{"url_path":"/sec/hlp/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 FINANCIAL 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":736,"has_tables":true,"body_markdown":"Item 8. FINANCIAL INFORMATION\n\n \n\nA. Consolidated Statements and Other Financial Information\n\n \n\nSee our audited consolidated financial statements\ncommencing on page F-1 of this Annual Report.\n\n \n\nLegal Proceedings\n\n \n\nTo the best of our knowledge, none of our directors\nor executive officers has, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401\nof Regulation S-K.\n\n \n\n105\n\n \n\n \n\nFrom time to time, we may become involved in legal\nproceedings or be subject to claims arising in the ordinary course of our business. We are not currently a party to any legal proceedings\nthat in the opinion of the management, if determined adversely to us, would have a material adverse effect on our business, financial\ncondition, operating results or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense\nand settlement costs, diversion of management resources and other factors.\n\n \n\nDividend Policy\n\n \n\nWe intend to keep any future earnings to finance\nthe expansion of the business of the PRC operating entities, and we do not anticipate that any cash dividends will be paid in the foreseeable\nfuture.\n\n \n\nUnder the Cayman Islands law, a Cayman Islands\ncompany may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend\nbe paid if this would result in the company being unable to pay its debts due in the ordinary course of business.\n\n \n\nIf we determine to pay dividends on any of our\nOrdinary Shares in the future, as a holding company, unless we receive proceeds from future offerings, we will be dependent on receipt\nof funds from Hongli HK, which will be dependent on receipt of dividends from Hongli WFOE, which will be dependent on payments from the\nVIE in accordance with the laws and regulations of the PRC and the Contractual Arrangements between them. Pursuant to the PRC Enterprise\nIncome Tax Law, or the “EIT Law” and its implementation rules, any dividends paid by Hongli WFOE to Hongli HK will be subject\nto a withholding tax rate of 10%. However, if the Hongli WFOE is determined by the relevant PRC tax authority to have satisfied the relevant\nconditions and requirements under Double Tax Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends\nHongli HK receives from Hongli WFOE may be reduced to 5%. See “Item 3. Key Information-D. Risk Factors - Risks Relating to Doing\nBusiness in China **-***We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash\nand financing requirements we may have, and any limitation on the ability of our subsidiary to make payments to us could have a material\nadverse effect on our ability to conduct the business.**”***\n\n \n\nCurrent PRC regulations permit Hongli WFOE to\npay dividends to Hongli HK only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and\nregulations. In addition, each of Hongli WFOE and the PRC operating entities is required to set aside at least 10% of its after-tax profits\neach year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other\nways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the\nreserve funds are not distributable as cash dividends except in the event of liquidation. Furthermore, if Hongli WFOE and Hongli Shandong\nincur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions\nto us. If either Hongli WFOE, Hongli HK or the VIE is unable to distribute dividends or make payments directly or indirectly to Hongli\nCayman, we may be unable to pay dividends on our Ordinary Shares.\n\n \n\nUnder existing PRC foreign exchange regulations,\npayments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange\ntransactions, can be made in foreign currencies, without prior approval of SAFE, by complying with certain procedural requirements. Specifically,\nwithout prior approval of SAFE, cash generated from the operations in PRC may be used to pay dividends to our Company.\n\n \n\nB. Significant Changes\n\n \n\nExcept as disclosed elsewhere in this Annual Report,\nwe have not experienced any significant changes since the date of our audited consolidated financial statements included in this Annual\nReport."}