HF Foods Group Inc.HFFG
HF Foods Group Inc. Goodwill & Intangibles Disclosure
Note 7 - Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill are presented below:
| (In thousands) | Amount | |||||||
| Balance at December 31, 2023 | $ | 85,118 | ||||||
| Goodwill impairment charges | (46,303) | |||||||
| Balance at December 31, 2024 | $ | 38,815 | ||||||
| Goodwill impairment charges | (38,815) | |||||||
| Balance at December 31, 2025 | $ | — | ||||||
Accumulated impairment for goodwill is $423.3 million as of December 31, 2025 and $384.5 million as of December 31, 2024. Prior to the goodwill impairment charge in the current year, the accumulated impairment resulted from impairment charges taken during the years ended December 31, 2024 and December 31, 2020.
There is only one reporting unit at December 31, 2025 and 2024. The Company tests goodwill for impairment at least annually, as of December 31, or whenever events or changes in circumstances indicated goodwill might be impaired.
As of September 30, 2024, the Company concluded that a triggering event occurred due to a sustained decline in the Company’s stock price since December 31, 2023, which required interim testing for goodwill impairment in accordance with ASC 350. Accordingly, the Company performed a quantitative assessment as of September 30, 2024. The fair value of the reporting unit exceeded the carrying value, and therefore the Company concluded no impairment was required to be recorded during the period ended September 30, 2024.
As a result of continued declines in the level of stock price, the Company performed a quantitative impairment assessment as of December 31, 2024. The results of the testing as of December 31, 2024, concluded that the estimated fair value of the reporting unit fell short of carrying value, and therefore impairment existed as of that date. A goodwill impairment charge of $46.3 million was recorded in the consolidated statements of operations and comprehensive loss during the year ended December 31, 2024.
As a result of declines in the stock price during the fourth quarter of 2025, the Company performed a quantitative impairment assessment as of December 31, 2025. The results of the testing at December 31, 2025, resulted in the conclusion that the estimated fair value of the Company’s single reporting unit was less than its carrying value, and its goodwill was impaired. A goodwill impairment charge was recorded in the consolidated statements of operations and comprehensive loss during the year ended December 31, 2025 of $38.8 million.
For the impairment tests conducted in 2025 and 2024, the Company used a combination of an income approach or a discounted cash flow (“DCF”) model and market approaches, such as public company comparable analysis and comparable acquisitions analysis to determine fair value of the reporting unit. The income approach and market approaches were weighted equally to estimate fair value. The income approach requires detailed forecasts of cash flows, including assumptions such as revenue growth rates, gross profit margins, distribution, selling and administrative expenses, among other assumptions, and an estimate of weighted-average cost of capital which the Company believes approximate the assumptions from a market participant’s perspective. The market approaches are primarily impacted by an enterprise value multiple of EBITDA. These estimates incorporate many uncertain factors which could be impacted by changes in market conditions, interest rates, growth rate, tax rates, costs, customer behavior, regulatory environment and other macroeconomic changes. In addition, the Company considered the reasonableness of the fair value of the reporting unit by assessing the implied enterprise value control premium based on the Company’s market capitalization. The Company determined that the implied control premiums used in each analysis were reasonable which corroborates the Company’s fair value estimates. The Company categorized the fair value determination as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.
Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation.
As of December 31, 2025, the Company’s goodwill was fully impaired.
Intangible Assets
In connection with the Sealand acquisition in 2022, the Company acquired $14.7 million of intangible assets, primarily representing trademarks and trade names of $4.4 million, customer relationships of $8.9 million and non-compete agreements of $1.4 million. The useful lives of trademarks and trade names are ten years, customer relationships are ten years and non-compete agreements are three years.
In connection with the Great Wall Group acquisition in 2021, HF Foods acquired $30.1 million of intangible assets, primarily representing a non-competition agreement, trademarks and trade names and customer relationships, which have an estimated amortization period of approximately three years, ten years, and ten years, respectively.
In connection with the acquisition of B&R Global in 2019, HF Foods acquired $188.5 million of intangible assets, primarily representing trademarks and trade names and customer relationships which have an estimated amortization period of and twenty years, respectively.
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| (In thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||||
| Non-competition agreements | $ | 3,892 | $ | (3,892) | $ | — | $ | 3,892 | $ | (3,723) | $ | 169 | ||||||||||||||||||||||||||
| Trademarks and trade names | 44,207 | (23,894) | 20,313 | 44,207 | (19,465) | 24,742 | ||||||||||||||||||||||||||||||||
| Customer relationships | 185,266 | (59,218) | 126,048 | 185,266 | (48,651) | 136,615 | ||||||||||||||||||||||||||||||||
| Inventory Management System | 5,667 | (540) | 5,127 | — | — | — | ||||||||||||||||||||||||||||||||
| Total | $ | 239,032 | $ | (87,544) | $ | 151,488 | $ | 233,365 | $ | (71,839) | $ | 161,526 | ||||||||||||||||||||||||||
The Company evaluated possible triggering events that would indicate its long-lived assets are impaired. No impairment was recorded against intangible assets for the years ended December 31, 2025 and 2024.
Amortization expense for intangible assets was $15.7 million and $16.3 million for the years ended December 31, 2025 and 2024, respectively.
The estimated future amortization expense for intangible assets is presented below:
| (In thousands) | Amount | |||||||
| Year ending December 31, | ||||||||
| 2026 | $ | 15,797 | ||||||
| 2027 | 15,797 | |||||||
| 2028 | 15,797 | |||||||
| 2029 | 15,309 | |||||||
| 2030 | 12,867 | |||||||
| Thereafter | 75,921 | |||||||
| Total | $ | 151,488 | ||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 26, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Jan 31, 2023 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 16, 2020 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.