NOTE

– 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 at both the legal and accounting acquirer based on the fact that there was

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 price of the Company’s common stock at the date of Closing.

The information included herein has been prepared based on the allocation of 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,

Business Combinations.

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		576,699,494
	$	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 from the acquisition date to

December 31, 2019

are as follows:

	From acquisition date to December 31, 2019

Net Revenue	$	86,059,243

Net Income	$	1,355,343

The following table presents the Company’s unaudited pro forma results for the years ended

December 31, 2019

and

2018,

respectively, as if the B&R Global Acquisition had occurred on

January 1, 2018.

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.

	Year ended December 31,
	2019			2018
Pro forma Net revenue	$	828,045,703		$	817,981,204
Pro forma Net income		6,799,694	(1)		16,114,247	(1)
Pro forma Net income attributable to HF Group		5,662,499	(1)		15,774,413	(1)

Pro forma earnings per common share - basic and diluted	$	0.11		$	0.31

Weighted average shares - basic and diluted		53,293,566			51,232,829

(

)

Includes intangibles asset amortization expense of

$10,890,300

for the years ended

December 31, 2019

and

December 31, 2018,

respectively.