{"url_path":"/sec/hlp/10-k/2026/item-10","section_key":"item-10","section_title":"Item 10 ADDITIONAL INFORMATION","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1855557/0001213900-26-055737-index.html","accession_number":"0001213900-26-055737","cik":"0001855557","ticker":"HLP","issuer_name":"Hongli Group Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1855557/0001213900-26-055737-index.html","primary_entity_key":"0001855557","primary_entity_name":"Hongli Group Inc."},"word_count":4139,"has_tables":true,"body_markdown":"Item 10. ADDITIONAL INFORMATION\n\n \n\nA. Share Capital\n\n \n\nNot applicable.\n\n \n\nB. First Amended and Restated Memorandum and Articles of Association\n\n \n\nThe information required by Item 10.B of Form\n20-F is included in Exhibits 1.1 and 2.1 to this Annual Report which is hereby incorporated by reference.\n\n \n\nC. Material Contracts\n\n \n\nThe information required by Item 10.C of Form 20-F is included in the\nsections titled “Item 4 - Information on the Company,” “Item 6 -Directors, Senior Management and Employees,” “Item\n7 - Major Shareholders and Related Party Transactions,” and Exhibits 4.1 to 4.16 in this Annual Report, which sections are incorporated\nherein by reference.\n\n \n\nD. Exchange Controls\n\n \n\nUnder Cayman Islands law, there are currently\nno restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of\ndividends, interest or other payments to nonresident holders of our shares. See “Item 4. Information on the Company-B. Business\nOverview-Regulations-Regulations Related to Foreign Exchange” for more information.\n\n \n\nE. Taxation\n\n \n\nThe following summary of the material Cayman Islands,\nPRC and U.S. federal income tax consequences of an investment in our Ordinary Shares is based upon laws and relevant interpretations\nthereof in effect as of the date of this Annual Report, all of which are subject to change. This summary does not deal with all possible\ntax consequences relating to an investment in our Ordinary Shares, such as the tax consequences under state, local and other tax laws.\nTo the extent that the discussion relates to matters of mainland China tax law, it represents the opinion of Beijing Dacheng Law Offices,\nLLP (Shanghai), our PRC counsel. To the extent that the discussion relates to matters of U.S. Federal Income Taxation, it represents\nthe opinion of McCarter & English, LLP, our U.S. counsel. To the extent that the discussion relates to matters of Cayman Islands\ntax law, it represents the opinion of Ogier (Cayman) LLP, our Cayman Islands counsel.\n\n \n\n107\n\n \n\n \n\n**Mainland China Enterprise Taxation**\n\n \n\nUnder the EIT Law and relevant implementing regulations,\na uniform corporate income tax rate of 25% is applied. If non-resident enterprises have not formed permanent establishments or premises\nin mainland China, or if they have formed permanent establishment or premises in mainland China but there is no actual relationship between\nthe relevant income derived in mainland China and the established institutions or premises set up by them, however, enterprise income\ntax is set at the rate of 10% with respect to their income sourced from inside mainland China.\n\n \n\nThe EIT Law and its implementation rules permit\ncertain “high and new technology enterprises strongly supported by the state” that independently own core intellectual property\nand meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate.\n\n** **\n\n**Hong Kong Taxation**\n\n \n\nHongli HK is incorporated in Hong Kong and is subject\nto Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant\nHong Kong tax laws. The applicable tax rate is 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits\nover HK$2,000,000 on its taxable income generated from operations in Hong Kong. We did not make any provisions for Hong Kong profit tax\nas there were no assessable profits derived from or earned in Hong Kong since inception. Additionally, payments of dividends by the subsidiary\nincorporated in Hong Kong to us are not subject to any Hong Kong withholding tax.\n\n** **\n\n**Cayman Islands Taxation**\n\n \n\nThe following is a discussion on certain Cayman\nIslands income tax consequences of an investment in the Ordinary Shares. The discussion is a general summary of the present law, which\nis subject to prospective and retroactive changes. It is not intended as tax advice, does not consider any investor’s particular\ncircumstances, and does not consider tax consequences other than those arising under Cayman Islands law.\n\n \n\nThe Cayman Islands currently levies no taxes on\nindividuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax\nor estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp\nduties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands.\nNo stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except\nthose which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the\nCayman Islands.\n\n \n\nPayments of dividends and capital in respect of\nour Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend\nor capital to any holder of our Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Ordinary Shares\nbe subject to Cayman Islands income or corporation tax.\n\n** **\n\nU.S. Federal Income Taxation\n\n \n\nThe\nfollowing discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of\nour ordinary shares by a U.S. Holder (as defined below) that holds our ordinary shares as “capital assets” (generally, property\nheld for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S.\nfederal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. There can be no assurance\nthat the Internal Revenue Service, or the IRS, or a court will not take a contrary position. This discussion, moreover, does not address\nthe U.S. federal estate, gift, Medicare tax on certain net investment income, and any minimum tax considerations, or any state, local\nand non-U.S. tax considerations, relating to the ownership or disposition of our ordinary shares. The following summary does not address\nall aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances\nor to persons in special tax situations such as:\n\n \n\n \n●\nbanks and other financial institutions;\n\n \n\n \n●\ninsurance companies;\n\n \n\n \n●\npension plans;\n\n \n\n \n●\ncooperatives;\n\n \n\n \n●\nregulated investment companies;\n\n \n\n \n●\nreal estate investment trusts;\n\n \n\n \n●\nbroker-dealers;\n\n \n\n108\n\n \n\n \n\n \n●\ntraders in securities that\nelect to use a mark-to-market method of accounting;\n\n \n\n \n●\ncertain former U.S. citizens\nor long-term residents;\n\n \n\n \n●\ntax-exempt entities (including\nprivate foundations);\n\n \n\n \n●\npersons liable for any minimum\ntax;\n\n \n\n \n●\npersons who acquire their ordinary shares pursuant to any employee share\noption or otherwise as compensation;\n\n \n\n \n●\ninvestors that will hold their ordinary shares as part of a straddle,\nhedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes;\n\n \n\n \n●\ninvestors that have a functional\ncurrency other than the U.S. dollar;\n\n \n\n \n●\npersons that actually or constructively own ordinary shares representing\n10% or more of our stock (by vote or value); or\n\n \n\n \n●\npartnerships or other entities or arrangements taxable as partnerships\nfor U.S. federal income tax purposes, or persons holding common stock through such entities or arrangements.\n\n \n\nall\nof whom may be subject to tax rules that differ significantly from those discussed below.\n\n \n\nEach\nU.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal tax law to its particular circumstances, and\nthe state, local, non-U.S. and other tax considerations of the ownership and disposition of our ordinary shares.\n\n \n\nGeneral\n\n \n\nFor\npurposes of this discussion, a “U.S. Holder” is a beneficial owner of our ordinary shares that is, for U.S. federal income\ntax purposes:\n\n \n\n \n\n●\nan individual who is a citizen\nor resident of the United States;\n\n \n\n●\na corporation (or other entity treated as a corporation for U.S. federal\nincome tax purposes) created in, or organized under the law of the United States or any state thereof or the District of Columbia;\n\n \n\n \n●\nan estate the income of which is includible in gross income for U.S. federal\nincome tax purposes regardless of its source; or\n\n \n\n \n●\na trust (A) the administration of which is subject to the primary supervision\nof a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or\n(B) that has otherwise validly elected to be treated as a U.S. person under the Code.\n\n \n\nIf\na partnership (or other entity or arrangements treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of\nour ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities\nof the partnership. Partnerships holding our ordinary shares and their partners are urged to consult their tax advisors regarding an\ninvestment in our ordinary shares.\n\n \n\nFor\nU.S. federal income tax purposes, it is generally expected that a U.S. Holder of ordinary shares will be treated as the beneficial owner\nof the underlying shares represented by the ordinary shares. The remainder of this discussion assumes that a U.S. Holder of our ordinary\nshares will be treated in this manner. Accordingly, deposits or withdrawals of ordinary shares will generally not be subject to U.S.\nfederal income tax.\n\n \n\n109\n\n \n\n \n\nPassive Foreign Investment Company Considerations\n\n \n\nA\nnon-U.S. corporation, such as our company, will be classified as a PFIC, for U.S. federal income tax purposes for any taxable year, if\neither (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more\nof the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that\nproduce or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are categorized\nas a passive asset and the company’s goodwill and other unbooked intangibles are taken into account. Passive income generally includes,\namong other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated as owning\na proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly\nor indirectly, 25% or more (by value) of the stock.\n\n \n\nAlthough\nthe law in this regard is unclear, we intend to treat our consolidated VIE and its subsidiaries as being owned by us for U.S. federal\nincome tax purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated\nwith these entities. As a result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it\nwere determined, however, that we are not the owner of the consolidated VIE and its subsidiaries for U.S. federal income tax purposes,\nwe would likely be treated as a PFIC for the current taxable year and any subsequent taxable year.\n\n \n\nAssuming\nthat we are the owner of the VIE for U.S. federal income tax purposes, and based upon our income and assets, and the market value of\nour ordinary shares, we do not believe we were a PFIC for the taxable year ended December 31, 2025 and do not anticipate being or becoming\na PFIC in the current taxable year or in the foreseeable future. While we do not anticipate being or becoming a PFIC in the current or\nforeseeable taxable years, no assurance can be given in this regard because the determination of whether we will be or become a PFIC\nis a factual determination made annually that will depend, in part, upon the composition of our income and assets. Fluctuations in the\nmarket price of our ordinary shares may cause us to be classified as a PFIC for the current or future taxable years because the value\nof our assets for purposes of the asset test, including the value of our goodwill and other unbooked intangibles, may be determined by\nreference to the market price of our ordinary shares from time to time (which may be volatile). If our market capitalization subsequently\ndeclines, we may be or become classified as a PFIC for the current taxable year or future taxable years. Furthermore, the composition\nof our income and assets may also be affected by how, and how quickly, we use our liquid assets. Under circumstances where our revenue\nfrom activities that produce passive income significantly increases relative to our revenue from activities that produce non-passive\nincome, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC\nmay substantially increase.\n\n \n\nIf\nwe are classified as a PFIC for any year during which a U.S. Holder holds our ordinary shares, the PFIC rules discussed below under “Passive\nForeign Investment Company Rules” will generally apply to such U.S. Holder for such taxable year, and unless the U.S. Holder makes\ncertain elections, will apply in future years even if we cease to be a PFIC.\n\n \n\nThe\ndiscussion below under “Dividends” and “Sale or Other Disposition” is written on the basis that we will not be\nor become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are\ntreated as a PFIC are discussed below under “Passive Foreign Investment Company Rules.”\n\n \n\nDividends\n\n \n\nAny\ncash distributions (including the amount of any PRC tax withheld) paid on our ordinary shares out of our current or accumulated earnings\nand profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder\nas dividend income on the day actually or constructively received by the U.S. Holder. Because we do not intend to determine our earnings\nand profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend”\nfor U.S. federal income tax purposes. Dividends received on our ordinary shares will not be eligible for the dividends received deduction\nallowed to corporations. A non-corporate U.S. Holder will be subject to tax at the lower capital gain tax rate applicable to “qualified\ndividend income,” provided that certain conditions are satisfied, including that (1) our ordinary shares are readily tradeable\non an established securities market in the United States, or, in the event that we are deemed to be a PRC resident enterprise under the\nPRC tax law, we are eligible for the benefit of the United States-PRC income tax treaty (the “Treaty”), (2) we are neither\na PFIC nor treated as such with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend was paid and\nthe preceding taxable year, and (3) certain holding period requirements are met. Our ordinary shares are readily tradeable on an established\nsecurities market in the United States. There can be no assurance, however, that our ordinary shares will be considered readily tradeable\non an established securities market in later years.\n\n \n\n110\n\n \n\n \n\nIn\nthe event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law (see “-Mainland China Enterprise\nTaxation”), a U.S. Holder may be subject to PRC withholding taxes on dividends paid on our ordinary shares. We may, however, be\neligible for the benefits of the Treaty. If we are eligible for such benefits, dividends we pay on our ordinary shares, regardless of\nwhether such shares are represented by the ordinary shares, would be eligible for the reduced rates of taxation described in the preceding\nparagraph.\n\n \n\nDividends\nwill generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally constitute passive category\nincome. Depending on the U.S. Holder’s individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of\ncomplex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on our ordinary\nshares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for U.S.\nfederal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all creditable\nforeign income taxes. The rules governing the foreign tax credit are complex and their outcome depends in large part on the U.S. Holder’s\nindividual facts and circumstances. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the availability of the\nforeign tax credit under their particular circumstances.\n\n \n\nSale or Other Disposition\n\n \n\nA\nU.S. Holder will generally recognize capital gain or loss upon the sale or other disposition of ordinary shares in an amount equal to\nthe difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ordinary shares. Any\ncapital gain or loss will be long-term if the ordinary shares have been held for more than one year and will generally be U.S.-source\ngain or loss for U.S. foreign tax credit purposes. Long-term capital gain of individuals and certain other non-corporate U.S. Holders\nwill generally be eligible for a reduced rate of taxation. The deductibility of a capital loss may be subject to limitations. In the\nevent that gain from the disposition of the ordinary shares is subject to tax in the PRC, such gain may be treated as PRC source gain\nunder the Treaty. Pursuant to U.S. Treasury Regulations (the applicability of which has been postponed until further guidance is issued),\nif a U.S. Holder is not eligible for the benefits of the Treaty or does not elect to apply the Treaty, then such U.S. Holder may not\nbe able to claim a foreign tax credit arising from any PRC tax imposed on the disposition of the ordinary shares. The rules regarding\nforeign tax credits and deduction of foreign taxes are complex. U.S. Holders are urged to consult their tax advisors regarding the tax\nconsequences if a foreign tax is imposed on a disposition of our ordinary shares, including the availability of the foreign tax credit\nor deduction under their particular circumstances, their eligibility for benefits under the Treaty and the potential impact of the U.S.\nTreasury Regulations.\n\n \n\nPassive Foreign Investment Company Rules\n\n \n\nIf\nwe are classified as a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, and unless the U.S. Holder makes\na mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution\nthat we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than\n125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding\nperiod for the ordinary shares), and (ii) any gain realized on the sale or other disposition of ordinary shares. Under the PFIC rules:\n\n \n\n●the excess distribution or gain\nwill be allocated ratably over the U.S. Holder’s holding period for the ordinary shares;\n\n \n\n \n●\nthe amount allocated to the current taxable year and any taxable years\nin the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC\nyear”), will be taxable as ordinary income;\n\n \n\n \n●\nthe amount allocated to each prior taxable year, other than a pre-PFIC\nyear, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and\n\n \n\n \n●\nthe interest charge generally applicable to underpayments of tax will\nbe imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.\n\n \n\n111\n\n \n\n \n\nIf\nwe are a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares and any of our subsidiaries is also a PFIC, such\nU.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application\nof these rules. U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.\n\n \n\nAs\nan alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with\nrespect to such stock, provided that such stock is regularly traded on a national securities exchange that is registered with the SEC\nor on a foreign exchange or market that the IRS determines is a qualified exchange that has rules sufficient to ensure that the market\nprice represents a legitimate and sound fair market value. For those purposes, our ordinary shares are listed on Nasdaq Capital Market,\nwhich is an established securities exchange in the United States. We anticipate that our ordinary shares should qualify as being regularly\ntraded, but no assurances may be given in this regard. If a U.S. Holder makes this election, the holder will generally (i) include as\nordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ordinary shares held at the\nend of the taxable year over the adjusted tax basis of such ordinary shares and (ii) deduct as an ordinary loss the excess, if any, of\nthe adjusted tax basis of the ordinary shares over the fair market value of such ordinary shares held at the end of the taxable year,\nbut such deduction will only be allowed to the extent of the amount previously included in income as a result of the mark-to-market election.\nThe U.S. Holder’s adjusted tax basis in the ordinary shares would be adjusted to reflect any income or loss resulting from the\nmark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation\nceases to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period\nthat such corporation is not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes\nupon the sale or other disposition of our ordinary shares in a year when we are a PFIC will be treated as ordinary income and any loss\nwill be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included\nin income as a result of the mark-to-market election.\n\n \n\nBecause\na mark-to-market election technically cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject\nto the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity\ninterest in a PFIC for U.S. federal income tax purposes.\n\n \n\nWe\ndo not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would\nresult in tax treatment different from the general tax treatment for PFICs described above.\n\n \n\nIf\na U.S. Holder owns our ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form\n8621. You should consult your tax advisors regarding the U.S. federal income tax consequences of owning and disposing of our ordinary\nshares if we are or become a PFIC.\n\n \n\nF. Dividends and Paying Agents\n\n \n\nNot applicable.\n\n \n\nG. Statement by Experts\n\n \n\nNot applicable.\n\n \n\nH. Documents on Display\n\n \n\nDocuments concerning us that are referred to in\nthis document may be inspected at c/o No. 777, Daiyi Road, Changle County, Weifang City, Shandong Province, China, 262400. In addition,\nwe file annual reports and other information with the Securities and Exchange Commission. We file annual reports on Form 20-F and submit\nother information under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the\nExchange Act and our officers, directors and principal shareholders are exempt from the insider short-swing disclosure and profit recovery\nrules of Section 16 of the Exchange Act. Annual reports and other information we file with the Commission may be inspected at the public\nreference facilities maintained by the Commission at Room 1024, 100 F. Street, N.E., Washington, D.C. 20549, and copies of all or any\npart thereof may be obtained from such offices upon payment of the prescribed fees. You may call the Commission at 1-800-SEC-0330 for\nfurther information on the operation of the public reference rooms and you can request copies of the documents upon payment of a duplicating\nfee, by writing to the Commission. In addition, the Commission maintains a web site that contains reports and other information regarding\nregistrants (including us) that file electronically with the Commission which can be assessed at http://www.sec.gov.\n\n \n\nI. Subsidiary Information\n\n \n\nFor a listing of our subsidiaries, see “Item\n4. Information on the Company - A. History and Development of the Company” and Exhibit 8.1 to this Annual Report.\n\n \n\n112"}