DEF 14A of HF Foods Group Inc., Apr 24, 2024

DEF 14A of HF Foods Group Inc.

Filed Apr 24, 2024 · FY20230001680873-24-000019

Open on EDGAR

  1. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS Our bylaws provide that the Board of Directors shall consist of one or more members. The exact number of directors shall be fixed by and may be changed from time to time by resolution of the Board of Directors. The Board of Directors adopted a resolution on December 13, 2021, to provide that there shall be a total of five (5) directors, who shall hold office until each such director’s successor is elected and qualified, or until such director’s earlier resignation or removal. The Nominating and Governance Committee (“Nominating Committee”) of the Board of Directors has unanimously recommended Russell T. Libby, Xiao Mou Zhang, Valerie Chase, Dr. Hong Wang and Prudence Kuai as nominees to our Board of Directors. If elected at the Annual Meeting, each of the nominees would serve until the 2025 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified, or until such director’s earlier death, resignation or removal. The nominees have consented to being nominated and have expressed their intention to serve if elected. We have no reason to believe that the nominees will be unable to serve if elected to office and, to our knowledge, the nominees intend to serve the entire term for which election is sought. In the event any of the nominees should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by the Board of Directors or the Board of Directors may elect to reduce its size. Only the nominees or substitute nominees designated by the Board of Directors will be eligible to stand for election as directors at the Annual Meeting. There are no arrangements or understandings between any director, or nominee for directorship, pursuant to which such director or nominee was selected as a director or nominee.

  2. Nominees for Board of Directors

    Nominees for Board of Directors We believe that our Board of Directors should be composed of individuals with sophistication and experience in many substantive areas that impact our business. We believe that experience, qualifications, or skills in the following areas are most important: procurement and distribution of food and related products, particularly those used by Chinese restaurants; delivery and logistics; customer service; restaurant industry management; technology and automation; accounting and finance; strategic planning; human resources and development practices; and board practices of other corporations. We believe that our current board members possess the professional and personal qualifications necessary for board service, and have highlighted particularly noteworthy attributes for each board member below. No director or nominee for director of the Company is also a director of a company having a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940. The principal occupation, business experience for at least the past five years, and the age as of April 24, 2024, of each director nominee is included below. The Company’s directors and nominees are as follows:

  3. Nominees for Board of Directors

    | Name | Age | Position | | Russell T. Libby | 58 | Independent Director and Chairman of the Board | | Xiao Mou Zhang | 51 | Director, Chief Executive Officer | | Valerie Chase | 41 | Independent Director | | Prudence Kuai | 68 | Independent Director | | Hong Wang | 65 | Independent Director |

  4. Nominees for Board of Directors

    Russell T. Libby has served as a director since July 1, 2020, and was elected Chairman of the Board on February 22, 2021. Mr. Libby held numerous positions of increasing responsibility within the leadership of Sysco Corp. from 2007 through 2019, most recently Executive Vice President - Administration and Corporate Secretary. Prior to his career with Sysco, he served as President, COFRA North America, and Vice President - Legal, for Good Energies, Inc., investment advisors to private equity and venture capital funds owned by COFRA Holding A.G., a Swiss international conglomerate. Mr. Libby began his career in 1991 as a corporate associate with Arnall Golden Gregory, LLP, a full-service law firm in Atlanta. In 1995, he joined Liuski International, Inc., a computer distribution and manufacturing company, as General Counsel, Vice President - Human Resources and Secretary. In 1988, he received his Bachelor of Arts degree in International Relations from the University of Virginia in Charlottesville and, in 1991, he earned a J.D. degree from Emory University School of Law in Atlanta. Mr. Libby currently serves as a director on the board of Legacy Food Group, a holding company comprised of regional independent food distributors. Since October 2022, Mr. Libby has also served on the board of the Batten School of Leadership and Public Policy at the University of Virginia. We believe Mr. Libby’s qualifications to sit on our Board of Directors include his knowledge of food distribution management and operations, mergers and acquisitions, business environment, and financial markets. Xiao Mou Zhang (aka Peter Zhang) has served as Co-Chief Executive Officer and director since November 4, 2019, following the merger between the Company and B&R Global Holdings Inc. ("B&R Global"), and was promoted to sole Chief Executive Officer on February 23, 2021. From 2014 until the merger, he served as Chairman of the Board and a Director of B&R Global that was co-founded by Mr. Zhang and his partners, to consolidate the shareholdings of various operating entities across the Pacific and Mountain States regions. Mr. Zhang has well over 20 years of experience in the food distribution industry with extensive experience in sales, marketing, financing, acquisitions, inventory, logistics and distribution. Under Mr. Zhang’s leadership, B&R Global established a large supplier network and maintained long-term relationships with many major suppliers stemming from business relationships that were built up over the years. We believe Mr. Zhang’s qualifications to sit on our Board of Directors include his extensive knowledge of the food distribution industry, particularly serving Chinese/Asian restaurants, and his over 20 years of management and leadership experience at B&R Global. Valerie Chase has served as a director since December 15, 2021. Ms. Chase’s experience includes 19 years in the finance and accounting industry. She has broad experience across the finance function including technical accounting and SEC reporting, internal controls implementation and compliance, acquisitions and divestitures, cybersecurity and system implementations. From 2018 to 2021, Ms. Chase served as the Vice President, Chief Accounting Officer and Controller of Magnolia Oil & Gas Corporation, a Houston based publicly traded oil & gas exploration and production company (“Magnolia Oil & Gas”). As one of the first employees of Magnolia Oil & Gas, she was instrumental in setting up several governance processes and establishing effective internal controls. From 2010 to 2018, Ms. Chase served in roles of increasing responsibility with Apache Corporation, a Houston-based, publicly traded oil & gas exploration and production company, culminating in her role as the head of accounting policy and financial controls. Ms. Chase’s previously spent four years with Ernst & Young LLP, from 2005 to 2009. Ms. Chase holds a Bachelor of Economics degree and a Master of Accounting degree from the University of Michigan in Ann Arbor and is a Certified Public Accountant in the State of Texas. Ms. Chase currently serves as Treasurer for the board of directors of LifeHouse of Houston, a non-profit organization that serves pregnant women and their babies, based in Houston Texas. We believe Ms. Chase’s qualifications to sit on our Board of Directors include her experience in finance, accounting and corporate governance, as well as her expertise in accounting procedures, policies and financial controls. Prudence Kuai joined as a director in January 2023. Ms. Kuai has most recently served as Chief Information Officer for Akumin/Alliance Imaging Company, a position which she held from July 2018 to February 2022. Prior to this, Ms. Kuai served as Chief Information Officer for Florida Blue from July 2012 to May 2015. Ms. Kuai also sits on the board of a not-for-profit charity Gabriel’s House, which is a homeless shelter for women and children based in Oxnard, California. Ms. Kuai is a 25-year veteran of the healthcare industry and a thought leader in applying technological advancements in operational process automation, eCommerce, utilization of artificial intelligence and data analytics. Ms. Kuai received a Master’s degree in Mathematics from the University of Texas, Arlington, and a Bachelor’s degree in Mathematics from National Taiwan University. We believe Ms. Kuai’s qualifications to sit on our Board of Directors include her experience in technology, management systems, cybersecurity, mergers and acquisitions, and knowledge of Chinese culture. Hong Wang has served as a director since December 2019. Dr. Wang was previously a member of the Board of Directors of the Company from August 22, 2018, through November 1, 2019. Dr. Wang has served as a Professor of Management Information Systems at North Carolina A&T State University since 2005 and a Visiting Professor at Yunnan University of Finance and Economics in China since June 2012, Dalian Maritime University in China since June 2012, and Henan Polytechnic University in China since June 2015. Dr. Wang has over 30 years of university teaching experience and has taught Management Sciences, Operations Research, Optimization, Business Environment, Management Concepts, Strategic Management, and Engineering Economy, in addition to various Information Systems courses at both graduate and undergraduate levels. Dr. Wang is active in professional and community services. He has served in multiple cities in the U.S. for several terms as President of local Chinese Associations, on various boards, as a principal of Chinese schools, as session chair of academic conferences, and as a journal referee. He also helped several Chinese universities to establish international programs in collaboration with U.S. universities. Dr. Wang received his Ph.D. in Management Information Systems/Decision Sciences from Ohio State University. We believe Dr. Wang’s qualifications to sit on our Board of Directors include his knowledge of Chinese culture, management, operations, optimization, business environment, and economic engineering, and his prior effective service as a member of our Board. Approval of the election of each director nominee requires the affirmative vote of a majority of the shares of common stock present in person, virtually or by proxy at the Annual Meeting and entitled to vote on this proposal. This means that each nominee who receives “For” votes representing a majority of the shares present in person, virtually or represented by proxy at the Annual Meeting and entitled to vote on this proposal will be elected. Accordingly, “Abstain” votes will have the same effect as a vote against the applicable director nominee. Broker non-votes are not treated as entitled to vote on this proposal, and accordingly will have no effect on the outcome of the vote on the proposal.

  5. Nominees for Board of Directors

    | The Board of Directors unanimously recommends a vote FOR each of the director nominees. |

  6. Considerations in Evaluating Director Nominees

    Considerations in Evaluating Director Nominees In selecting nominees for director, without regard to the source of the recommendation, our Nominating Committee uses a variety of methods for identifying and evaluating director nominees. In its evaluation of director candidates, our Nominating Committee may consider, among other things, the current size and composition of our Board of Directors, the needs of our Board of Directors, and the respective committees of our Board of Directors. Some of the qualifications that may be considered include, without limitation, issues of character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience, length of service, leadership skills, potential conflicts of interest, and other commitments. Director candidates must have sufficient time available, in the judgment of our Nominating Committee, to perform all Board of Director and committee responsibilities. In addition, our Nominating Committee considers all applicable statutory and regulatory requirements and the requirements of any exchange upon which our common stock is listed or to which it may apply in the foreseeable future. Although our Board of Directors does not maintain a specific policy with respect to board diversity, we believe that our Board of Directors should be a diverse body, and our Nominating Committee considers a broad range of backgrounds and experiences in reviewing candidates for nomination to the Board of Directors. In making determinations regarding nominations of directors, our Nominating Committee may take into account the benefits of diverse viewpoints and other related factors as it oversees the annual Board of Director and committee evaluations. After completing its review and evaluation of director candidates, our Nominating Committee recommends to our full Board of Directors the director nominees for selection.

  7. Executive Compensation Philosophy

    Executive Compensation Philosophy The Company is committed to maintaining a compensation program that aligns with corporate values, promotes stockholder interests, and drives long-term sustainable growth. The Company’s compensation philosophy is guided by the following key principles: •Performance Alignment: We believe in linking executive compensation directly to the Company's performance and strategic objectives. Compensation is tied to both short-term and long-term performance metrics, ensuring that executives are incentivized to achieve results that drive stockholder value creation and support the Company’s strategic goals. •Pay-for-Performance: Our compensation program emphasizes a pay-for-performance philosophy, where executive pay is directly tied to individual and Company performance. We believe that executives should be rewarded based on their contributions to the Company's success, with a significant portion of compensation being variable and performance based. •Competitive Compensation: We strive to offer competitive compensation packages to attract and retain top executive talent within our industry. In late 2023, compensation levels were benchmarked against industry peers and relevant market data to ensure that our executives are fairly compensated relative to their peers and industry standards. •Stockholder Alignment: We are committed to aligning executive compensation practices with the interests of our stockholders. We believe that executive pay should be transparent, reasonable, and aligned with stockholder value creation, promoting accountability and responsible governance. •Governance and Oversight: The Compensation Committee of the Board of Directors oversees the development, implementation, and evaluation of our executive compensation program. The committee is composed of independent directors with relevant expertise and experience in compensation matters and operates in accordance with best corporate governance practices. The Compensation Committee has retained Pay Governance LLC (“Pay Governance”) to provide advice on best practices, review and assess compensation programs, and to assist in analyzing executive compensation. Pay Governance is an independent compensation consultant that provides executive compensation program design as well as research and competitive market intelligence on executive pay. Prior to engaging Pay Governance, the Compensation Committee considered the independence of Pay Governance and concluded that the work of Pay Governance did not raise any conflicts of interests. •Transparency and Disclosure: We are committed to transparency and disclosure regarding our executive compensation practices. We believe that stockholders have the right to understand how executive pay is determined and how it aligns with Company performance and stockholder interests. The compensation program for the Company’s NEOs consists of the following components: •Base Salary: Provides a fixed annual salary to NEOs, reflecting their experience, skills, and responsibilities within the organization, and ensuring a competitive level of compensation relative to industry benchmarks. •Annual Incentive Compensation: Performance-based bonuses tied to the achievement of annual financial targets, operational objectives, and individual performance goals, encouraging executives to deliver results that drive business success. •Long-Term Incentive Plan: Equity-based awards designed to align NEO interests with long-term stockholder value creation and incentivize sustained performance and growth. •Benefits: Comprehensive benefits packages provided to NEOs on the same basis as other employees, including health insurance, retirement plans, and other employee benefits, aimed at supporting the well-being and financial security of executives, employees and their families. Pay Mix The Company’s compensation mix is designed to align with the Company’s strategic objectives and performance goals, ensuring that executive pay reinforces the Company’s strategic priorities. The CEO and each of the other NEOs each receive compensation in each of these forms.

  8. Executive Compensation Philosophy

    | Element | Form | Purpose | Metrics | Time-Period | % of 2023 Pay Mix for NEOs1 | | Base Salary | Cash | To attract and retain and to provide a steady source of annual cash income | | 1-year | 32% | | Annual Incentive Plan | Cash | To incentivize for certain annual financial, operational, and individual objectives | •Financial Targets (70%) i.Net Revenue (10%) ii.Gross Profit (30%) iii.Internal Adjusted EBITDA2 (60%) •Initiative Based Targets (30%) | 1-year performance period | 32% | | Equity Incentive Compensation | Restricted Stock Units (“RSUs”) and Performance Share Units (“PSUs”) | To incentivize for certain long-term financial performance objectives and drive long-term shareholder value. 50% granted as RSUs and 50% granted as PSUs. RSUs vest based on continued employment through vesting date or earlier vesting as specified. PSUs incentivize based on attainment of specified goals. | For PSUs: •Revenue •Internal Adjusted EBITDA | 3-year performance period3 | 36% |

  9. Executive Compensation Philosophy

    1 This column reflects the base salary at the end of 2023 and so takes into account the increase in base compensation to $375,000 for Ms. Chang during the 2023 year and the increase in the target for the Annual Incentive Plan for Ms. Chang during 2023 from 75% to 100%. Ms. Chang received equity incentive compensation of PSUs and RSUs based on her salary at the time of grant in 2023, which was $300,000. 2 For its target objectives, the Company used an internal adjusted EBITDA (“Internal Adjusted EBITDA”) which added back certain advisory fees and costs associated with the SEC investigation, delinquent filings/restatement and indemnification of former officers and directors. 3 The Compensation Committee has the ability to adjust payout based upon management’s achievement of significant milestones within the Company’s long-term strategic plan.

  10. Key Elements of Compensation

    Key Elements of Compensation When compensation decisions for 2023 were made in 2022, we did not use a prescribed formula to establish pay levels. Rather, the Compensation Committee considered changes in the business, external market factors and the Company’s financial position when determining pay levels for the NEOs. The Compensation Committee generally seeks to set an NEO’s targeted total cash compensation opportunity within a range that is the average of the applicable peer company and/or general industry compensation survey data, adjusted as appropriate for individual performance and internal pay equity and labor market conditions. In 2022, the Compensation Committee relied on market data to determine competitive compensation levels for the NEOs. In November 2023, for fiscal year 2024 compensation decisions, Pay Governance developed with the Compensation Committee the following peer group consisting of fifteen companies:

  11. Key Elements of Compensation

    | | 2023 AIP Target Award | | 2023 AIP Actual Award | | | Name | % of Base Salary Rate | $ Amount | % of Target | $ Amount | | Xiao Mou Zhang | 100% | 600,000 | 80% | $481,800 | | Xi Lin | 100% | 450,000 | 90% | $406,350 | | Carlos Rodriguez 1 | 100% | 400,000 | —% | $— | | Christine Chang 2 | 100% | 375,000 | 90% | $338,625 |

  12. Key Elements of Compensation

    1 The amount, if any, of any bonus under the AIP for Mr. Rodriguez is not calculable through the latest practicable date and the amount, if any, of such bonus is expected to be determined in 2024 and such amount will be disclosed in a filing under Item 5.02(f) of Form 8–K (17 CFR 249.308). 2 Ms. Chang’s bonus payout target increased from 75% to 100% as of May 11, 2023. Subsequent Events For fiscal year 2024, Mr. Zhang’s bonus payout target increased from 100% to 125%. Equity Grants Equity awards granted under the 2018 Plan, such as RSUs and PSUs, are an integral component of the Company’s compensation program. These awards serve multiple purposes: •Alignment with Stockholder Interests: Equity grants align the interests of executives with those of stockholders, incentivizing executives to drive long-term value creation and stockholder returns. •Retention and Motivation: Equity awards are an effective tool for retaining and motivating key executive talent, as they provide executives with a stake in the Company’s future performance and success. •Long-Term Performance Incentives: By vesting over time or contingent upon the achievement of performance goals, equity awards provide executives with long-term performance incentives, encouraging sustained growth and strategic execution. The Company grants various types of equity awards to executives, including: •RSUs: RSUs represent a promise to deliver shares of Company stock to executives at a future date, subject to vesting conditions. These awards incentivize executives to remain with the Company and contribute to its long-term success. The time-based RSUs awarded in fiscal year 2023 vest in equal one-third installments on the first through third anniversary of the date of grant. •PSUs: PSUs are granted based on the achievement of predetermined performance metrics over a specified performance period. These awards directly link executive compensation to the Company’s financial and operational performance, promoting accountability and alignment with corporate goals. The Company’s PSUs in 2023 were granted over a three-year performance period. The performance metrics are Internal Adjusted EBITDA (50%) and net revenue (50%). During fiscal year 2023, the Compensation Committee approved the granting of time-based RSUs and PSUs to each of the NEOs. For these awards, the target award value was set at 150% of base salary for Mr. Zhang, 100% of base salary for Mr. Lin, Mr. Rodriguez, and Ms. Chang. The mix of awards consists of 50% PSUs and 50% time-based RSUs. The Company’s NEOs grant of RSUs and potential grant of PSUs are calculated as a percentage of the individual NEO’s salary as listed below.

  13. Key Elements of Compensation

    | Name | RSU Grant as % of Base Salary | Max PSU Grant as % of Base Salary | $ Total Amount | | Xiao Mou Zhang | 75% | 75% | $900,000 | | Xi Lin | 50% | 50% | $450,000 | | Carlos Rodriguez | 50% | 50% | $400,000 | | Christine Chang | 50% | 50% | $375,000 |

  14. Key Elements of Compensation

    For fiscal year 2023, the Company achieved 93.5% of the revenue target and 93.9% of the Internal Adjusted EBITDA target, resulting in a vesting percentage of 93.7% for PSUs. For grants to be made in fiscal year 2024, PSUs will vest over a three-year period, with vesting to be earned, if at all, at the end of the three-year period. Payments Upon Termination of Service or Change of Control The Company believes that providing payments upon termination of service or change of control payments for executives is essential for attracting and retaining top talent, mitigating the risks associated with executive turnover, and ensuring leadership continuity during periods of change. These payments are structured to align with stockholder interests and promote responsible governance. Each NEO is entitled to receive severance under the HF Foods Group Inc. Severance Plan, as amended and restated, (the “Severance Plan”), that provides for payment of severance benefits upon the occurrence of certain involuntary termination events, including terminations of employment by the Company without Cause and resignations for Good Reason (each as defined in the Severance Plan). The Severance Plan provides for enhanced severance in the event of a qualifying termination during the six-month period before or the twelve-month period following a Change in Control (as defined in the Severance Plan). For a description of the Severance Plan and the severance and change in control payments the NEOs would be entitled to under the Severance Plan, see the Severance Plan and the Potential Payments Upon Termination or Change in Control sections below. Mr. Rodriguez departed the Company effective April 8, 2024, and will receive severance benefits under the Severance Plan, subject to Mr. Rodriguez entering into a release of claims. In addition, pursuant to the 2018 Plan, all unvested equity awards will accelerate in vesting in the event of a Change in Control (as defined in the 2018 Plan), as described further in the 2018 Omnibus Equity Incentive Plan and Potential Payments Upon Termination or Change in Control sections below. These payments are designed to provide executives with financial security and incentivize retention during periods of transition. Perquisites Other than the broad-based plan benefits described under the Other Compensation section below, the Company offers only a limited amount of perquisites to our NEOs that are not otherwise available to all salaried employees, such as relocation benefits, and believe this arrangement is consistent with our “pay for performance” philosophy. Other Compensation The NEOs are eligible to participate in the Company’s broad-based plans, such as medical, dental, vision, disability and the 401(k) plan with a Company matching contribution, which is described in more detail in the Defined Contribution Retirement Plan section below. Each NEO was eligible to participate in the Company’s employee term life insurance policy during fiscal year 2023 at no cost to the employee equal to one times pay up to a maximum death benefit of $500,000. NEOs may also purchase additional life insurance for themselves and their spouse and dependents.

  15. Risk Assessment

    Risk Assessment Executive compensation practices can introduce various risks to the Company, including: •Excessive Risk-Taking: Compensation structures that overly incentivize short-term performance may encourage executives to take excessive risks to meet performance targets, potentially jeopardizing the company's long-term sustainability. •Misalignment with Stockholder Interests: Compensation arrangements that do not effectively align executive interests with stockholder interests may result in conflicts of interest and undermine corporate governance practices. •Retention Risks: Inadequate compensation packages may increase the risk of talent flight, leading to turnover among key executives and disrupting business continuity and strategic execution. •Reputational Risks: Controversial or excessive executive compensation practices may attract negative attention from stakeholders, damaging the Company's reputation and stakeholder trust. The Company monitors and evaluates the effectiveness of its executive compensation program in mitigating risks and achieving desired outcomes. This includes regular reviews of compensation practices and structures to ensure alignment with corporate objectives and stockholder interests and annual assessments of the relationship between executive compensation and Company performance. In addition, the Company employs the following strategies: •Balanced Compensation Mix: The Company maintains a balanced mix of fixed and variable compensation components to mitigate the risk of excessive risk-taking. Performance-based incentives are designed to align with the Company's long-term strategic objectives. In connection with this strategy, PSU awards in 2024 will utilize a three-year cliff vesting schedule, instead of vesting annually over three years. •Performance Metrics Alignment: Performance metrics used to determine executive compensation are aligned with the Company's strategic priorities and long-term stockholder value creation, reducing the risk of short-sighted decision making. •Clawback Provisions: As noted above, the Company has implemented and maintains a Clawback Policy, allowing for the recoupment of incentive compensation in the event of financial restatements. •Independent Oversight: The Compensation Committee of the Board of Directors provides independent oversight of the executive compensation program, ensuring that compensation practices are consistent with best corporate governance practices and aligned with stockholder interests. The Compensation Committee works with the compensation consultant on structuring and reviewing its executive compensation program.

  16. Summary Compensation Table

    Summary Compensation Table

  17. Summary Compensation Table

    | Name | Year | Salary ($) | Bonus ($) | Stock Awards (5) ($) | All Other Compensation ($) | Total ($) | | Xiao Mou Zhang (1) | 2023 | 600,000 | 481,800 | 900,000 | 170,000 (6) | 2,151,800 | | Chief Executive Officer | 2022 | 600,000 | 596,400 | 900,000 | — | 2,096,400 | | | 2021 | 600,000 | 680,000 | 1,258,047 | — | 2,538,047 | | Carlos Rodriguez (2) | 2023 | 400,000 | — | 400,000 | — | 800,000 | | Chief Financial Officer | 2022 | 153,846 | 250,000 | 400,000 | — | 803,846 | | Xi Lin (3) | 2023 | 450,000 | 406,350 | 450,000 | 75,088 (7) | 1,381,438 | | Chief Operating Officer | 2022 | 285,577 | 447,300 | 610,000 | 92,504 (7) | 1,435,381 | | Christine Chang (4) | 2023 | 346,154 | 338,625 | 300,000 | — | 984,779 | | General Counsel and Chief Compliance Officer | 2022 | 234,903 | 223,650 | 262,500 | — | 721,053 | | | 2021 | 41,346 | 60,000 | 216,557 | 40,000 (8) | 357,903 |

  18. Summary Compensation Table

    (1)Mr. Zhang was appointed Co-CEO on November 4, 2019, following the merger with B&R Global and became sole CEO on February 23, 2021. (2)Mr. Rodriguez was appointed the Company’s Chief Financial Officer August 1, 2022. On February 12, 2024, Mr. Rodriguez went on a personal leave of absence and effective April 8, 2024, Mr. Rodriguez departed from the Company. The amount, if any, of any bonus under the Annual Incentive Plan for Mr. Rodriguez is not calculable through the latest practicable date and the amount, if any, of such bonus is expected to be determined in 2024 and such amount will be disclosed in a filing under Item 5.02(f) of Form 8–K (17 CFR 249.308). (3)Mr. Lin was a member of the Board of Directors prior to commencing service as the Company’s Chief Operating Officer on April 15, 2022. He was appointed Interim Chief Financial Officer effective May 9, 2022, following Mr. Lee’s departure. Upon Mr. Rodriguez’s hiring and appointment as Chief Financial Officer, effective August 1, 2022, Mr. Lin relinquished his duties as Interim Chief Financial Officer and remained Chief Operating Officer. Effective on Mr. Rodriguez’s leave of absence, on February 12, 2024, Mr. Lin was appointed as Interim Chief Financial Officer, and Mr. Lin will continue to serve in the role as Interim Chief Financial Officer until a new permanent Chief Financial Officer is appointed. (4)Ms. Chang joined the Company in September 2021. (5)Amounts reflect the full grant-date fair value of restricted stock units (“RSUs”) and performance restricted stock units (“PSUs”) granted during the years ended December 31, 2023, 2022 and 2021 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named executive officer. The value of the PSUs set forth above is based on the probable outcome of the performance conditions on the grant date. We provide information regarding the assumptions used to calculate the value of all PSUs and RSUs granted to our executive officers in Note 14 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (6)Consists of payment under a modified bonus arrangement for 2021 which deferred payment of 20%, or $170,000, of the 2021 total bonus of $850,000 until the filing of 2021 Annual Report on Form 10-K, which occurred on January 31, 2023. (7)Consists of amounts paid to reimburse relocation expenses for 2022 and 2023 and payments for 2023 of employer matching contributions under the Company’s defined contribution plan of $6,923. (8)Consists of signing bonus per Ms. Chang’s offer letter.

  19. Grants of Plan-Based Awards

    Grants of Plan-Based Awards

  20. Grants of Plan-Based Awards

    | Name | Grant Date | Estimated future payouts under equity incentive plan awards | | All other stock awards: Number of shares of stock or units (2) (#) | Grant date fair value of stock awards (3) ($) | | | | Threshold/Target (#) | Maximum (1) (#) | | | | Xiao Mou Zhang | 4/15/2023 | 116,580 | 116,580 | 116,850 | 900,000 | | Carlos Rodriguez | 4/15/2023 | 51,813 | 51,813 | 51,813 | 400,000 | | Christine Chang | 4/15/2023 | 38,860 | 38,860 | 38,860 | 300,000 | | Xi Lin | 4/15/2023 | 58,290 | 58,290 | 58,290 | 450,000 |

  21. Grants of Plan-Based Awards

    (1)Represents PSUs granted under the 2018 Plan. The PSUs vest over three equal annual installments on the first three anniversaries of the grant date and may be earned over a three-year performance period based on the applicable NEO’s continuation in service through the end of the performance period and the attainment of pre-determined goals. The performance goals are described in the “Compensation Metrics” section within the Compensation Discussion and Analysis section above. (2)Represents RSUs granted under the 2018 Plan. The RSUs vest over three equal annual installments on the first three anniversaries of the grant date and are subject to forfeiture in the event of NEO’s termination of service under specified circumstances. (3)Amounts for the year ended December 31, 2023, reflect the full grant-date fair value of RSUs and PSUs granted during the year ended December 31, 2023, computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the NEO. The value of the PSUs set forth above is based on the probable outcome of the performance conditions on the grant date. We provide information regarding the assumptions used to calculate the value of all PSUs and RSUs granted to our NEOs in Note 14 to the consolidated financial statements included in in our Annual Report on Form 10-K for the year ended December 31, 2023.

  22. Outstanding Equity Awards at December 31, 2023

    Outstanding Equity Awards at December 31, 2023 The following table provides information regarding outstanding stock awards to our NEOs that remained subject to vesting at December 31, 2023.

  23. Outstanding Equity Awards at December 31, 2023

    | | Equity Incentive Plan Awards: Number of unearned shares, units or other rights that have not vested (#) | Equity Incentive Plan Awards: Market or payout value of unearned shares, units or other rights that have not vested (7)(8) ($) | | Xiao Mou Zhang | 29,014(1) | 154,935 | | | 14,507(2) | 77,467 | | | 58,708(3) | 313,501 | | | 62,630(4) | 334,444 | | | 116,580(5) | 622,537 | | | 116,580(6) | 622,537 | | Christine Chang | 6,979(1) | 37,268 | | | 3,489(2) | 18,631 | | | 17,123(3) | 91,437 | | | 18,267(4) | 97,546 | | | 38,860(5) | 207,512 | | | 38,860(6) | 207,512 | | Xi Lin | 42,400(3) | 226,416 | | | 31,315(4) | 167,222 | | | 58,290(5) | 311,269 | | | 58,290(6) | 311,269 | | Carlos Rodriguez | 26,092(3) | 139,331 | | | 27,836(4) | 148,644 | | | 51,813(5) | 276,681 | | | 51,813(6) | 276,681 |

  24. Outstanding Equity Awards at December 31, 2023

    (1) Shares of RSUs granted in 2021 to the NEOs vest over three equal annual installments and are subject to forfeiture in the event of the NEO’s termination of service to the Company under specified circumstances. (2) Shares of PSUs granted to the NEOs vest over three equal annual installments beginning from April 1, 2022, and are subject to forfeiture in the event of the NEO’s termination of service to the Company under specified circumstances. The number of shares shown is the target amount, and the actual number of shares that may vest ranges from 0% to 100% of the target amount, depending on the achievement of specified performance goals. (3) Shares of RSUs granted to the NEOs vest over three equal annual installments beginning from April 15, 2023, and are subject to forfeiture in the event of the NEO’s termination of service to the Company under specified circumstances. (4) Shares of PSUs granted to the NEOs vest over three equal installments beginning from April 15, 2023, and are subject to forfeiture in the event of the NEO’s termination of service to the Company under specified circumstances. The number of shares shown is the target amount, and the actual number of shares that may vest ranges from 0% to 100% of the target amount, depending on the achievement of specified performance goals. (5) Shares of RSUs granted to the NEOs in 2023 vest over three equal annual installments beginning from April 15, 2024, and are subject to forfeiture in the event of the NEO’s termination of service to the Company under specified circumstances. (6) Shares of PSUs granted to the NEOs vest over three equal installments beginning from April 15, 2024, and are subject to forfeiture in the event of the NEO’s termination of service to the Company under specified circumstances. The number of shares shown is the target amount, and the actual number of shares that may vest ranges from 0% to 100% of the target amount, depending on the achievement of specified performance goals. (7) Dollar amount is determined by multiplying the number of unvested shares of RSUs by the closing price per share of the Company’s common stock on December 29, 2023 ($5.34), as reported on the NASDAQ Capital Market. (8) Dollar amount is determined by multiplying the number of unvested shares of PSUs by the closing price per share of the Company’s common stock on December 29, 2023 ($5.34), as reported on the NASDAQ Capital Market.

  25. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table sets forth information regarding the exercise of stock options and the vesting of stock awards for each NEO on an aggregated basis during the fiscal year ended December 31, 2023.

  26. Option Exercises and Stock Vested

    | Name | Option Awards | | Stock Awards | | | | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($) | | Xiao Mou Zhang | - | - | 118,699 | 510,984 | | Carlos Rodriguez | - | - | 26,965 | 104,085 | | Christine Chang | - | - | 31,654 | 129,059 | | Xi Lin | - | - | 48,600 | 187,596 |

  27. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

    POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Potential payments upon a termination or change in control as of December 31, 2023, for the NEOs are set forth in the Change in Control and Severance Payments Table below. The amounts of these payments as of December 31, 2023, for each of Mr. Zhang, Mr. Rodriguez, Ms. Chang and Mr. Lin are set forth in the Change in Control and Severance Payments Table. All of the NEOs participate in and are eligible to receive severance benefits under the Severance Plan, as described in the Severance Plan section above, with the following “severance plan policy” attachments applying to each NEO: for Mr. Zhang, the Chief Executive Officer policy; for Mr. Rodriguez, Ms. Chang, and Mr. Lin, the “Key Executive” policy. As described above, receiving these payments is subject to the named NEO’s execution of a general release of claims. Mr. Rodriguez departed the Company effective April 8, 2024, and therefore the potentially payable severance or other benefits no longer apply to him. Pursuant to the 2018 Plan, in the event of a change in control, all unvested equity awards will accelerate in vesting. In the event of a termination without a change in control, the number of shares of common stock subject to RSU awards that vest shall be determined by the Compensation Committee. For equity awards granted in 2024 and beyond, unvested equity awards will accelerate in vesting in the event of a termination by the Company without cause within twelve months following a change in control.

  28. Chief Executive Officer Pay Ratio

    Chief Executive Officer Pay Ratio The Company’s chief executive officer to median employee pay ratio was calculated in accordance with SEC requirements. However, due to the flexibility afforded by Item 402(u) of Regulation S‑K in calculating the pay ratio, the ratio presented herein is a reasonable estimate and may not be comparable to the pay ratio presented by other companies. The Company identified the median employee by examining 2023 total compensation for all employees of the Company excluding the Chief Executive Officer. The employee population used to identify the Company’s median employee included all employees of the Company, whether employed on a full‑time, part‑time or seasonal basis, as of December 31, 2023. The compensation measure described above was consistently applied to this entire employee population. The Company did not make any assumptions, adjustments or estimates with respect to the employee population or the compensation measure, but it did annualize the compensation for any employees that were not employed by the Company for all of 2023. After identifying the median employee based on the compensation measure described above, the Company calculated annual total compensation for the median employee using the same methodology used for our named executive officers as set forth in the “Summary Compensation Table” herein. The median employee was identified as of December 31, 2023, and the chief executive officer to median employee pay ratio was calculated with respect to the annualized compensation for Mr. Zhang. As illustrated in the table below, in 2023, the Company’s Chief Executive Officer’s annual total compensation was 33.9 times that of the Company’s median employee.

  29. Chief Executive Officer Pay Ratio

    | 2023 Annual Total Compensation of CEO | $2,151,800 | | 2023 Annual Total Compensation of Median Employee | $63,489 | | Total Annual Compensation Pay Ratio | 33.9 |

  30. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION The following table sets forth compensation for each director for the year ended December 31, 2023:

  31. DIRECTOR COMPENSATION

    | Name | Fees Earned (3) ($) | Stock Awards (4) ($) | All Other Compensation ($) | Total ($) | | Xiao Mou Zhang (1) | — | — | — | — | | Russell T. Libby | 205,000 | 100,000 | — | 305,000 | | Dr. Hong Wang | 75,000 | 60,000 | — | 135,000 | | Valerie Chase | 175,000 | 60,000 | — | 235,000 | | Prudence Kuai (2) | 60,000 | 60,000 | — | 120,000 |

  32. DIRECTOR COMPENSATION

    (1)Mr. Zhang did not receive any additional compensation for his service as a director. (2)Ms. Kuai was appointed as a director effective January 17, 2023. (3)Includes fees earned for serving on the Special Investigation Committee of $50,000 for Mr. Libby and Ms. Chase, and fees earned for serving on the Special Litigation Committee of $25,000 for Mr. Libby and Ms. Chase. (4)Amounts reflect the full grant-date fair value of RSUs granted during the year ended December 31, 2023, computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the director. The award values were calculated using the grant date stock price on April 15, 2023, of $3.86, and all vest on April 15, 2024.

  33. Narrative Disclosure to Director Compensation Table

    Narrative Disclosure to Director Compensation Table For the year ending December 31, 2023, we paid our Chairman of the Board $25,000 per quarter and independent directors $15,000 per quarter, as well as an annual equity award in the form of RSUs, which vest on the one year anniversary of the grant, with grant date fair values of $100,000 for our Chairman of the Board and $60,000 for our independent directors. We also paid the Chairs of the Audit, Compensation, Nominating and Governance, Special Transaction and Special Investigation Committees $3,750 per quarter for the year ended December 31, 2023. Special Investigation Committee members also received $2,500 per quarter. We reimburse directors for any out-of-pocket expenses incurred in connection with attending board or committee meetings. Special Investigation Committee members were awarded bonuses in the amount of $50,000 each, and Special Litigation Committee members were awarded bonuses in the amount of $25,000 each. For 2024, the Compensation Committee approved the following increases in director compensation: (i) the chairperson of the audit committee’s fee will increase from $15,000 to $20,000; and (ii) directors will receive equity awards with grant date fair values equal to 125% of the director’s retainer (increased from 100% of the director’s retainer in 2023).

  34. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE

  35. PAY VERSUS PERFORMANCE

    | Year(1) | Summary Compensation Table Total for Xiao Mou Zhang ($) | Summary Compensation Table Total for Zhou Min Ni ($) | Compensation Actually Paid to Xiao Mou Zhang(2) ($) | Compensation Actually Paid to Zhou Min Ni(2) ($) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($) | Average Compensation Actually Paid to Non-PEO Named Executive Officers(2) ($) | Value of Initial Fixed $100 Investment Based on: | | Net Income (Loss) ($)(4) | Adjusted EBITDA ($)(4)(5) | | | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(3) | | | | 2023 | 2,151,800 | — | 2,619,163 | — | 1,055,406 | 1,262,107 | 27.38 | 151.04 | (2,662) | 44,583 | | 2022 | 2,096,400 | — | 1,205,945 | — | 836,756 | 521,323 | 20.82 | 130.67 | 235 | 40,133 | | 2021 | 2,538,047 | 216,212 | 2,752,751 | 216,212 | 437,239 | 535,905 | 43.38 | 145.67 | 22,821 | 50,841 | | 2020 | 603,077 | 1,408,130 | 603,077 | 1,408,130 | 273,777 | 273,777 | 38.56 | 116.47 | (343,219) | 14,458 |

  36. PAY VERSUS PERFORMANCE

    (1)For 2023 and 2022, the Principal Executive Officer (“PEO”) is Xiao Mou Zhang. For 2021 and 2020, both Xiao Mou Zhang and Zhou Min Ni are PEOs. For 2023, the non-PEO named executive officers are Xi Lin, Carlos Rodriguez and Christine Chang. For 2022, the non-PEO named executive officers are Kong Hian Lee, Xi Lin, Carlos Rodriguez and Christine Chang. For 2021, the non-PEO named executive officers are Kong Hian Lee, Christine Chang and Caixuan Xu. For 2020, the non-PEO named executive officers are Kong Hian Lee, Sha Zhang and Caixuan Xu. (2)The following table details the applicable adjustments that were made to determine compensation actually paid (“CAP”).

  37. PAY VERSUS PERFORMANCE

    | | 2023 | | 2022 | | 2021 | | | 2020 | | | | | PEO ($) | Average Non-PEO NEOs ($) | PEO ($) | Average Non-PEO NEOs ($) | PEO Xiao Mou Zhang ($) | PEO Zhou Min Ni ($) | Average Non-PEO NEOs ($) | PEO Xiao Mou Zhang ($) | PEO Zhou Min Ni ($) | Average Non-PEO NEOs ($) | | Summary Compensation Table (SCT) Total | 2,151,800 | 1,055,406 | 2,096,400 | 836,756 | 2,538,047 | 216,212 | 437,239 | 603,077 | 1,408,130 | 273,777 | | Less Stock Award Value Reported in SCT for the Covered Year | 900,000 | 383,333 | 900,000 | 424,167 | 1,258,047 | — | 282,999 | — | — | — | | Plus Year End Fair Value of Equity Awards Granted During the Covered Year that Remain Outstanding and Unvested as of Last Day of the Covered Year | 1,245,074 | 530,308 | 738,957 | 338,162 | 1,472,751 | — | 381,665 | — | — | — | | Plus Year over Year Change in Fair Value as of the Last Day of the Covered Year of Outstanding and Unvested Equity Awards Granted in Prior Years | 211,020 | 74,027 | (510,647) | (172,381) | — | — | — | — | — | — | | Plus Year over Year Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior Years that Vested During the Covered Year | 29,066 | (4,856) | (96,036) | (25,237) | — | — | — | — | — | — | | Less Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Covered Year | 117,797 | 9,445 | 122,729 | 31,810 | — | | — | — | — | — | | Compensation Actually Paid (CAP) Total | 2,619,163 | 1,262,107 | 1,205,945 | 521,323 | 2,752,751 | 216,212 | 535,905 | 603,077 | 1,408,130 | 273,777 |

  38. PAY VERSUS PERFORMANCE

    (3)The Company’s peer group consists of the S&P 500 Food & Staple Retailing Index (TR). (4)Values shown are in thousands. (5)Adjusted EBITDA is defined as net income (loss) before interest expense, interest income, income taxes, and depreciation and amortization, further adjusted to exclude certain unusual, non-cash, or non-recurring expenses. See Appendix for reconciliation to most directly comparable GAAP measure.