NOTE

- ORGANIZATION AND BUSINESS DESCRIPTION

Organization and General

HF Foods Group Inc. (“HF Foods”, or the “Company”) markets and distributes fresh produces, frozen and dry food, and non-food products to primarily Asian/Chinese restaurants and other foodservice customers throughout the southeast region of the United States.

The Company was originally incorporated in Delaware on

May 19, 2016

as a special purpose acquisition company under the name Atlantic Acquisition Corp. (“Atlantic”), in order to acquire, through a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with

one

or more businesses or entities.

Business Combination

Effective

August 22, 2018,

Atlantic consummated the transactions contemplated by a merger agreement (the “Merger Agreement”), dated as of

March 28, 2018,

by and among Atlantic, HF Group Merger Sub Inc., a Delaware subsidiary formed by Atlantic, HF Group Holding Corporation, a North Carolina corporation (“HF Holding”), the stockholders of HF Holding, and Zhou Min Ni, as representative of the stockholders of HF Holding. Pursuant to the Merger Agreement, HF Holding merged with HF Merger Sub and HF Holding became the surviving entity (the “Merger”) and a wholly-owned subsidiary of Atlantic (the “Acquisition”). Additionally, upon the closing of the transactions contemplated by the Merger Agreement (the “Closing”), (i) the stockholders of HF Holding became the holders of 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 “Transactions”).

At closing on

August 22, 2018,

Atlantic issued the HF Holding stockholders an aggregate of

19,969,831

shares of its common stock, equal to approximately

88.5%

of the aggregate issued and outstanding shares of Atlantic’s common stock. The pre-Transaction stockholders of Atlantic owned the remaining

11.5%

of the issued and outstanding shares of common stock of the combined entities.

Following the consummation of the 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 Merger Agreement, (ii)

400,000

shares redeemed by

one

of Atlantic’s shareholders in conjunction with the Transactions, (iii)

10,000

restricted shares issued to

one

of Atlantic’s shareholders in conjunction with the Transactions, and (iv)

2,587,655

shares originally issued to the pre-Transaction stockholders of Atlantic.

The Acquisition is treated by Atlantic as a reverse business combination under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). For accounting purposes, HF Holding is considered to be acquiring Atlantic in this transaction. Therefore, the aggregate consideration paid in connection with the business combination will be allocated to Atlantic’s tangible and intangible assets and liabilities based on their fair market values. The assets and liabilities and results of operations of Atlantic will be consolidated into the results of operations of HF Holding as of the completion of the business combination.

Reorganization of HF Group

HF Holding was incorporated in the State of North Carolina on

October 11, 2017.

Effective

January 1, 2018,

HF Holding entered into a Contribution Agreement (the “Agreement”) whereby the controlling shareholders of the following

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 (hereafter collectively referred to as “HF Group”).

●

Han Feng, Inc. (“Han Feng”)

●

Truse Trucking, Inc. (“TT”)

●

Morning First Delivery (“MFD”)

●

R&N Holdings, LLC (“R&N Holdings”)

●

R&N Lexington, LLC (“R&N Lexington”)

●

Kirnsway Manufacturing Inc. (“Kirnsway”)

●

Chinesetg, Inc. (“Chinesetg”)

●

New Southern Food Distributors, Inc. (“NSF”)

●

B&B Trucking Services, Inc. (“BB”)

●

Kirnland Food Distribution, Inc. (“Kirnland”)

●

Hg Realty LLC (“Hg Realty”)

In accordance with Accounting Standards Codification (“ASC”)

805

25,

the transaction consummated through the Agreement has been accounted for as a transaction among entities under common control since the same shareholders control all these

entities prior to the execution of the Agreement.

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

Name	Date Of Incorporation	Place Of Incorporation	Percentage Of Legal Ownership By HF Holding	Principal Activities
Parent:
HF Holding	October 11, 2017	North Carolina, USA	----	Holding Company
Subsidiaries:
Han Feng	January 14, 1997	North Carolina, USA	100%	Distributing food and related products
TT	August 6, 2002	North Carolina, USA	100%	Trucking service
MFD	April 15, 1999	North Carolina, USA	100%	Real estate holding
R&N Holdings	November 21, 2002	North Carolina, USA	100%	Real estate holding
R&N Lexington	May 27, 2010	North Carolina, USA	100%	Design and printing services
Kirnsway	May 24, 2006	North Carolina, USA	100%	Design and printing services
Chinesetg	July 12, 2011	North Carolina, USA	100%	Design and printing services
NSF	December 17, 2008	Florida, USA	100%	Distributing food and related products
BB	September 12, 2001	Florida, USA	100%	Trucking service
Kirnland	April 11, 2006	Georgia, USA	66.7%	Distributing food and related products
HG Realty	May 11, 2012	Georgia, USA	100%	Real estate holding

June 5, 2018,

AnHeart Inc. (“AnHeart”) was incorporated and

100%

owned by HF Holding. On

February 23, 2019,

HF Holding transferred all of its ownership interest in AnHeart to Jianping An, a resident of New York. AnHeart had

activities since inception other than being formed solely to enter into lease agreements for

two

premises in New York City, NY (Note