and outstanding, excluding 3,894,933 shares subject to possible redemption.~~

~~Note 8 — Fair Value Measurements~~

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

~~The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in~~2019. In connection with the sale of the ~~assets or paid in connection with~~above notes, the ~~transfer~~Company also required 208,806 additional shares of common stock of the ~~liabilities~~Company owned by Mr. Ni to be placed in an ~~orderly transaction between market participants at the measurement date. In connection with measuring the fair value~~escrow account for a period of ~~its assets and liabilities,~~one year (the “Escrow Period”), which will be delivered to the Company ~~seeks~~in part or in full, if the volume weighted average closing price of the Company’s common stock for the 250-trading-day period immediately preceding the expiration of the Escrow Period is less than $13.30.

d.	Accounts payable - related parties

As of March 31, 2020, and December 31, 2019, the Company had a total accounts payable balance of $3,738,202 and $4,521,356 due to ~~maximize~~various related parties, respectively. All these accounts payable to related parties occurred in the ~~use~~ordinary course of ~~observable inputs (market data obtained from independent sources)~~business and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:are payable upon demand without interest.

e.	~~Level 1:~~	Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

	~~Level 2:~~	Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

	~~Level 3:~~	~~Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.~~ Advances from customers - related parties

The Company also periodically receives advances from its related parties for business purposes. These advances are interest free and due upon demand. The balance for advances from customers involving related parties was $213,354 at March 31, 2020 and there were no advances from customers involving related parties at December 31, 2019.

f.	Security deposit - related parties

The Company made deposits to its related parties for warehouse rental purposes. These deposits are expected to be returned upon termination of the respective leases. Total deposits to related parties amounted to $591,380 at December 31, 2019. As a result of the Realty Acquisition referenced in Footnote 8, rent deposits previously classified as related party became intercompany balances and were eliminated as of March 31, 2020. There was no related party rent deposit as of March 31, 2020.

g.	Term Loan guaranty - related parties

B&R Global issued a $7.0 million Unsecured Subordinated Promissory Note to B&R Group Realty. The note bears an interest rate of 6% per annum that matures in January 2030. At March 31, 2020, accrued interest payable was $87,500. The term loan is collateralized by all assets of the Company.

Lease Agreements with Related Parties:

A subsidiary of the Company, R&N Holding, leases a facility to a related party under an operating lease agreement expiring in 2024. The cost of the leased building is $400,000 at March 31, 2020 and December 31, 2019, and the accumulated depreciation of the leased building is $80,102 and $78,282 at March 31, 2020 and December 31, 2019, respectively. Rental income for the three months ended March 31, 2020 and 2019 was $11,400 and $11,400, respectively.

A subsidiary of the Company, R&N Holding, leases a facility to a related party under an operating lease agreement expiring in 2022. Rental income for the three months ended March 31, 2020 and 2019 was $10,500 and $10,500, respectively.

In 2017, a subsidiary of the Company, HG Realty, leased a warehouse to a related party under an operating lease agreement expiring on September 21, 2027. The cost of the leased building is $3,223,745 at March 31, 2020 and December 31, 2019, and the accumulated depreciation of the leased building is $537,291 and $516,626 as of March 31, 2020 and December 31, 2019, respectively. Rental income for the three months ended March 31, 2020 and 2019 was $120,000 and $120,000, respectively.

B&R Global leased warehouses from related parties owned by the majority shareholder of B&R Global prior to Realty Acquisition on January 17, 2020. Rent incurred to the related parties from January 1, 2020 to January 16, 2020 was $187,750.

In 2020, a subsidiary of the Company, Kirnland, leased a warehouse from a related party under an operating lease agreement expiring on December 31, 2020. Rent incurred to the related party was $30,000 and $30,000 for the three months ended March 31, 2020 and 2019, respectively.

Related party sales and purchases transactions:

The Company makes regular sales to and purchases from various related parties during the normal course of business. The total sales to related parties were $5,163,322 and $4,497,111 for the three months ended March 31, 2020 and 2019, respectively. The total purchases made from related parties were $10,492,252 and $8,932,217 for the three months ended March 31, 2020 and 2019, respectively.

NOTE 16 - SEGMENT REPORTING

ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision makers, reviews operation results by the revenue of different products. After acquiring the business of B&R Global, the Company distinguishes revenues, costs and expenses between HF Group and B&R Global in its internal reporting, and reports costs and expenses by nature in different operating segments. As a result, the Company has two reportable segments, including HF Group and B&R Global, and has re-presented the segment reporting for the three months ended March 31, 2019 as follows.

The following table presents ~~information about~~net sales by segment for the three months ended March 31, 2020 and 2019, respectively:

	For the Three Months Ended
	March 31, 2020		March 31, 2019
Net revenue
HF	$	62,905,580	$	74,801,022
B&R Global		112,897,756		-
Total	$	175,803,336	$	74,801,022

All the Company’s ~~assets that are measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016, and indicates~~revenue was generated from its business operations in the ~~fair value hierarchy~~U.S.

	For the Three Months Ended March 31, 2020
	HF		B&R Global		Total
Revenue	$	62,905,580	$	112,897,756	$	175,803,336
Cost of revenue		51,350,288		95,478,003		146,828,291
Gross profit		11,555,292		17,419,753		28,975,045
Depreciation and amortization		755,642		3,770,635		4,526,277
Total capital expenditures	$	21,459	$	138,793	$	160,252

	For the Three Months Ended March 31, 2019
	HF		B&R Global		Total
Revenue	$	74,801,022	$	-	$	74,801,022
Cost of revenue		62,094,166		-		62,094,166
Gross profit		12,706,856		-		12,706,856
Depreciation and amortization		872,148		-		872,148
Total capital expenditures	$	1,344,555	$	-	$	1,344,555

	As of March 31, 2020		As of December 31, 2019
Total assets:
HF	$	69,878,489	$	80,514,529
B&R Global		451,533,917		722,329,265
Total Assets	$	521,412,406	$	802,843,794

All of the ~~valuation inputs~~Company’s long-lived assets are located in the ~~Company utilized to determine such fair value:~~US.

Description Level September 30,
2017 December 31,
2016
Assets:
Cash and marketable securities held in Trust Account 1 45,185,462 $ —

~~Note 9 — Reconciliation of Net Income (Loss) per Common Stock~~NOTE 17 – COMMITMENT AND CONTINGENCY

~~The Company’s net loss~~Various labor and employment lawsuits were filed by former employees against FUSO, NBT, and HRT, alleging these entities failed to provide proper meal and rest breaks, as well as other related violations. These entities deny all the allegations. Management believes there is ~~adjusted for~~no merit to the ~~portion of income that is attributable to common stock subject to redemption, as these shares only participate in~~cases and will vigorously defend the ~~income of the Trust Account and not the losses of the Company. Accordingly, basic and diluted loss per common share is:~~

For Three Months ended September 30, For The Nine Months
Ended For The Period
From May 19, 2016 (Inception)
2017 2016 September 30, 2017 Through September 30, 2016

Net loss (1,037 ) (100 ) (1,119 ) (625 )
Less: income attributable to common stock subject to redemption (25,914 ) — (25,914 ) —
Adjusted loss (26,951 ) (100 ) (27,033 ) (625 )
Basic and diluted weighted average shares outstanding⁽¹⁾ 1,467,996 1,000,000 1,157,713 1,000,000
Basic and diluted net loss per share (0.02 ) (0.00 ) (0.02 ) (0.00 )

~~(1)~~

Excludes an aggregate of up to 3,894,933 common shares subject to redemption at September 30, 2017 and 150,000 shares of common stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriter at September 30, 2016. An aggregate of 43,753 shares of common stock were cancelled after partial exercise of the overallotment option by the underwriters.

~~Note 10 — Subsequent Events~~

~~The Company’s management reviewed all material events that have occurred after the balance sheet date through the date which these financial statements were issued. Based upon this review,~~cases. Therefore, the Company did not ~~identify~~accrue any ~~subsequent events that would have required adjustment or disclosure~~loss contingency for this matter on its consolidated financial statements as of March 31, 2020 and 2019.

On March 29, 2020, plaintiff Jesus Mendoza (“Mendoza”) filed a putative shareholder securities class action lawsuit (the “Mendoza Lawsuit”) in the United States District Court for the Central District of California against the Company and certain of its present and former officers (collectively, the “Mendoza Defendants”) styled Mendoza v. HF Foods Group Inc., et al., Civil Action No. 2:20-CV-2929-ODW-JPR (C.D. Cal.). On April 30, 2020, plaintiff Walter Ponce-Sanchez (“Ponce-Sanchez”) filed a substantially similar putative shareholder securities class action lawsuit (the “Ponce-Sanchez Lawsuit”) in the United States District Court for the Central District of California against the same defendants named in the Mendoza Lawsuit (collectively, the “Ponce-Sanchez Defendants” and with the Mendoza Defendants, the “Defendants”) styled Ponce-Sanchez v. HF Foods Group Inc., et al., Civil Action No. 2:20-CV-3967-PA-GJS (C.D. Cal.). The complaints in the Mendoza Lawsuit and the Ponce-Sanchez Lawsuit both allege that the Defendants made materially false and/or misleading statements that caused losses to investors. Additionally, Mendoza and Ponce-Sanchez both allege that the Defendants failed to disclose in public statements that the Company engaged in certain related party transactions, that insiders and related parties were enriching themselves by misusing shareholder funds, and that the Company masked the true number of free-floating shares. Neither the Mendoza Lawsuit nor the Ponce-Sanchez Lawsuit quantifies any alleged damages, but, in addition to attorneys’ fees and costs, they seek to recover damages on behalf of themselves and other persons who purchased or otherwise acquired Company stock during the putative class period from August 23, 2018 through March 23, 2020 at allegedly inflated prices and purportedly suffered financial harm as a result. The Company disputes these allegations and intends to defend the Mendoza Lawsuit and the Ponce-Sanchez Lawsuit vigorously. At this stage, the Company is unable to determine whether a future loss will be incurred due to this litigation, or estimate a range of loss, if any, and accordingly, no amounts have been accrued in the Company’s financial statements.

NOTE 18 – SUBSEQUENT EVENTS

Starting Mid-March 2020 when, federal, state and local governments throughout the United States issued shelter-in-place orders related to the COVID-19 pandemic. Many of the Company’s customers, including those in the restaurant segments, ceased operating due to governmental requirements for closures to help curb the spread of COVID-19, and there are no assurances as to how long these closures may remain in effect. Furthermore, even after reopening, there can be no assurance as to the time required to regain operations and sales volume at prior levels. Given the uncertain nature of this situation, the Company cannot reasonably estimate the further impacts of COVID-19 on its financial condition, results of operations or cash flows for the foreseeable future. However, the Company expects the COVID-19 pandemic will have a material and adverse impact on future revenue growth, as well as overall profitability, and may lead to higher bad debt expense, higher inventory allowance, additional impairment of goodwill, intangible assets or fixed assets.

~~Item 2. Management’s Discussion and Analysis.~~

~~Forward-Looking Statements~~CAUTIONARY NOTE ABOUT FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ~~includes~~for HF Foods Group Inc. (“HF Foods,” the “Company,” “we,” “us,” or “our”) contains forward-looking statements. ~~We have based these~~Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our ~~current expectations~~assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and ~~projections about future events. These~~it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are subject to ~~known~~risks and ~~unknown risks,~~ uncertainties ~~and assumptions about us~~ that may cause ~~our~~ actual results ~~levels of activity, performance~~to differ materially from those that we expected. Important factors that could cause actual results to differ materially from our expectations, or ~~achievements~~cautionary statements, include without limitation:

	●	Unfavorable macroeconomic conditions in the United States;
	●	Competition in the food service distribution industry particularly the entry of new competitors into the Chinese/Asian restaurant market niche;
	●	Increases in fuel costs;
	●	Increases in commodity prices;
	●	Disruption of relationships with vendors and increases in product prices;
	●	US government tariffs on products imported into the United States, particularly from China;
	●	Changes in consumer eating and dining out habits;
	●	Disruption of relationships with or loss of customers;
	●	Our ability to execute our acquisition strategy;
	●	Availability of financing to execute our acquisition strategy;
	●	Our ability to renew or replace the current lease of our warehouse in Georgia;
	●	Control of the Company by our Co-Chief Executive Officers and principal stockholders;
	●	Failure to retain our senior management and other key personnel particularly, Zhou Min Ni and Chan Sin Wong;
	●	Our ability to attract, train and retain employees;
	●	Changes in and enforcement of immigration laws;
	●	Failure to comply with various federal, state and local rules and regulations regarding food safety, sanitation, transportation, minimum wage, overtime and other health and safety laws;
	●	Product recalls, voluntary recalls or withdrawals if any of the products we distribute are alleged to have caused illness, been mislabeled, misbranded or adulterated or to otherwise have violated applicable government regulations;
	●	Failure to protect our intellectual property rights;
	●	Any cyber security incident, other technology disruption or delay in implementing our information technology systems;
	●	The development of an active trading market for our common stock;
	●	Failure to acquire other distributors or wholesalers and enlarge our customer base could negatively impact our results of operations and financial condition;
	●	Scarcity of and competition for acquisition opportunities;
	●	Our ability to obtain acquisition financing;
	●	The impact of non-cash charges relating to the amortization of intangible assets related to material acquisitions;
	●	Our ability to ~~be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can~~ identify acquisition candidates;
	●	Increases in debt in order to successfully implement our acquisition strategy;
	●	Difficulties in integrating operations, personnel, and assets of acquired businesses that may disrupt our business, dilute stockholder value, and adversely affect our operating results; and
	●	Other factors discussed in “Item 1A. Risk Factors.” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by ~~terminology such~~these cautionary statements as ~~“may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or~~well as other ~~similar expressions. Factors~~cautionary statements that ~~might cause or contribute~~are made from time to ~~such a discrepancy include, but are not limited to, those described~~time in our other filings with the Securities and Exchange Commission ~~(“SEC”~~(the "SEC") ~~filings. References~~and public communications. We caution you that the important factors referenced above may not contain all of the factors that are important to ~~“we”, “us”, “our”~~you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the ~~“Company”~~consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. Except as otherwise required by law, we undertake no obligation to ~~Atlantic Acquisition Corp., except where the context requires~~update or revise any forward-looking statement as a result of new information, future events or otherwise. ~~The following~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of HF Foods Group Inc.

This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes ~~thereto~~ included elsewhere in this report. The following discussion contains forward-looking statements that involve numerous risks and uncertainties. Our actual results could differ materially from the forward-looking statements as a result of these risks and uncertainties. See “Cautionary Note About Forward-Looking Statements” for additional cautionary information.

Overview

~~We were formed~~HF Foods Group Inc. (“HF Group”, or the “Company”) markets and distributes fresh produces, frozen and dry food, and non- food products to primarily Asian restaurants and other foodservice customers throughout the Southeast, Pacific and Mountain West regions region of the United States.

The Company was originally incorporated in Delaware on May 19, 2016 ~~for~~as a special purpose acquisition company under the ~~purpose of entering into~~name Atlantic Acquisition Corp. (“Atlantic”), in order to acquire, through a merger, share exchange, asset acquisition, ~~stock~~share purchase, recapitalization, reorganization or ~~other~~ similar business combination, ~~with~~ one or more ~~target businesses. Our efforts to identify a prospective target business will not be limited to any particular industry~~businesses or geographic region, although we intend to focus our search on target businesses being operated by and/or serving ethnic minorities in the United States, especially within Asian-American communities. We intend to utilize cash derived from the proceeds of our initial public offering in effecting our initial business combination.entities.

~~We presently have no revenue, have had losses since inception from incurring formation costs~~Effective August 22, 2018, Atlantic consummated the transactions contemplated by a merger agreement (the “Atlantic Merger Agreement”), dated as of March 28, 2018, by and ~~have had no operations other than~~among Atlantic, HF Group Merger Sub Inc., a Delaware subsidiary formed by Atlantic, HF Group Holding Corporation, a North Carolina corporation (“HF Holding”), the ~~active solicitation~~stockholders of HF Holding, and Zhou Min Ni, as representative of the stockholders of HF Holding. Pursuant to the Atlantic Merger Agreement, HF Holding merged with HF Merger Sub and HF Holding became the surviving entity (the “Atlantic Merger”) and a ~~target business with which to complete a business combination. We have relied upon the sale~~wholly-owned subsidiary of ~~our securities and loans from our officers and directors to fund our operations.~~

~~On August 14, 2017, the Company consummated its initial public offering (“IPO”) of 4,000,000 units~~Atlantic (the ~~“Units”~~“Atlantic Acquisition”). ~~Each Unit consists of one share of common stock (“Common Stock”), and one right to receive 1/10 of a share of Common Stock at~~Additionally, upon the closing of the ~~Company’s initial business combination. The Units were sold at an offering price~~transactions contemplated by the Atlantic Merger Agreement (the “Atlantic Closing”), (i) the stockholders of ~~$10.00 per Unit, generating gross proceeds~~HF Holding became the holders of ~~$40,000,000. The~~a majority of the shares of common stock of Atlantic, and (ii) Atlantic changed its name to HF Foods Group Inc. (Collectively, these transactions are referred to as the “Atlantic Transactions”).

Effective November 4, 2019, HF Group consummated the transactions contemplated by a merger agreement (the “B&R Global Merger Agreement”), dated as of June 21, 2019, by and among the Company, ~~granted~~B&R Global Merger Sub Inc., a Delaware corporation (“Merger Sub”), B&R Global, the ~~underwriters a 45-day option to purchase up to 600,000 additional Units to cover over-allotments, if any. Simultaneously with~~stockholders of B&R Global (the ”B&R Global Stockholders”), and Xiao Mou Zhang, as representative of the stockholders (the “Business Combination”). Upon the closing of the ~~IPO,~~transactions contemplated by the B&R Global Merger Agreement (the “Closing”), Merger Sub merged with and into B&R Global, resulting in B&R Global becoming a wholly owned subsidiary of HF Group. HF Group acquired 100% of the controlling interest of B&R Global, in exchange for 30,700,000 shares of HF Group Common Stock. The aggregate fair value of the consideration paid by HF Group in the business combination is approximately $576,699,494 and is based on the closing share price at the date of Closing.

On January 17, 2020, B&R Global acquired all equity membership interests in the B&R Realty Subsidiaries, which own warehouse facilities that were being leased by the Company consummated a private placement (“Private Placement”) of 320,000 units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $3,200,000. Subsequently, the underwriters exercised the over-allotment optionfor its operations in ~~part~~California, Arizona, Utah, Colorado, Washington, and on August 21, 2017, the underwriters purchased 425,000 over-allotment option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $4,250,000. On August 21, 2017, simultaneously with the saleMontana. Co-CEO of the ~~over-allotment units,~~Company, Xiao Mou Zhang, managed and owned an 8.91% interest in B&R Group Realty. The total purchase price for the ~~Company consummated the private sale of an additional 21,250 Private Units, generating gross proceeds of $212,500. On August 22, 2017, the underwriters canceled the remainder~~acquisition was $101,269,706, which is based on independent fair market value appraisals of the ~~over-allotment option. In connection with~~properties owned by the cancellation of the remainder of the over-allotment option, the Company canceled an aggregate of 43,753 shares of common stock issued to the Company’s initial stockholders prior to the IPO and Private Placement. A total of $45,135,000 of the net proceeds from the sale of Units in the IPO (including the over-allotment option units) and the Private Placements on August 14, 2017 and August 21, 2017 were placed in a trust account established for the benefit of the Company’s public stockholders.B&R Realty Subsidiaries.

~~As of September 30, 2017, a total of $45,185,462 was in the trust account established for the benefit of the Company’s public shareholders.~~

~~Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placement, although~~The Company notes that substantially all of the ~~net proceeds~~fair value of the gross assets acquired is concentrated in a group of similar assets (land and buildings in which the buildings are ~~intended to~~all used for warehousing and distribution purposes). As such, the acquisition of B&R Global Realty would not be ~~applied generally towards consummating~~deemed a business ~~combination.~~combination under ASC 805 but as an asset acquisition. The total purchase price is allocated on a relative fair value basis to the net assets acquired.

~~Results~~Due to the acquisition of ~~Operations~~B&R Global, the financial information of the Company for the quarter ended March 31, 2020 is not comparable to the quarter ended March 31, 2019. As such, the Company has presented our results of operations for the quarters ended March 31, 2020 and 2019 as well as the unaudited pro forma combined results of operations for quarters ended March 31, 2020 and 2019. For more information, see section titled “Supplemental Unaudited Pro Forma Combined Financial Information”.

Outlook

The Company plans to continue to expand our business through acquisition of other distributors and wholesalers, which depends on access to sufficient capital. If the Company is unable to obtain equity or debt financing, or borrowings from bank loans, the Company may not be able to execute its plan to acquire other distributors and wholesalers. Even if the Company is able to make such acquisitions, the Company may not be able to successfully integrate any acquired businesses or improve their profitability, which could have a material adverse effect on our financial condition and future operating performance.

Our ~~entire activity from inception up to August 14, 2017 was in preparation~~net revenue for the ~~IPO. Since~~quarter ended March 31, 2020 was $175.8 million, an increase of $101.0 million, or 135.0%, from $74.8 million for the IPO, our activity has been limited to the evaluation of business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We expect to generate small amounts of non-operating income in the form of interest income on cash and cash equivalents. Interest income is not expected to be significant in view of current low interest rates on risk-free investments (treasury securities). We expect to incur increased expensesquarter ended March 31, 2019, as a result of ~~being~~the business combination with B&R Global effective November 4, 2019. Net loss attributable to HF Group’s stockholders for the quarter ended March 31, 2020 was $339.9 million, a ~~public company (for legal,~~decrease of $341.6 million, or 20,418.1%, from net income attributable to HF Group’s stockholders of $1.7 million for the quarter ended March 31, 2019, due to the significant impairment of goodwill ($338.2 million - see Note 9 to our financial ~~reporting, accounting and auditing compliance)~~statements for additional information) prompted by the impact of COVID-19 pandemic that swept through the United States in March 2020. Adjusted EBITDA for the quarter ended March 31, 2020 was $4.3 million, an increase of $0.8 million, or 24.8%, ~~as well as~~from $3.5 million for ~~due diligence expenses. We expect~~the quarter ended March 31, 2019. For additional information on Adjusted EBITDA, see the section entitled “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS— Adjusted EBITDA” below.

On a pro-forma basis, assuming that the Business Combination took place on January 1, 2019, our ~~expenses~~net revenue for the quarter ended March 31, 2020 would have been $175.8 million, a decrease of $33.2 million, or 15.9% from $209.0 million for the quarter ended March 31, 2019. Net loss attributable to ~~increase substantially after this period.~~HF Group’s stockholders for the quarter ended March 31, 2020 would have been $339.9 million, a decrease of $342.6 million, or 12,790.0%, from net income attributable to HF Group’s stockholder of $2.7 million for the quarter ended March 31, 2019. Adjusted EBITDA for the quarter ended March 31, 2020 would have been $4.3 million, a decrease of $5.7 million, or 56.8%, from $10.0 million for the quarter ended March 31, 2019. For additional information on our pro-forma results, see the section entitled “SUPPLEMENTAL UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION” below.

COVID-19 Update

For the ~~three~~first two months of 2020, the outbreak of COVID-19 did not have a significant impact on our business. However, we began to experience a gradual decline in sales towards the end of February and the impact began to intensify in March, especially in the final two weeks of the month.

By late March, almost all states across the country had issued some form of stay-at-home orders. As such, the operations of our restaurant customers were severely disrupted due to the “cliff-like” decline in consumer demand for food away from home. The government mandates have forced many of our restaurant customers to temporarily close or convert to take-out or delivery-only operations. As a result, the last two weeks of March led to a significant decline in net sales, hence impacting our overall net income and adjusted EBITDA in the first quarter ended ~~September~~March 31, 2020. Our net sales during the last two weeks of the first quarter decreased approximately 67% compared to pro-forma sales in the same period ended March 31, 2019.

The intensification of the COVID-19 pandemic and the resulting sharp slowdown in overall business activities will continue to adversely impact our sales and liquidity position. We currently expect that the COVID-19 outbreak will impact our financial performance for the second quarter ending June 30, ~~2017,~~2020 more than it impacted the first quarter ended March 31, 2020.

The trends that began at the end of March continued to worsen in April 2020, resulting in as much as a 75% decrease in net sales compared to pro-forma sales in the comparable prior year period, and took a $338.2 million impairment charge to goodwill (See Note 9 to our financial statements for additional information). However, we ~~had~~began to experience a recovery of business volume since the week of April 27, 2020 as the COVID-19 infection curve began to flatten and fear among consumers began to subside. Weekly sales in the beginning of May have recovered to over 50% of pre-COVID-19 levels, and we expect the recovery to continue into the month of June 2020.

In late March 2020, we swiftly pivoted our business strategy and cost structure to reduce operating costs, strengthen our liquidity position, and secure new revenue sources in response to the COVID-19 pandemic. Some of the notable actions include:

• actively managing our variable costs to better align with current sales volumes by instituting temporary furloughs, reducing our delivery schedules and temporary shutting down operation of a few distribution centers, resulting in no less than 40% overall cost reduction in the month of April 2020;

• improving working capital by extending terms with vendors while focusing on collecting receivables;

• suspending capital expenditures and limiting maintenance and information technology projects;

• developing our proprietary e-commerce platform (www.rongchengmarkets.com) with very minimal investment to cater to consumers and meet the increasing demand for online grocery shopping in larger quantities at wholesale prices; and

• securing new partnerships with other online grocery retailers.

The above decisive actions have resulted in an overall improvement of our available line of credit that would enable the Company to confidently navigate through this unprecedented “crisis”.

We also have the ability to implement further cost reduction measures as necessary if the COVID-19 pandemic persists longer than expected. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law at the end of March 2020. HF foods may benefit from the refundable payroll tax credits provided under the CARES. We also expect that many of our customers will benefit from the federally backed small business loan program, which in turn will help to speed up our business volume recovery.

The impact of the COVID-19 pandemic continues to evolve and, therefore, we cannot currently predict the extent to which our business, results of operations, or financial condition will ultimately be impacted. The impact of the COVID-19 pandemic on our business will also depend on:

• the resilience of the Asian/Chinese restaurants, and consumer spending more broadly;

• actions taken by governments to successfully contain the virus or limit its impact, including travel restrictions, social distancing requirements, required closures of non-essential businesses, and aid and economic stimulus efforts; and

• any prolonged economic recession resulting from the pandemic.

We do not expect economic and operating conditions for our business to improve until consumers are once again willing and able to resume consumption of food away from home on a regular basis. This may not occur until well after the pandemic abates and the broader economy begins to improve.

We are optimistic about the long-term prospects for our business. Although the timetable for returning to normalcy is unknown, we believe that our current level of sales volumes will increase over time as the effects of the COVID-19 pandemic slowly dissipate and consumer demand for food prepared away from home increases.

As the market leader in servicing the Asian/Chinese restaurant sector, we believe we are well-positioned for long-term success. The fragmented nature of the Asian/Chinese food service industry and the current environment create opportunities for companies like HF Foods, which has the necessary expertise and deep understanding of our unique customers base. We believe we are differentiated from many of our competitors given our extensive footprint, strong vendor and customer relationships, and value-added service offerings, all of which have allowed us to continue to serve our customers in these unprecedented conditions.

How to Assess HF Group’s Performance

In assessing our performance, the Company considers a variety of performance and financial measures, including principal growth in net ~~loss of $1,037, which was comprised of $30,478 of~~revenue, gross profit, distribution, general and administrative expenses, and ~~$21,021~~adjusted EBITDA. The key measures that the Company uses to evaluate the performance of ~~State franchise~~our business are set forth below:

Net Revenue

Net revenue is equal to gross sales minus sales returns, sales incentives that the Company offers to our customers, such as rebates and discounts that are offsets to gross sales; and certain other adjustments. Our net sales are driven by changes in number of customers and average customer order amount, product inflation that is reflected in the pricing of its products and mix of products sold.

Gross Profit

Gross profit is equal to net sales minus cost of revenue. Cost of revenue primarily includes inventory costs (net of supplier consideration), inbound freight, custom clearance fees and other miscellaneous expenses. Cost of revenue generally changes as the Company incurs higher or lower costs from suppliers and as the customer and product mix changes.

Distribution, Selling and Administrative Expenses

Distribution, selling and administrative expenses primarily consist of salaries and benefits for employees and contract laborers, trucking and fuel expenses, utilities, maintenance and repair expenses, insurance expenses, depreciation and amortization expenses, selling and marketing expenses, professional fees and other operating expenses.

Adjusted EBITDA

The Company believes that Adjusted EBITDA is a useful performance measure and can be used to facilitate a comparison of the Company’s operating performance on a consistent basis from period to period and to provide for a more complete understanding of factors and trends affecting our business than GAAP measures alone can provide. Our management believes that Adjusted EBITDA is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect our operating performance. Our management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial performance with other companies in the same industry, many of which present similar non-GAAP financial measures to investors. The Company presents Adjusted EBITDA in order to provide supplemental information that the Company considers relevant for the readers of our consolidated financial statements included elsewhere in this report, and such information is not meant to replace or supersede U.S. GAAP measures.

The Company defines Adjusted EBITDA as net income (loss) before interest expense, income taxes, ~~offset~~and depreciation and amortization, further adjusted to exclude certain unusual, non-cash, non-recurring, cost reduction, and other adjustment items. The definition of Adjusted EBITDA may not be the same as similarly titled measures used by ~~$50,462~~other companies in the industry. Adjusted EBITDA is not defined under U.S. GAAP and is subject to important limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of ~~interest income earned from investment in trust account.~~HF Group’s results as reported under U.S. GAAP. For example, Adjusted EBITDA:

●

excludes certain tax payments that may represent a reduction in cash available to the Company;

●

does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

●

does not reflect changes in, or cash requirements for, our working capital needs; and

●

does not reflect the significant interest expense, or the cash requirements, necessary to service our debt.

For additional information on Adjusted EBITDA, see the section entitled “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Adjusted EBITDA” below.

Results of Operations for the three months ended ~~September 30, 2016, we had a net loss of $100, which was consisted of general~~March 31, 2020 and ~~administrative expenses.~~2019

The following table sets forth a summary of our consolidated results of operations for the three months ended March 31, 2020 and 2019. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

	For the three months ended March 31,						Changes
	2020			2019			Amount			%
Net revenue	$	175,803,336		$	74,801,022		$	101,002,314			135.0	%
Cost of revenue		146,828,291			62,094,166			84,734,125			136.5	%
Gross profit		28,975,045			12,706,856			16,268,189			128.0	%
Distribution, selling and administrative expenses		29,406,593			10,365,172			19,041,421			183.7	%
Income (loss) from operations		(431,548	)		2,341,684			(2,773,232	)		(118.4	)%
Interest income		131			151,949			(151,818	)		(99.9	)%
Interest expenses and bank charges		(1,951,569	)		(336,958	)		(1,614,611	)		479.2	%
Goodwill impairment loss		(338,191,407	)		-			(338,191,407	)		100	%
Other income, net		405,650			284,535			121,115			42.6	%
Income (loss) before income tax provision		(340,168,743	)		2,441,210			(342,609,953	)		(14034.4	)%
Provision (benefit) for income taxes		(482,211	)		647,639			(1,129,850	)		(174.5	)%
Net income (loss)		(339,686,532	)		1,793,571			(341,480,103	)		(19039.1	)%
Less: net income attributable to noncontrolling interest		197,410			120,758			76,652			63.5	%
Net income (loss) attributable to HF Foods Group Inc.	$	(339,883,942	)	$	1,672,813		$	(341,556,755	)		(20418.1	)%

Net Revenue

Net revenue was mainly derived from sales to independent restaurants (Chinese/Asian restaurants) and sales as wholesale to smaller distributors.

The following table sets forth the breakdown of net revenue:

	For the three months ended March 31,
	2020					2019					Change
	Amount		%			Amount		%			Amount		%
Net revenue
Sales to independent restaurants	$	167,272,317		95.1	%	$	70,123,135		93.7	%	$	97,149,182		138.5	%
Wholesale		8,531,019		4.9	%		4,677,887		6.3	%		3,853,132		82.4	%
Total	$	175,803,336		100.0	%	$	74,801,022		100.0	%	$	101,002,314		135.0	%

~~For~~Net revenue increased by $101.0 million, or 135.0%, during the ~~nine~~three months ended ~~September 30, 2017, we had~~March 31, 2020 as compared to the three months ended March 31, 2019. This was attributable primarily to the acquisition of B&R Global, which contributed $4.1 million in sales to wholesale customers and $108.7 million in sales to independent restaurants. The increase was offset by a decrease in revenue of $11.6 million in sales to independent restaurants of HF and $0.3 million of sales to wholesale customers. This decrease was due to lower sales as a result of the COVID-19 pandemic. The negative impact of the COVID-19 pandemic on our restaurant customers during the last two weeks of March 2020 led to a significant decline in the net ~~loss~~revenue for both HF Foods and B&R Global for the three months ended March 31, 2020. See the section entitled “SUPPLEMENTAL UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION” below.

We conduct wholesale operations as a supplemental business to our foodservice distribution to restaurants by purchasing full truckloads of ~~$1,119,~~product from suppliers and redistributing to smaller distributors who are typically not large enough to order truckload quantities, or do not want to keep inventory for long periods. The larger purchase can improve overall bargaining power with suppliers by increasing total order quantity. Net revenue from wholesale for the three months ended March 31, 2020 increased by $3.9M, or 82.4%, as compared to the three months ended March 31, 2019, due to the acquisition of B&R Global.

Cost of sales and Gross Profit

The following tables set forth the calculation of gross profit and gross margin for sales to independent restaurants, wholesale and total net revenue:

	For the three months ended March 31,						Changes
	2020			2019			Amount			%
Sales to independent restaurants
Net revenue	$	167,272,317		$	70,123,135		$	97,149,182			138.5	%
Cost of revenue		138,729,285			57,560,246			81,169,039			141.0	%
Gross profit	$	28,543,032		$	12,562,889		$	15,980,143			127.2	%
Gross Margin		17.1	%		17.9	%		(0.8	)%

Wholesale
Net revenue	$	8,531,019		$	4,677,887		$	3,853,132			82.4	%
Cost of revenue		8,099,006			4,533,920			3,565,086			78.6	%
Gross profit	$	432,013		$	143,967		$	288,046			200.1	%
Gross Margin		5.1	%		3.1	%		2.0	%

Total sales
Net revenue	$	175,803,336		$	74,801,022		$	101,002,314			135.0	%
Cost of revenue		146,828,291			62,094,166			84,734,125			136.5	%
Gross profit	$	28,975,045		$	12,706,856		$	16,268,189			128.0	%
Gross Margin		16.5	%		17.0	%		(0.5	)%

Cost of revenue was $146.8 million for the three months ended March 31, 2020, an increase of $84.7 million or 136.5%, from $62.1 million for the three months ended March 31, 2019. The increase was mainly attributable to the acquisition of B&R Global, with $91.6 million and $3.9 million in cost of revenue for sales to independent restaurants and wholesale customers, respectively. This increase was offset by a decrease of $10.4 million cost of revenue due to reduced sales resulting from the COVID-19 pandemic.

Gross profit was $29.0 million for the three months ended March 31, 2020, an increase of $16.3 million, or 128%, from $12.7 million for the three months ended March 31, 2019. The increase was attributable primarily to B&R Global, with $17.1 million and $0.3 million in gross profit derived from sales to independent restaurants and wholesale customers, respectively. This increase was offset by a decrease $1.1 million cost of revenue for the sales to independent restaurants of HF driven by the decrease in sales.

Gross margin decreased from 17.0% for the three months ended March 31, 2019 to 16.5% for the three months ended March 31, 2020, primarily attributable to the lower gross margin of B&R Global. B&R Global’s gross margin for the three months ended March 31, 2020 was 15.4% which ~~was comprised of $30,560 of general~~resulted in lower gross margin in overall gross margin.

Distribution, selling and Administrative Expenses

Distribution, selling and administrative expenses were $29.4 million and ~~$21,021~~$10.4 million for the three months ended March 31, 2020 and the three months ended March 31, 2019, respectively, representing a $19.0 million, or 183.7% increase. The increase was mainly attributable to the Business Combination with B&R Global, which contributed $16.6 million, and the amortization expense of ~~State franchise~~$2.7 million relating to the intangible assets acquired from the Business Combination.

Interest Expense and Bank Charges

Interest expense and bank charges are primarily generated from lines of credit, capital leases, and long-term debt. Interest expenses and bank charges were $1.9 million for the three months ended March 31, 2020, an increase of $1.6 million, or 479.2%, compared with $0.3 million for the three months ended March 31, 2019. The increase was mainly attributable to increased lines of credit after the business combination with B&R Global and additional long-term debt with B&R Realty Subsidiaries, with total interest expenses of $1.0 million for the three months ended March 31, 2020.

Goodwill Impairment Loss

Goodwill impairment loss was $338.2 million for the three months ended March 31, 2020 and nil for the three months ended March 31, 2019. See Note 9 to our financial statements for additional information.

Other Income

Other income consists primarily of non-operating income and rental income. Other income was $0.4 million, for the three months ended March 31, 2020 an increase of $0.1 million or 42.6%, compared with $0.3 million for the three months ended March 31, 2019.

Income taxes Provision

Provision for income taxes decreased by $1.1 million of 174.5%, from $0.6 million for the three months ended March 31, 2019 to a tax benefit of $0.5 million for the three months ended March 31, 2020, as a result of the decrease in income before income tax provision.

Net Income Attributable to Noncontrolling interest

Net income attributable to noncontrolling interest was derived from four minority owned subsidiaries and increased by $0.1 million, or 63.5% from $0.1 million for the three months ended March 31, 2019 to $0.2 million for the three months ended March 31, 2020. The increase was due to the Business Combination with B&R Global, net income attributable to noncontrolling interest of $0.1 million for the three months ended March 31, 2020.

Net Income (Loss) Attributable to Our Stockholders

As a result of all analysis above, net income attributable to our stockholders was $1.7 million and net loss attributable to our stockholders was $339.9 million for the three months ended March 31, 2019 and for the three months ended March 31, 2020, respectively.

Adjusted EBITDA

The following table sets forth of the calculation of adjusted EBITDA and reconciliation to net income (loss), the closest U.S. GAAP measure:

	For the three months ended March 31,						Change
	2020			2019			Amount			%
Net income (loss)	$	(339,686,532	)	$	1,793,571		$	(341,480,103	)		(19039.1	)%
Interest expenses		1,951,569			336,958			1,614,611			479.2	%
Income tax provision (benefit)		(482,211	)		647,639			(1,129,850	)		(174.5	)%
Depreciation & Amortization		4,374,080			707,396			3,666,684			518.3	%
Goodwill impairment loss		338,191,407			-			338,191,407			100	%
Adjusted EBITDA	$	4,348,313			3,485,564			862,749			24.8	%
Percentage of revenue		2.5	%		4.7	%		(2.2	)%

Adjusted EBITDA was $4.3 million for the three months ended March 31, 2020, an increase of $0.8 million, or 24.8%, compared to $3.5 million for the three months ended March 31, 2019, resulting mainly from the $3.3 million decrease in net income (excluding goodwill impairment loss), partially offset by ~~$50,462~~$1.6 million increase in interest expense due to increased line of ~~interest income earned~~credit and Long-Term Debt and $3.7 million more depreciation and amortization from ~~investment in trust account. For the period from May 19, 2016 (Inception) to September 30, 2017, we had a net loss~~intangible and fixed assets associated with acquisition of ~~$625, which was comprised of formation~~B&R Global and ~~operating costs.~~B&R Realty Subsidiaries

Supplemental Unaudited Pro Forma Combined Financial Information

As described above, the Company completed the Business Combination with B&R Global on November 4, 2019. For comparative purposes, the Company is presenting supplemental unaudited pro forma combined statements of operations for the quarters ended March 31, 2020 and 2019. The unaudited pro forma combined statements of operations for these periods present our consolidated results of operations giving pro forma effect to the Business Combination as if it had occurred on January 1, 2019. The pro forma combined adjustments give effect to the items identified in the unaudited pro forma combined tables below in connection with the Business Combination.

The unaudited pro forma combined adjustments are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma combined basis, the impact of the Business Combination on our historical financial information, as applicable.

The B&R Global Financial Statements and our financial statements have been adjusted in the pro forma financial information to give effect to events that are (1) directly attributable to the Business Combination, (2) factually supportable, and (3) expected to have a continuing impact on the combined company.

The unaudited pro forma combined financial information has been prepared for informational purposes only and is not necessarily indicative of or intended to represent what the combined company’s financial position or results of operations actually would have been had the Business Combination occurred as of the dates indicated. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or operating results of the combined company. The unaudited pro forma adjustments are based on information available at the time of the preparation of the unaudited pro forma combined financial information.

The unaudited pro forma combined financial information does not reflect cost savings, synergies or revenue enhancements that the Company may achieve with respect to combining the companies or costs to integrate the B&R Global business or the impact of any non-recurring activity and any one-time transaction related costs. Synergies and integration costs have been excluded from consideration because they do not meet the criteria for unaudited pro forma adjustments.

Unaudited Pro Forma Results of Operations

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma financial statements:

	Three months ended March 31, 2019
	HF		B&R Global		Adjustments			Pro Forma Combined

Net revenue	$	74,801,022	$	134,154,344	$	-		$	208,955,366
Net income		1,793,571		3,853,379		(2,722,575	)(1)		2,924,375
Net Income Attributable to HF Foods Group Inc.	$	1,672,813	$	3,728,121	$	(2,722,575	)	$	2,678,359

(1)

Includes intangibles asset amortization expense of $2,722,575 for the three months ended March 31, 2019.

Liquidity and Capital Resources

As of ~~September 30, 2017,~~March 31, 2020, we had ~~$694,798 in~~ cash ~~outside the trust account.~~of approximately $12.7 million. We have funded working capital and other capital requirements primarily by equity contribution from shareholders, 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 repay debts.

~~Our liquidity needs have been satisfied~~On April 18, 2019, we and our operating subsidiaries Han Feng, New Southern Food Distributers and Kirnland entered into a credit agreement with East West Bank, which replaced our prior credit agreement with East West Bank. The credit agreement provides a $25,000,000 revolving credit facility which was due August 18, 2021, accrued interest based on the prime rate less 0.375% or 2.20% above LIBOR, but in no event less than 4.214% per annum, and was secured by virtually all assets of the Company and our domestic subsidiaries. On November 4, 2019, the East West Bank revolving credit facility loan was paid off from borrowings under the Amended and Restated Credit Agreement entered into connection with the merger with B&R, as described below.

On November 4, 2019, we entered into an Amended and Restated Credit Agreement with JP Morgan. The Amended and Restated Credit Agreement provides for (a) a $100 million asset-secured revolving credit facility maturing on November 4, 2022, and (b) mortgage-secured term loans of $55.4 million.

On January 17, 2020, the Company, B&R Global, and the Borrowers, and certain material subsidiaries of the Company as guarantors, entered into a Second Amended and Restated Credit Agreement (the “Second Amended Credit Agreement”) by and among JPMorgan, as Administrative Agent, and certain lender parties thereto, including Comerica Bank. The Second Amended Credit Agreement provided for (a) a $100 million asset-secured revolving credit facility maturing on November 4, 2022 (the “Facility”), and (b) mortgage-secured Term Loans of $75.6 million. The Second Amended Credit Agreement amended and restated the existing $55.0 million of real estate term loans under the Amended Credit Agreement. As of January 17, 2020, the existing balance of revolving debt under the Amended Credit Agreement, $41.2 million, was rolled over, and an additional $18.7 million available to ~~date through receipt of $25,000~~the Company under the Facility was drawn. The Company used the $75.6 million in mortgage-secured term loans and $18.7 million drawn from the ~~sale~~revolving credit facility to fund in part the Acquisition of the ~~insider shares~~B&R Realty Subsidiaries, as noted above. Borrowings under the Second Amended Credit Agreement may be used for, among other things, working capital and ~~loans from insiders in~~other general corporate purposes of the Company and its subsidiaries (including permitted acquisitions). The Borrowers have the ability to increase the amount of the Facility, which increases may take the form of increases to the revolving credit commitments, by an aggregate amount of ~~$175,000, which was converted into Private Units as part~~up $30 million upon satisfaction of ~~the Private Placement at the closing~~customary conditions precedent for such increases or incremental loans and receipt of ~~the IPO, and the funds received in the IPO and Private Placement that are held outside the trust account.~~

We intend to use substantially all of the net proceeds of the IPO, including the funds held in the trust account, in connection with our initial business combination and to pay our expenses relating thereto, including a deferred underwriting commission payable to Chardan Capital Markets, LLC in an amount equal to 2.5% of the total gross proceeds raised in the IPO upon consummation of our initial business combination. To the extent that our capital stock is used in wholeadditional commitments by one or in part as consideration to effect our initial business combination, the remaining proceeds held in the trust account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development ofmore existing or new ~~products. Such funds could also~~lenders. Borrowings under the Facility bear interest at a floating rate, which will be, ~~used to repay any operating expenses~~at the Borrowers’ option, either LIBOR plus 1.375%, or ~~finders’ fees~~a base rate of prime rate minus 1.125%. The mortgage-secured Term Loans bear interest at a floating rate, which ~~we had incurred prior to~~will be, at the ~~completion~~Borrowers’ option, either LIBOR plus 1.875%, or a base rate of ~~our initial business combination if~~prime rate minus 0.625%. A commitment fee of 0.15% is payable monthly in arrears based on the ~~funds available to us outside~~daily amount of the ~~trust account were insufficient~~undrawn portion of each lender’s revolving credit commitments under the Facility. The Borrowers are obligated to ~~cover such expenses.~~pay monthly installments on the mortgage-secured Term Loans in the amount of $252,000.00, with a final installment of the remaining principal balance of the Term Loans due on January 17, 2030, the Term Loan Maturity Date.

~~We anticipate~~Although management believes that the ~~funds held outside of our trust account~~cash generated from operations will be sufficient to ~~allow us~~meet our normal working capital needs for at least the next twelve months, our ability to ~~operate 12 months from~~repay our current obligations will depend on the ~~filing date~~future realization of ~~this Form 10-Q, 2019, assuming that a business combination is not consummated during that time.~~

If our ~~estimates~~current assets. Management has considered the historical experience, the economy, trends in the foodservice distribution industry, the expected collectability of accounts receivable and the realization of the ~~costs~~inventories as of ~~undertaking due diligence and negotiating our initial business combination are less than~~March 31, 2020. Based on the ~~actual amount necessary to do so,~~above considerations, management is of the opinion that we ~~may~~ have ~~insufficient~~sufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to convert a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our ~~obligations.~~working capital requirements and debt obligations as they become due. However, there is no assurance that management will be successful in our plan. There are a number of factors that could potentially arise that could result in shortfalls to our plan, such as the demand for our products, economic conditions, the 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 are insufficient to fund our liquidity needs, we may be forced to reduce or delay our expected acquisition plan, sell assets, obtain additional debt or equity capital, or refinance all or a portion of our debt.

We, however, make no assurance, however, that we will be able to raise any additional capital in the future on satisfactory terms or at all. Our continued access to sources of liquidity depends on multiple factors, including economic conditions, the condition of financial markets, the availability of sufficient amounts of financing, our operating performance and our credit ratings. In addition, the effect of COVID-19 on the capital markets could significantly impact our cost of borrowing and the availability of capital to us.

The following table sets forth cash flow data for the three months ended March 31, 2020 and 2019:

	For the three months ended March 31,
	2020			2019
Net cash provided by operating activities	$	18,627,806		$	2,521,378
Net cash used in investing activities		(94,073,441	)		(1,380,487	)
Net cash provided by financing activities		73,597,614			267,059
Net increase (decrease) in cash and cash equivalents	$	(1,848,021	)	$	1,407,950

Operating Activities

Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, changes in deferred income taxes and others, and adjusted for the effect of working capital changes. Net cash provided by operating activities was approximately $18.6 million for the quarter ended March 31, 2020, an increase of $16.1 million, or 638.8%, compared to net cash provided by operating activities of $2.5 million for the quarter ended March 31, 2019. The increase was due primarily result of newly acquired B&R Global with total net cash provided by operating activities of $11.4 million. The remaining increase is a combined results of an increase of $14.3 million from changes in working capital items mainly resulting from changes in accounts receivable, accrued expenses, advances from customers – related parties , inventory and depreciation and amortization expense which were offset by a decrease of $9.2 million in, net income, advances to suppliers – related parties, other current assets, other long term assets and accounts payable.

Investing Activities

Net cash used in investing activities was approximately $94.1 million for the quarter ended March 31, 2020, an increase of $92.7 million, or 6,714.5%, compared to $1.4 million net cash used investing activities for the quarter ended March 31, 2019. The increase was primarily due to payment made to acquire B&R Realty Subsidiaries of $94.1 million. The increase was offset by a combined result of, decreased cash paid for the purchase of property and equipment of $1.3 million, cash paid to notes receivable to third parties and related parties of $0.1 million and $0.1 million, respectively, offset by a decrease in cash proceeds from the disposal of equipment of $0.1 million.

Financing Activities

Net cash provided by financing activities was approximately $73.6 million for the quarter ended March 31, 2020, an increase of $73.3 million, or 27458.6%, compared with $0.3 million of net cash used in financing activities for the quarter ended March 31, 2019. The increase was due primarily result of newly acquired $75.6 million in mortgage-backed term loans to fund Realty Acquisition. The increase was offset by a combined result of , an increase of $170.0 million in repayment of lines of credit, an increase of $172.6 million in proceeds from lines of credit, an increase of $0.7 million in repayment of long term debt , an increase of $1.5 million in repayment of bank overdrafts and a decrease of $0.1 million in cash dividend to shareholders.

Commitments and Contractual Obligations

The following table presents the company’s material contractual obligations as of March 31, 2020:

Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Lines of credit	$	43,101,338		-		43,101,338		-		-
Long-term debt		97,092,946		6,941,738		10,725,978		7,718,680		71,706,550
Promissory note payable - related party		7,000,000		-		-		-		7,000,000
Finance lease obligations		1,517,482		373,715		686,375		457,392		-
Operating lease obligations		1,008,813		395,354		534,675		78,784		-
Total	$	149,720,579		7,710,807		55,048,366		8,254,856		78,706,550

On July 2, 2018, AnHeart, Inc., one of our subsidiaries, entered into two separate leases for two buildings located in Manhattan, New York, at 273 Fifth Avenue and 275 Fifth Avenue, for 30 years and 15 years, respectively, which are net leases, meaning that AnHeart is required to pay all costs associated with the buildings, including utilities, maintenance and repairs. HF Holding provided a guaranty for all rent and related costs of the leases, including costs associated with the construction of a two-story structure at 273 Fifth Avenue and rehabilitation of the building at 275 Fifth Avenue. Under the lease for 273 Fifth Avenue, the fixed rent costs over 30 years commence at $325,000 for the first year and escalate every year during the term to $1,047,000 in year 30. Under the lease for 275 Fifth Avenue, the fixed rent costs over 15 years commence at $462,000 for the first year and escalate every year during the term to approximately $760,878 in year 15. The 275 Fifth Avenue lease includes an option to extend the term for an additional 10 years. Under the leases, AnHeart delivered a letter of credit in favor of the Landlord in the amount of $213,000 as security for AnHeart’s obligations under the lease at 273 Fifth Avenue, and $115,500 with respect to 275 Fifth Avenue. The Company entered into the leases for the purpose of expanding its product lines to include Chinese herb supplements, and to use the sites to develop into a hub for such products. The Company has since determined to cease this business expansion.

On February 23, 2019, the Company executed an agreement to transfer all of our ownership interest in AnHeart to Jianping An, a resident of New York, for the sum of $20,000. The transfer of ownership was disclosed and landlord consent was obtained. However, the transfer of ownership does not release HF Holding’s guaranty of AnHeart’s obligations or liabilities under the original lease agreements. Under the terms of the transfer agreement, AnHeart executed a security agreement which grants us a security interest in AnHeart assets and a covenant to assign the leases to HF Group if AnHeart defaults. Further, AnHeart has tendered an unconditional guaranty of all liabilities arising under the leases, in favor of the Company, executed by Minsheng Pharmaceutical Group Company, Ltd., a Chinese manufacturer and distributor of herbal medicines.

Off-Balance Sheet Arrangements

~~As of September 30, 2017, we did not~~We have ~~any~~no off-balance sheet ~~arrangements.~~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

Critical Accounting Policies and Estimates

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing the Company's 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 2019 Annual Report includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the three months ended March 31, 2020.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2, Recent Accounting Pronouncements, in our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market ~~Risk~~Risk.

AsInterest Rate Risk

Our debt exposes us to risk of ~~September 30, 2017, we were not subject to any market or~~fluctuations in interest rates. Floating rate debt, where the interest rate ~~risk. Following~~fluctuates periodically, exposes us to short-term changes in market interest rates. Fixed rate debt, where the ~~consummation~~interest rate is fixed over the life of the ~~IPO,~~instrument, exposes us to changes in market interest rates reflected in the ~~net proceeds~~fair value of the ~~IPO, including amounts~~debt and to the risk that we may need to refinance maturing debt with new debt at higher rates. We manage our debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps as a tool to achieve that position.

Floating rate debt’s outstanding principal balance was $121.7 million as of March 31, 2020, which consists of long-term debt and revolver (See Notes 10 and 11 to our financial statements). Based on the outstanding balance as of March 31, 2020, a hypothetical 1% change in the ~~trust account, may be invested~~applicable base rate would cause interest expense on our floating rate debt to change by approximately $1.2 million per year.

Fuel Price Risk

We are also exposed to risk due to fluctuations in ~~U.S. government treasury bills, notes~~the price and availability of diesel fuel. We require significant quantities of diesel fuel for our vehicle fleet, and the delivery to us of the products we sell also is dependent upon shipment by diesel-fueled vehicles. We currently are able to obtain adequate supplies of diesel fuel, and prices in the current quarter are substantially lower than in the comparable period of 2019. However, it is impossible to predict the future availability or ~~bonds with a maturity~~price of ~~180 days or less or~~diesel fuel. The price and supply of diesel fuel fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, regional production patterns, weather conditions and environmental concerns. Increases in ~~certain money market funds that invest solely in U.S. treasuries. Due~~the cost of diesel fuel can increase the prices we pay for products and the costs we incur to ~~the short-term nature of these investments, we believe there will be no associated material exposure~~deliver products to ~~interest rate risk.~~our customers.

Our activities to minimize fuel cost risk include route optimization, improving fleet utilization and using fuel surcharges.

Item 4. Controls and ~~Procedures~~Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as ~~of the end of the fiscal quarter ended September 30, 2017, as~~ such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act.~~Act, as of the end of the period covered by this report. In connection with this review and the audit of our consolidated financial statements for the year ended December 31, 2019, we identified material weaknesses and control deficiencies in our internal control over financial reporting. The material weaknesses related to (1) the Company does not have in-house accounting personnel with sufficient capacity of US GAAP and SEC reporting experiences related to complex transactions; and (2) The Company failed to maintain effective IT General Controls, including missing certain entity level controls in IT management, lack of segregation of duties in IT functions, proper review of the operation of application systems, and measures to protect data security and maintain business sustainability. Control deficiencies are related to the lack of proper documentation to evidence the management review in various business processes. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that ~~during~~as a result of the ~~period covered by this report,~~material weakness in our internal control over financial reporting reported in our Annual Report on Form 10-K for the year ended December 31, 2019, our disclosure controls and procedures were ~~effective.~~not effective as of March 31, 2020. Notwithstanding the material weaknesses, our management has concluded that the financial statements included elsewhere in this report present fairly, and all materials respects, our financial position on results of operation and cash flow in conformity with GAAP.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control ~~over~~Over Financial Reporting

~~There~~As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019, management concluded that our internal control over financial reporting was ~~no change~~ineffective due to material weakness and control deficiencies in our internal control over financial reporting. The material weaknesses related to (1) of the Company does not have in-house accounting personnel with sufficient knowledge of US GAAP and SEC reporting ~~that occurred~~experiences, especially related to complex transactions and new accounting pronouncements; and (2) The Company failed to maintain effective IT General Controls, including missing certain entity level controls in IT management, lack of segregation of duties in IT functions, proper review of the operation of application systems, and measures to protect data security and maintain business sustainability. Control deficiencies are related to the lack of proper documentation to evidence the management review in various business processes. In order to address and resolve the foregoing material weakness, during the ~~fiscal quarter covered~~three months ended March 31, 2020, we continued to improve on our US GAAP and SEC reporting knowledge relating to complex transactions and added additional resources to improve our internal control over financial reporting:

The measures we have implemented are subject to continued management review supported by confirmation and testing, as well as audit committee oversight. Management remains committed to the implementation of remediation efforts to address these material weaknesses. Although we will continue to implement measures to remedy our internal control deficiencies, there can be no assurance that our efforts will be successful or avoid potential future material weaknesses. In addition, until remediation steps have been completed and/or operated for a sufficient period of time, and subsequent evaluation of their effectiveness is completed, the material weaknesses identified and described above will continue to exist.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Various labor and employment lawsuits were filed by former employees against FUSO, NBT, and HRT, alleging these entities failed to provide proper meal and rest breaks, as well as other related violations. These entities deny all the allegations. Management believes there is no merit to the cases and will vigorously defend the cases. Therefore, the Company did not accrue any loss contingency for this matter on its consolidated financial statements as of March 31, 2020 and 2019.

Item 1A. Risk Factors.

There have been no changes with respect to risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “Previous Report”). Investing in our common stock involves a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described in our Previous Report, our Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 2 of Part I of this Quarterly Report on Form 10-Q, ~~that has materially affected, or is reasonably likely~~our consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and our consolidated financial statements and related notes, as well as our Management’s Discussion and Analysis of Financial Condition and Results of Operations and the other information in our Previous Report. Readers should carefully review those risks, as well as additional risks described in other documents we file from time to ~~materially affect, our internal control over financial reporting.~~time with the SEC.

~~PART II - OTHER INFORMATION~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered ~~Securities~~Securities.

On August 14, 2017, the Company consummated its initial public offering (“IPO”) of 4,000,000 units (the “Units”). Each Unit consists of one share of common stock (“Common Stock”), and one right to receive 1/10 of a share of Common Stock at the closing of the Company’s initial business combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $40,000,000. The Company granted the underwriters a 45-day option to purchase up to 600,000 additional Units to cover over-allotments, if any. Simultaneously with the closing of the IPO, the Company consummated the private placement (“Private Placement”) of 320,000 units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $3,200,000. Subsequently, the underwriters exercised the over-allotment option in part and, on August 21, 2017, the underwriters purchased 425,000 over-allotment option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $4,250,000. On August 21, 2017, simultaneously with the sale of the over-allotment units, the Company consummated the private sale of an additional 21,250 Private Units, generating gross proceeds of $212,500. On August 22, 2017, the underwriters canceled the remainder of the over-allotment option. In connection with the cancellation of the remainder of the over-allotment option, the Company canceled an aggregate of 43,753 shares of common stock issued to the Company’s initial stockholders prior to the IPO and Private Placement. A total of $45,135,000 of the net proceeds from the sale of Units in the IPO (including the over-allotment option units) and the Private Placements on August 14, 2017 and August 21, 2017, were placed in a trust account established for the benefit of the Company’s public stockholders.None.

The Private Units are identical to the units sold in the IPO. The holders of the Private Units have agreed (A) to vote the private shares underlying the Private Units (the “Private Shares”) and any public shares acquired by them in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by February 14, 2019 (or August 14, 2019, as applicable), unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, (C) not to convert any shares (including the Private Shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our certificate of incorporation relating to the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by February 14, 2019 (or August 14, 2019, as applicable) and (D) that the Private Shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the trust account if a business combination is not consummated. Additionally, our insiders (and/or their designees) have agreed not to transfer, assign or sell any of the private units or underlying securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to, each as described above) until the completion of our initial business combination.Item 3. Defaults Upon Senior Securities.

As of September 30, 2017, a total of $45,185,462 of the net proceeds from the IPO and the Private Placement, and interest from investment on such net proceeds were in a trust account established for the benefit of the Company’s public shareholders.None.

We paid a total of $1,327,500 in underwriting discounts and commissions (not including the 2.5% deferred underwriting commission payable at the consummation of initial business combination) and $523,717 for other costs and expenses related to our formation and the IPO.Item 4. Mine Safety Disclosures.

~~For a description of the use of the proceeds generated in our IPO, see Part I, Item 2 of this Form 10-Q.~~Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are being filed or furnished with this quarterly report on Form 10-Q:

Exhibit No.		Description

2.1		~~Description~~ Form of Membership Interest Purchase Agreement among B&R Global Holdings, Inc., B&R Group Realty Holding, LLC, and subsidiaries of B&R Group Realty Holding, LLC (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on January 21, 2020)

~~1.1~~ 10.1		~~Underwriting Agreement, dated August 8, 2017, by and between the Registrant and Chardan Capital Markets, LLC (incorporated by reference to Exhibit 1.1 to the Current Report on~~ Form ~~8-K dated August 8, 2017)~~
~~3.1~~		of Second Amended and Restated ~~Certificate~~Credit Agreement among HF Foods Group Inc. B&R Global Holdings, Inc., subsidiaries of ~~Incorporation (incorporated by reference to Exhibit 3.1 to~~ the ~~Current Report on Form 8-K dated August 8, 2017)~~
~~4.1~~		~~Rights Agreement, dated August 8, 2017, by~~Company, JPMorgan Chase Bank, N.A. (“JPMorgan”), as Administrative Agent, and ~~between American Stock Transfer & Trust Company, LLC~~certain lender parties thereto [disclosure schedules have been redacted as immaterial and ~~the Registrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated August 8, 2017)~~
~~10.1~~		~~Investment Management Trust Account Agreement, dated August 8, 2017, by and between American Stock Transfer & Trust Company, LLC and the Registrant~~commercially sensitive] (incorporated by reference to Exhibit 10.1 toof the Registrant’s Current Report on Form 8-K ~~dated August 8, 2017)~~filed with the SEC on January 21, 2020)
~~10.2~~
10.2		~~Registration Rights~~Form of Letter Agreement ~~dated August 8, 2017, by~~between HF Foods Group Inc. and ~~among the Registrant and the initial stockholders~~Russell T. Libby (incorporated by reference to Exhibit ~~10.2~~5.1 to the Registrant’s Current Report on Form 8-K ~~dated August 8, 2017)~~filed with the SEC on March 23, 2020)
~~10.3~~
10.3		~~Stock Escrow~~Form of Mutual Rescission Agreement between HF Group and Rescinding Shareholders dated ~~August 8, 2017 among the Registrant, American Stock Transfer & Trust Company, LLC, and the initial stockholders~~April 1, 2020 (incorporated by reference to Exhibit ~~10.3 to~~10.1 of the Registrant’s Current Report on Form 8-K ~~dated August 8, 2017)~~
~~10.4~~		Form of Letter Agreement by and between the Registrant, the initial shareholders and the officers and directors of the Company (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1 filed with the ~~Securities & Exchange Commission~~SEC on ~~July 27, 2017)~~April 7, 2020)
~~31.1~~
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

32 32.1		Certification of Chief Executive Officer ~~and~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

~~SIGNATURES~~signatures

~~In accordance with~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~ATLANTIC ACQUISITION CORP.~~ HF FOODS GROUP INC.

	By:	/s/ ~~Richard Xu~~Zhou Min Ni
	~~Richard Xu~~
	Zhou Min Ni Chief Executive Officer (Principal executive officer)

	~~By:~~	~~/s/ Peiling He~~
	~~Peiling He~~ By: /s/ Kong Hian Lee
	Kong Hian Lee Chief Financial Officer (Principal accounting and financial ~~and accounting~~ officer)

Date: ~~November 13, 2017~~May 18, 2020

~~ATLANTIC ACQUISITION CORP.~~
~~(Exact Name of Registrant as Specified in Its Charter)~~

Delaware		~~81-2717873~~
(State or other jurisdiction of incorporation or organization)		81-2717873 (I.R.S. Employer Identification No.)

19319 Arenth Avenue, City of Industry, CA 91748
(Address of principal executive offices) (Zip Code)

Large accelerated filer ☐	☐	Accelerated filer	☐ ☒
Non-accelerated filer ☐	☐	Smaller reporting company	☒ ☐
~~(Do not check if smaller reporting company)~~		Emerging ~~Growth Company~~	growth company ☒

Description			Page
~~Part I.~~		~~Financial Information~~	3
PART I.	FINANCIAL INFORMATION
	Item 1.1 Financial Statements	3 1
	Condensed Consolidated Balance Sheets (Unaudited)	3 1
	Condensed Consolidated Statements of ~~Operations~~Income (Unaudited)	4 2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5 4
	Notes to Unaudited Condensed Consolidated Financial Statements	6 5
	Item 2.2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	18 31
	Item 3.3 Quantitative and Qualitative Disclosures ~~Regarding~~about Market Risk	19 40
	Item 4.4 Controls and Procedures	19 40
~~Part II.~~	~~Other Information~~	21
PART II.	OTHER INFORMATION
	Item 2.1 Legal Proceedings	41
	Item 1A Risk Factors	41
	Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	21 41
	Item 5.3 Defaults Upon Senior Securities	41
	Item 4 Mine Safety Disclosures	41
	Item 5 Other Information	41
	Item 6.6 Exhibits	22 42
~~Signatures~~	23
SIGNATURE PAGE		43

	September 30, 2017			December 31, 2016
		(Unaudited)
ASSETS

Current Assets
Current assets-cash	$	694,798		$	44,955
Prepaid expenses		10,500			—
Deferred offering costs		—			154,820
Total Current Assets		705,298			199,775

Cash and marketable securities held in Trust Account		45,185,462			—
Total Assets	$	45,890,760		$	199,775

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable	$	35,175		$	475
Accrued state franchise taxes		21,021			—
Note payable to related parties		—			175,000
Total Current Liabilities		56,196			175,475

Deferred underwriting compensation		1,106,250			—
Total Liabilities		1,162,446			175,475

Commitments and Contingencies
Common stocks subject to possible conversion; 3,894,933 and -0- (at conversion value of $10.20 per share)		39,728,313			—

Stockholders’ Equity
Preferred stock, $.0001 par value, 1,000,000 shares authorized		—			—
Common Stock, $.0001 par value, 30,000,000 shares authorized , 1,977,564 and 1,150,000⁽¹⁾ common stocks issued and outstanding (excluding 3,894,933 and -0- shares subject to redemption)		198			115
Additional paid- in capital		5,001,622			24,885
Accumulated deficit		(1,819	)		(700	)
Total Stockholders’ Equity		5,000,001			24,300

Total Liabilities and Stockholders’ Equity	$	45,890,760		$	199,775

	As of
	March 31			December 31
	2020			2019
ASSETS
CURRENT ASSETS:
Cash	$	12,690,265		$	14,538,286
Accounts receivable, net		26,210,460			50,027,134
Accounts receivable - related parties, net		5,987,632			4,202,870
Inventories, net		75,704,474			77,531,854
Advances to suppliers - related parties, net		864,816			745,135
Other current assets		3,872,326			4,374,338
TOTAL CURRENT ASSETS		125,329,973			151,419,617

Property and equipment, net		139,941,393			37,538,147
Security deposits-related parties		-			591,380
Operating lease right-of-use assets		883,552			17,155,584
Long-term investments		2,331,337			2,296,276
Intangible assets, net		183,965,375			186,687,950
Goodwill		68,511,941			406,703,348
Deferred tax assets		69,236			78,993
Other long-term assets		379,599			372,499
TOTAL ASSETS	$	521,412,406		$	802,843,794

CURRENT LIABILITIES:
Bank overdraft	$	13,474,772		$	14,952,510
Lines of credit		43,101,338			41,268,554
Accounts payable		32,456,258			39,689,911
Accounts payable - related parties		3,738,202			4,521,356
Advances from customers - related parties		213,354			-
Current portion of long-term debt, net		6,941,738			2,726,981
Current portion of obligations under finance leases		288,101			280,243
Current portion of obligations under operating leases		333,180			4,322,503
Accrued expenses and other liabilities		2,960,084			2,683,696
TOTAL CURRENT LIABILITIES		103,507,027			110,445,754

Long-term debt, net		90,151,208			18,535,016
Promissory note payable - related party		7,000,000			-
Obligations under finance leases, non-current		979,782			1,053,166
Obligations under operating leases, non-current		550,372			12,833,081
Deferred tax liabilities		51,378,817			52,320,045
TOTAL LIABILITIES		253,567,206			195,187,062

SHAREHOLDERS’ EQUITY:
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized , no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		-			-
Common Stock, $0.0001 par value, 100,000,000 shares authorized, 53,050,211 shares issued, and 52,145,096 shares outstanding as of March 31, 2020 and December 31, 2019, respectively		5,305			5,305
Treasury Stock, at cost, 905,115 shares as of March 31, 2020 and December 31, 2019, respectively		(12,038,030	)		(12,038,030	)
Additional paid-in capital		599,617,009			599,617,009
Retained earnings (accumulated deficit)		(324,060,281	)		15,823,661

Total shareholders’ equity attributable to HF Foods Group, Inc.		263,524,003			603,407,945
Noncontrolling interest		4,321,197			4,248,787
TOTAL SHAREHOLDERS’ EQUITY		267,845,200			607,656,732
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	521,412,406		$	802,843,794

HF FOODS GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	For the three months Ended Mar 31,
	2020			2019

Net revenue - third parties		170,640,014		$	70,303,911
Net revenue - related parties		5,163,322			4,497,111
TOTAL NET REVENUE		175,803,336			74,801,022

Cost of revenue - third parties		141,904,237			57,725,355
Cost of revenue - related parties		4,924,054			4,368,811
TOTAL COST OF REVENUE		146,828,291			62,094,166

GROSS PROFIT		28,975,045			12,706,856

DISTRIBUTION, SELLING AND ADMINISTRATIVE EXPENSES		29,406,593			10,365,172

INCOME (LOSS) FROM OPERATIONS		(431,548	)		2,341,684

Other Income (Expenses)
Interest income		131			151,949
Interest expense and bank charges		(1,951,569	)		(336,958	)
Goodwill impairment loss		(338,191,407	)		-
Other income		405,650			284,535
Total Other Income (Expenses), net		(339,737,195	)		99,526

INCOME (LOSS) BEFORE INCOME TAX PROVISION		(340,168,743	)		2,441,210

PROVISION (BENEFIT) FOR INCOME TAXES		(482,211	)		647,639

NET INCOME (LOSS)		(339,686,532	)		1,793,571

Less: net income attributable to noncontrolling interest		197,410			120,758

NET INCOME (LOSS) ATTRIBUTABLE TO HF FOODS GROUP INC.		(339,883,942	)	$	1,672,813

Earnings (loss) per common share - basic and diluted		(6.52	)	$	0.08

Weighted average shares - basic and diluted		52,145,096			22,167,486

	Common Stock							Additional		Retained Earnings			Total Shareholders’ Equity Attributable						Total
	Number of				Treasury			Paid-in		(Accumulated			to HF			Noncontrolling			Shareholders’
	Shares		Amount		Stock			Capital		Deficit)			Group Inc.			Interest			Equity
Balance at December 31, 2019		52,145,096	$	5,305	$	(12,038,030	)	$	599,617,009	$	15,823,661		$	603,407,945		$	4,248,787		$	607,656,732
Net income (loss)		-		-		-			-		(339,883,942	)		(339,883,942	)		197,410			(339,686,532	)
Distribution to shareholders		-		-		-			-		-			-			(125,000	)		(125,000	)
Balance at March 31, 2020		52,145,096		5,305		(12,038,030	)		599,617,009		(324,060,281	)		263,524,003			4,321,197			267,845,200


Balance at December 31, 2018		22,167,486		2,217		-			22,920,603		10,433,984			33,356,804			1,104,678			34,461,482
Net income		-		-		-			-		1,672,813			1,672,813			120,759			1,793,572
Balance at March 31, 2019		22,167,486	$	2,217	$	-		$	22,920,603	$	12,106,797		$	35,029,617		$	1,225,437		$	36,255,054


	For Three Months ended September 30,						For The Nine Months Ended			For The Period From May 19, 2016 (Inception) Through
	2017			2016			September 30, 2017			September 30, 2016

General and administrative expenses	$	(30,478	)	$	(100	)	$	(30,560	)	$	(625	)
State franchise taxes		(21,021	)		—			(21,021	)		—
Interest income on cash and marketable securities held in trust		50,462			—			50,462			—
Net Loss		(1,037	)		(100	)		(1,119	)		(625	)

Basic and diluted weighted average shares outstanding⁽¹⁾		1,467,996			1,000,000			1,157,713			1,000,000
Basic and diluted net loss per share	$	(0.02	)	$	(0.00	)	$	(0.02	)	$	(0.00	)


	For The Nine Months Ended September 30, 2017			For The Period From May 19 (Inception) Through September 30, 2016

Cash flow from operating activities
Net loss	$	(1,119	)	$	(625	)
Adjustments to reconcile net loss to net cash used in operating activities:
Interest income on cash and marketable securities held in trust		(50,462	)		—
Change in operating assets and liabilities:
Change in prepaid expenses		(10,500	)		—
Change in accounts payable		34,700			475
Change in accrued state franchise taxes		21,021			—
Net cash used in operating activities		(6,360	)		(150	)

Cash flows from investing activities
Investment of cash and marketable securities in Trust Account		(45,135,000	)		—
Net cash used in investing activities		(45,135,000	)		—

Cash flow from financing activities
Proceeds from sale of public units during the public offering		40,000,000			—
Proceeds from sale of private units concurrent with the public offering		3,025,000			—
Proceeds from sale of underwriter’s unit purchase option		100			—
Proceeds from sale of units upon partial exercise of overallotment option		4,250,000			—
Proceeds from sale of private units upon partial exercise of overallotment option		212,500			—
Payment of offering costs		(1,696,397	)		(118,621	)
Proceeds from note payable to related party		—			175,000
Proceeds from sale of common stock		—			25,000
Net cash provided by financing activities		45,791,203			81,379

Net Change in Cash and Cash Equivalents		649,843			81,229
Cash at beginning of period		44,955			—
Cash at end of period	$	694,798		$	81,229

Supplemental disclosure of non-cash financing activities
Repayment of old note payable by new note holder (Note 5)	$	175,000		$	—
Conversion of note payable into private units	$	175,000		$	—

Supplemental disclosure of non-cash investing activities
Proceeds from issuance of shares in May 2017 paid directly by new Shareholders to repurchase initial shareholder shares	$	25,000		$	—

Description	Level	September 30, 2017		December 31, 2016
Assets:
Cash and marketable securities held in Trust Account	1		45,185,462	$	—


	For Three Months ended September 30,						For The Nine Months Ended			For The Period From May 19, 2016 (Inception)
	2017			2016			September 30, 2017			Through September 30, 2016

Net loss		(1,037	)		(100	)		(1,119	)		(625	)
Less: income attributable to common stock subject to redemption		(25,914	)		—			(25,914	)		—
Adjusted loss		(26,951	)		(100	)		(27,033	)		(625	)
Basic and diluted weighted average shares outstanding⁽¹⁾		1,467,996			1,000,000			1,157,713			1,000,000
Basic and diluted net loss per share		(0.02	)		(0.00	)		(0.02	)		(0.00	)