| Delaware (State or other jurisdiction of incorporation or organization) | | | 3089 (Primary Standard Industrial Classification Code Number) | | | 83-2237832 (I.R.S. Employer Identification Number) | |
| Copies to: | | |||
| Mark Y. Liu Christina C. Russo Akerman LLP 601 W. 5th Street, 3rd Floor Los Angeles, CA 90071 | | | Stephen Older Rakesh Gopalan McGuireWoods LLP 1251 Avenue of the Americas, 20th Floor New York, NY 10020 | |
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer | | | Smaller reporting company ☒ | |
| | | | Emerging growth company ☒ | |
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Title of Each Class of Securities to be Registered | | | | Amount To Be Registered(1) | | | | Proposed Maximum Offering Price Per Share | | | | Proposed Maximum Aggregate Offering Price(1) | | | | Amount of Registration Fee(2) | | ||||||
Common stock, par value $0.001 per share | | | | 4,542,500 | | | | $20.00 | | | | | $ | 90,850,000 | | | | | | | 9,911.74 | | |
| | | Per Share | | | Total | |
Initial public offering price | | | $ | | | $ | |
Underwriting discounts and commissions(1) | | | $ | | | $ | |
Proceeds to us, before expenses | | | $ | | | $ | |
| Stifel | | | William Blair | | | Truist Securities | |
| National Securities Corporation | | | D.A. Davidson & Co. | |
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| | | | | F-1 | | |
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| | | (unaudited) | | | (unaudited) | | | (audited) | | |||||||||||||||||||||||||||
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | | Year Ended December 31, | | |||||||||||||||||||||||||||
Statement of operations data: | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | | 2018 | | | 2017 | | ||||||||||||||||||
Net sales | | | | $ | 60,010,000 | | | | | $ | 46,262,000 | | | | | $ | 108,459,000 | | | | | $ | 82,986,000 | | | | | $ | 175,434,000 | | | | | $ | 140,058,000 | | |
Cost of goods sold | | | | | 43,025,000 | | | | | | 33,374,000 | | | | | | 78,824,000 | | | | | | 61,951,000 | | | | | | 131,979,000 | | | | | | 98,753,000 | | |
Gross profit | | | | | 16,985,000 | | | | | | 12,888,000 | | | | | | 29,635,000 | | | | | | 21,035,000 | | | | | | 43,455,000 | | | | | | 41,305,000 | | |
Operating expenses | | | | | 14,336,000 | | | | | | 10,247,000 | | | | | | 26,153,000 | | | | | | 18,830,000 | | | | | | 41,323,000 | | | | | | 35,297,000 | | |
Operating income | | | | $ | 2,649,000 | | | | | $ | 2,641,000 | | | | | $ | 3,482,000 | | | | | $ | 2,205,000 | | | | | $ | 2,132,000 | | | | | $ | 6,008,000 | | |
Other income (expense) | | | | | 231,000 | | | | | | (166,000) | | | | | | (644,000) | | | | | | (622,000) | | | | | | (585,000) | | | | | | (1,363,000) | | |
Net income (loss) | | | | $ | 2,685,000 | | | | | $ | 1,821,000 | | | | | $ | 2,557,000 | | | | | $ | 7,000 | | | | | $ | (124,000) | | | | | $ | 4,549,000 | | |
Basic and diluted earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | | | | $ | 0.00 | | | | | $ | 0.31 | | |
Diluted | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | | | | $ | 0.00 | | | | | $ | 0.31 | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 14,830,312 | | | | | | 14,724,996 | | |
Diluted | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 14,830,312 | | | | | | 14,724,996 | | |
| | | (unaudited) | | | (audited) | | ||||||
Balance sheet data: | | | June 30, 2019 | | | December 31, 2018 | | ||||||
Cash and cash equivalents | | | | $ | 4,340,000 | | | | | $ | 965,000 | | |
Total current assets | | | | | 67,525,000 | | | | | | 47,619,000 | | |
Total assets | | | | | 133,349,000 | | | | | | 96,013,000 | | |
Total current liabilities | | | | | 33,291,000 | | | | | | 60,510,000 | | |
Total liabilities | | | | | 108,902,000 | | | | | | 74,123,000 | | |
Total Karat Packaging Inc. stockholders’ equity | | | | | 15,696,000 | | | | | | 14,017,000 | | |
Total noncontrolling interest equity | | | | | 8,751,000 | | | | | | 7,873,000 | | |
Total liabilities & stockholders’ equity | | | | | 133,349,000 | | | | | | 96,013,000 | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | | Year Ended December 31, | | |||||||||||||||||||||||||||
Other non-GAAP financial data: | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | | 2018 | | | 2017 | | ||||||||||||||||||
Adjusted EBITDA(1) | | | | $ | 6,437,000 | | | | | $ | 3,823,000 | | | | | $ | 8,023,000 | | | | | $ | 4,079,000 | | | | | $ | 6,962,000 | | | | | $ | 9,042,000 | | |
| | | Year Ended December 31, | | | | |||||||||||||
| | | 2020 | | | 2019 | | | | ||||||||||
| | | (in thousands, except share and per share amounts) | | | | |||||||||||||
Net sales | | | | $ | 295,518 | | | | | $ | 224,910 | | | | | ||||
Cost of goods sold | | | | | 206,393 | | | | | | 163,891 | | | | | ||||
Gross profit | | | | | 89,125 | | | | | | 61,019 | | | | | ||||
Operating expenses | | | | | 61,428 | | | | | | 55,183 | | | | | ||||
Operating income | | | | | 27,697 | | | | | | 5,836 | | | | | ||||
Other expenses | | | | | (5,770) | | | | | | (2,891) | | | | | ||||
Provision for income tax expense | | | | | 5,259 | | | | | | 781 | | | | | ||||
Net Income | | | | | 16,668 | | | | | | 2,164 | | | | | ||||
Basic and diluted earnings per share | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | 1.15 | | | | | $ | 0.11 | | | | | ||||
Diluted | | | | $ | 1.13 | | | | | $ | 0.11 | | | | | ||||
Basic and diluted earnings per share – proforma (unaudited)(1) | | | | | | | | ��� | | | | | | | | ||||
Basic – proforma | | | | $ | 1.12 | | | | | | | | | | | ||||
Diluted – proforma | | | | $ | 1.10 | | | | | | | | | | | ||||
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | |
Basic | | | | | 15,176,809 | | | | | | 15,190,000 | | | | | ||||
Diluted | | | | | 15,447,809 | | | | | | 15,190,000 | | | | | ||||
Weighted average common shares outstanding – proforma (unaudited)(1) | | | | | | ||||||||||||||
| | | | | | ||||||||||||||
Basic – proforma | | | | | 16,744,125 | | | | | | | | | | | ||||
Diluted – proforma | | | | | 17,015,125 | | | | | |
| | | December 31, 2020 | | | December 31, 2019 | | ||||||
| | | (in thousands) | | |||||||||
Balance sheet data: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 448 | | | | | $ | 802 | | |
Total current assets | | | | | 79,777 | | | | | | 61,027 | | |
Total assets | | | | | 181,104 | | | | | | 133,353 | | |
Total current liabilities | | | | | 43,137 | | | | | | 35,928 | | |
Total liabilities | | | | | 141,236 | | | | | | 109,299 | | |
Total Karat Packaging Inc. stockholders’ equity | | | | | 32,404 | | | | | | 15,741 | | |
Total noncontrolling interest equity | | | | | 7,464 | | | | | | 8,313 | | |
Total stockholders’ equity . . | | | | | 39,868 | | | | | | 24,054 | | |
Total liabilities and stockholders’ equity | | | | | 181,104 | | | | | | 133,353 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
| | | (in thousands) | | |||||||||
Other non-GAAP financial data (unaudited): | | | | ||||||||||
Adjusted EBITDA(2) | | | | $ | 35,988 | | | | | $ | 11,281 | | |
| | (unaudited) | | (unaudited) | | (unaudited) | | | Year Ended December 31, | | | ||||||||||||||||||||||||||||||||||||||||||
Reconciliation of non-GAAP financial data: | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Year Ended December 31, | | |||||||||||||||||||||||||||||||||||||||||||||
| 2019 | | 2018 | | 2019 | | 2018 | | 2018 | | 2017 | | |||||||||||||||||||||||||||||||||||||||||
Net income (loss): | | | $ | 2,685,000 | | | | $ | 1,821,000 | | | | $ | 2,557,000 | | | | $ | 7,000 | | | | $ | (124,000) | | | | $ | 4,549,000 | | | ||||||||||||||||||||||
Reconciliation of non-GAAP financial data (unaudited): | | 2020 | | 2019 | | | |||||||||||||||||||||||||||||||||||||||||||||||
| | (in thousands) | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Net Income | | | $ | 16,668 | | | | $ | 2,164 | | | | |||||||||||||||||||||||||||||||||||||||||
Add: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
Interest expense | | | | 2,256,000 | | | | | 349,000 | | | | | 2,806,000 | | | | | 564,000 | | | | | 1,455,000 | | | | | 1,278,000 | | | | | | 5,492 | | | | | 4,752 | | | | ||||||||||
Income tax expense | | | | 195,000 | | | | | 654,000(1) | | | | | 281,000 | | | | | 1,576,000(1) | | | | | 1,671,000(1) | | | | | 96,000 | | | | | | 5,259 | | | | | 781 | | | | ||||||||||
Depreciation and amortization | | | | 1,301,000 | | | | | 999,000 | | | | | 2,379,000 | | | | | 1,932,000 | | | | | 3,960,000 | | | | | 3,119,000 | | | | | | 8,569 | | | | | 5,953 | | | | ||||||||||
Gain on sale of asset(1) | | | | — | | | | | (2,369) | | | | |||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | | | $ | 6,437,000 | | | | $ | 3,823,000 | | | | $ | 8,023,000 | | | | $ | 4,079,000 | | | | $ | 6,962,000 | | | | $ | 9,042,000 | | | | | $ | 35,988 | | | | $ | 11,281 | | | |
| Assumed initial public offering price per share | | | | | | | | $ | 8.00 | | | Assumed initial public offering price per share | | | | | | | | $ | 19.00 | | | ||||
| Net tangible book per share as of June 30, 2019 | | | $ | 1.61 | | | | | | | | Net tangible book per share as of December 31, 2020 | | | $ | 2.42 | | | | | | | | ||||
| Increase pro forma net tangible book value per share attributable to new investors in this offering | | | $ | 1.37 | | | | | | | | Increase pro forma net tangible book value per share attributable to new investors in this offering | | | $ | 3.04 | | | | | | | | ||||
| Pro forma as adjusted net tangible book value per share after giving effect to this offering | | | $ | 2.98 | | | | | | | | Pro forma as adjusted net tangible book value per share after giving effect to this offering | | | $ | 5.47 | | | | | | | | ||||
| Dilution in pro forma as adjusted net tangible book value per share to new investors in this offering | | | | | | | | $ | 5.02 | | | Dilution in pro forma as adjusted net tangible book value per share to new investors in this offering | | | | | | | | $ | 13.53 | | |
| | Shares Purchased | | Total Consideration | | Weighted Average Price Per Share | | | Shares Purchased | | Total Consideration | | Weighted Average Price Per Share | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | # | | % | | $ | | % | | | | # | | % | | $ | | % | | | ||||||||||||||||||||||||||||||||||||||||||
Existing stockholders | | | | 15,190,000 | | | | | 75.24% | | | | $ | 13,996,000 | | | | | 25.92% | | | | $ | 0.92 | | | | | | 15,167,000 | | | | | 79.3% | | | | $ | 13,996,000 | | | | | 15.7% | | | | $ | 0.92 | | | ||||||||||
New investors purchasing common stock | | | | 5,000,000 | | | | | 24.76% | | | | $ | 40,000,000 | | | | | 74.08% | | | | $ | 8.00 | | | | | | 3,950,000 | | | | | 20.7% | | | | $ | 75,050,000 | | | | | 84.3% | | | | $ | 19.00 | | | ||||||||||
Total | | | | 20,190,000 | | | | | 100.0% | | | | $ | 53,996,000 | | | | | 100.0% | | | | $ | 2.67 | | | | | | 19,117,000 | | | | | 100% | | | | $ | 89,046,000 | | | | | 100% | | | | $ | 4.66 | | |
As of June 30, 2019 | | Actual | | As adjusted(1) | | |||||||||||||||||||||
As of December 31, 2020 | | Actual | | As adjusted(1) | | |||||||||||||||||||||
| | (in thousands) | | (in thousands) | | |||||||||||||||||||||
Cash and cash equivalents | | | $ | 4,340,000 | | | | | 39,976,000 | | | | | $ | 448 | | | | | 38,443 | | | ||||
Long-term debt | | | | 76,965,000 | | | | | 76,965,000 | | | |||||||||||||||
Long-term debt, current portion | | | | 11,685 | | | | | 8,761 | | | |||||||||||||||
Long-term debt, net of current portion | | | | 53,700 | | | | | 46,852 | | | |||||||||||||||
Line of credit | | | | 33,169 | | | | | 13,169 | | | |||||||||||||||
Total long-term debt and line of credit | | | | 98,554 | | | | | 68,782 | | | |||||||||||||||
Stockholders’ equity: | | | | | ||||||||||||||||||||||
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 15,190,000 shares issued and outstanding, actual; 20,190,000 shares issued and outstanding, as adjusted(2) | | | | 15,000 | | | | | 20,000 | | | |||||||||||||||
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 15,190,000 shares issued and 15,167,000 outstanding, actual; 19,117,000 shares issued and outstanding, as adjusted (2) | | | | 15 | | | | | 19 | | | |||||||||||||||
Additional paid-in capital | | | | 13,981,000 | | | | | 49,612,000 | | | | | | 13,981 | | | | | 81,744 | | | ||||
Treasury stock | | | | (248) | | | | | (248) | | | |||||||||||||||
Retained earnings | | | | 1,700,000 | | | | | 1,700,000 | | | | | | 18,656 | | | | | 18,656 | | | ||||
Non-controlling interest | | | | 8,751,000 | | | | | 8,751,000 | | | | | | 7,464 | | | | | 7,464 | | | ||||
Total stockholders’ equity | | | | 24,447,000 | | | | | 60,083,000 | | | | | | 39,868 | | | | | 107,635 | | | ||||
Total capitalization | | | $ | 101,412,000 | | | | $ | 137,048,000 | | | | | | 138,422 | | | | | 176,417 | | |
| | | (unaudited) | | | (unaudited) | | | (audited) | | |||||||||||||||||||||||||||
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | | Year Ended December 31, | | |||||||||||||||||||||||||||
Statement of operations data: | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | | 2018 | | | 2017 | | ||||||||||||||||||
Net sales | | | | $ | 60,010,000 | | | | | $ | 46,262,000 | | | | | $ | 108,459,000 | | | | | $ | 82,986,000 | | | | | $ | 175,434,000 | | | | | $ | 140,058,000 | | |
Cost of goods sold | | | | | 43,025,000 | | | | | | 33,374,000 | | | | | | 78,824,000 | | | | | | 61,951,000 | | | | | | 131,979,000 | | | | | | 98,753,000 | | |
Gross profit | | | | | 16,985,000 | | | | | | 12,888,000 | | | | | | 29,635,000 | | | | | | 21,035,000 | | | | | | 43,455,000 | | | | | | 41,305,000 | | |
Operating expenses | | | | | 14,336,000 | | | | | | 10,247,000 | | | | | | 26,153,000 | | | | | | 18,830,000 | | | | | | 41,323,000 | | | | | | 35,297,000 | | |
Operating income | | | | $ | 2,649,000 | | | | | $ | 2,641,000 | | | | | $ | 3,482,000 | | | | | $ | 2,205,000 | | | | | $ | 2,132,000 | | | | | $ | 6,008,000 | | |
Other income (expense) | | | | | 231,000 | | | | | | (166,000) | | | | | | (644,000) | | | | | | (622,000) | | | | | | (585,000) | | | | | | (1,363,000) | | |
Net income (loss) | | | | $ | 2,685,000 | | | | | $ | 1,821,000 | | | | | $ | 2,557,000 | | | | | $ | 7,000 | | | | | $ | (124,000) | | | | | $ | 4,549,000 | | |
Basic and diluted earnings per share: | | | | | | | | ||||||||||||||||||||||||||||||
Basic | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | | | | $ | 0.00 | | | | | $ | 0.31 | | |
Diluted | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | | | | $ | 0.00 | | | | | $ | 0.31 | | |
Weighted average common shares outstanding: | | | | | | | | ||||||||||||||||||||||||||||||
Basic | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 14,830,312 | | | | | | 14,724,996 | | |
Diluted | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 14,830,312 | | | | | | 14,724,996 | | |
| | | (unaudited) | | | (audited) | | ||||||
Balance sheet data: | | | June 30, 2019 | | | December 31, 2018 | | ||||||
Cash and cash equivalents | | | | $ | 4,340,000 | | | | | $ | 965,000 | | |
Total current assets | | | | | 67,525,000 | | | | | | 47,619,000 | | |
Total assets | | | | | 133,349,000 | | | | | | 96,013,000 | | |
Total current liabilities | | | | | 33,291,000 | | | | | | 60,510,000 | | |
Total liabilities | | | | | 108,902,000 | | | | | | 74,123,000 | | |
Total Karat Packaging Inc. stockholders’ equity | | | | | 15,696,000 | | | | | | 14,017,000 | | |
Total noncontrolling interest equity | | | | | 8,751,000 | | | | | | 7,873,000 | | |
Total liabilities & stockholders’ equity | | | | | 133,349,000 | | | | | | 96,013,000 | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | | Year Ended December 31, | | |||||||||||||||||||||||||||
Other non-GAAP financial data: | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | | 2018 | | | 2017 | | ||||||||||||||||||
Adjusted EBITDA(1) | | | | $ | 6,437,000 | | | | | $ | 3,823,000 | | | | | $ | 8,023,000 | | | | | $ | 4,079,000 | | | | | $ | 6,962,000 | | | | | $ | 9,042,000 | | |
| | | Year Ended December 31, | | | | |||||||||||||
| | | 2020 | | | 2019 | | | | ||||||||||
| | | (in thousands, except share and per share amounts) | | | | |||||||||||||
Net sales | | | | $ | 295,518 | | | | | $ | 224,910 | | | | | ||||
Cost of goods sold | | | | | 206,393 | | | | | | 163,891 | | | | | ||||
Gross profit | | | | | 89,125 | | | | | | 61,019 | | | | | ||||
Operating expenses | | | | | 61,428 | | | | | | 55,183 | | | | | ||||
Operating income | | | | | 27,697 | | | | | | 5,836 | | | | | ||||
Other expenses | | | | | (5,770) | | | | | | (2,891) | | | | | ||||
Provision for income tax expense | | | | | 5,259 | | | | | | 781 | | | | | ||||
Net Income (loss) | | | | | 16,668 | | | | | | 2,164 | | | | | ||||
Basic and diluted earnings per share | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | 1.15 | | | | | $ | 0.11 | | | | | ||||
Diluted | | | | $ | 1.13 | | | | | $ | 0.11 | | | | | ||||
Basic and diluted earnings per share – proforma (unaudited)(1) | | | | | | | | | | | | | | | | | | | |
Basic – proforma | | | | $ | 1.12 | | | | | | | | | | | | | | |
Diluted – proforma | | | | $ | 1.10 | | | | | | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | |
Basic | | | | | 15,176,809 | | | | | | 15,190,000 | | | | | ||||
Diluted | | | | | 15,447,809 | | | | | | 15,190,000 | | | | | ||||
Weighted average common shares outstanding – proforma (unaudited)(1) | | | | | | ||||||||||||||
| | | | | | ||||||||||||||
Basic – proforma | | | | | 16,744,125 | | | | | | | | | | | ||||
Diluted – proforma | | | | | 17,015,125 | | | | | |
| | | Year Ended December 31, | | |||||||||
Balance sheet data: | | | 2020 | | | 2019 | | ||||||
| | | (in thousands) | | |||||||||
Cash and cash equivalents | | | | $ | 448 | | | | | $ | 802 | | |
Total current assets | | | | | 79,777 | | | | | | 61,027 | | |
Total assets | | | | | 181,104 | | | | | | 133,353 | | |
Total current liabilities | | | | | 43,137 | | | | | | 35,928 | | |
Total liabilities | | | | | 141,236 | | | | | | 109,299 | | |
Total Karat Packaging Inc. stockholders’ equity . | | | | | 32,404 | | | | | | 15,741 | | |
Total noncontrolling interest equity | | | | | 7,464 | | | | | | 8,313 | | |
Total stockholders’ equity . . | | | | | 39,868 | | | | | | 24,054 | | |
Total liabilities and stockholders’ equity | | | | | 181,104 | | | | | | 133,353 | | |
Adjusted EBITDA (unaudited)(2) | | | | $ | 35,988 | | | | | $ | 11,281 | | |
| | (unaudited) | | (unaudited) | | (unaudited) | | | Year Ended December 31, | | | |||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of non-GAAP financial data: | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Year Ended December 31, | | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | | 2018 | | 2019 | | 2018 | | 2018 | | 2017 | | ||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of non-GAAP financial data (unaudited): | | 2020 | | 2019 | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
| | (in thousands) | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss): | | | $ | 2,685,000 | | | | $ | 1,821,000 | | | | $ | 2,557,000 | | | | $ | 7,000 | | | | $ | (124,000) | | | | $ | 4,549,000 | | | | | $ | 16,668 | | | | $ | 2,164 | | | | |||||||||||||
Add: | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||
Interest expense | | | | 2,256,000 | | | | | 349,000 | | | | | 2,806,000 | | | | | 564,000 | | | | | 1,455,000 | | | | | 1,278,000 | | | | | | 5,492 | | | | | 4,752 | | | | |||||||||||||
Income tax expense | | | | 195,000 | | | | | 654,000(1) | | | | | 281,000 | | | | | 1,576,000(1) | | | | | 1,671,000(1) | | | | | 96,000 | | | | | | 5,259 | | | | | 781 | | | | |||||||||||||
Depreciation and amortization | | | | 1,301,000 | | | | | 999,000 | | | | | 2,379,000 | | | | | 1,932,000 | | | | | 3,960,000 | | | | | 3,119,000 | | | | | | 8,569 | | | | | 5,953 | | | | |||||||||||||
Gain on sale of asset(1) | | | | — | | | | | (2,369) | | | | ||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | | | $ | 6,437,000 | | | | $ | 3,823,000 | | | | $ | 8,023,000 | | | | $ | 4,079,000 | | | | $ | 6,962,000 | | | | $ | 9,042,000 | | | | | $ | 35,988 | | | | $ | 11,281 | | | |
| | | Karat Packaging, Inc. | | | Global Wells Investment Group | | | Eliminations | | | Consolidated | | ||||||||||||
| | | (in thousands) | | |||||||||||||||||||||
Net sales | | | | | 295,518 | | | | | | — | | | | | | — | | | | | | 295,518 | | |
Cost of goods sold | | | | | 206,393 | | | | | | — | | | | | | — | | | | | | 206,393 | | |
Gross profit | | | | | 89,125 | | | | | | — | | | | | | — | | | | | | 89,125 | | |
Operating expenses | | | | | 63,064 | | | | | | 1,973 | | | | | | (3,609) | | | | | | 61,428 | | |
Operating income | | | | | 26,061 | | | | | | (1,973) | | | | | | 3,609 | | | | | | 27,697 | | |
Rental income | | | | | — | | | | | | 3,907 | | | | | | 3,585 | | | | | | 322 | | |
Other income (expense) | | | | | (3,285) | | | | | | (2,915) | | | | | | 108 | | | | | | (6,092) | | |
Income (loss) before provision for income taxes | | | | | 22,776 | | | | | | (981) | | | | | | 132 | | | | | | 21,927 | | |
Provision for income tax expense | | | | | 5,259 | | | | | | — | | | | | | — | | | | | | 5,259 | | |
Net income (loss) | | | | | 17,517 | | | | | | (981) | | | | | | 132 | | | | | | 16,668 | | |
Net income (loss) attributable to noncontrolling interest | | | | | — | | | | | | (849) | | | | | | — | | | | | | (849) | | |
Net income (loss) attributable to controlling interest . | | | | | 17,517 | | | | | | (132) | | | | | | 132 | | | | | | 17,517 | | |
Other non-GAAP financial data (unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA(1) | | | | | 33,059 | | | | | | 2,797 | | | | | | 132 | | | | | | 35,988 | | |
| | | Karat Packaging, Inc. | | | Global Wells Investment Group | | | Eliminations | | | Consolidated | | ||||||||||||
| | | (in thousands) | | |||||||||||||||||||||
Net sales | | | | | 224,910 | | | | | | — | | | | | | — | | | | | | 224,910 | | |
Cost of goods sold | | | | | 163,891 | | | | | | — | | | | | | — | | | | | | 163,891 | | |
Gross profit | | | | | 61,019 | | | | | | — | | | | | | — | | | | | | 61,019 | | |
Operating expenses | | | | | 55,248 | | | | | | 1,565 | | | | | | (1,630) | | | | | | 55,183 | | |
Operating income | | | | | 5,771 | | | | | | (1,565) | | | | | | 1,630 | | | | | | 5,836 | | |
Rental income | | | | | — | | | | | | 1,588 | | | | | | (1,588) | | | | | | — | | |
Other income (expense) | | | | | (3,266) | | | | | | 486 | | | | | | (111) | | | | | | (2,891) | | |
Income (loss) before provision for income taxes | | | | | 2,505 | | | | | | 509 | | | | | | (69) | | | | | | 2,945 | | |
Provision for income tax expense | | | | | 781 | | | | | | — | | | | | | — | | | | | | 781 | | |
Net income (loss) | | | | | 1,724 | | | | | | 509 | | | | | | (69) | | | | | | 2,164 | | |
Net income (loss) attributable to noncontrolling interest | | | | | — | | | | | | 440 | | | | | | — | | | | | | 440 | | |
Net income (loss) attributable to controlling interest . | | | | | 1,724 | | | | | | 69 | | | | | | (69) | | | | | | 1,724 | | |
Other non-GAAP financial data (unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA(1) | | | | | 10,574 | | | | | | 776 | | | | | | (69) | | | | | | 11,281 | | |
| | | Karat Packaging, Inc. | | | Global Wells Investment Group | | | Eliminations | | | Consolidated | | ||||||||||||
| | | (in thousands) | | |||||||||||||||||||||
Net income (loss) | | | | | 17,517 | | | | | | (981) | | | | | | 132 | | | | | | 16,668 | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest | | | | | 2,577 | | | | | | 2,915 | | | | | | — | | | | | | 5,492 | | |
Income tax expense | | | | | 5,259 | | | | | | — | | | | | | — | | | | | | 5,259 | | |
Depreciation and amortization | | | | | 7,706 | | | | | | 863 | | | | | | — | | | | | | 8,569 | | |
Adjusted EBITDA | | | | | 33,059 | | | | | | 2,797 | | | | | | 132 | | | | | | 35,988 | | |
| | | Karat Packaging, Inc. | | | Global Wells Investment Group | | | Eliminations | | | Consolidated | | ||||||||||||
| | | (in thousands) | | |||||||||||||||||||||
Net income (loss) | | | | | 1,724 | | | | | | 509 | | | | | | (69) | | | | | | 2,164 | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | |
Gain on sale of asset | | | | | — | | | | | | (2,369) | | | | | | — | | | | | | (2,369) | | |
Interest | | | | | 2,868 | | | | | | 1,884 | | | | | | — | | | | | | 4,752 | | |
Income tax expense | | | | | 781 | | | | | | — | | | | | | — | | | | | | 781 | | |
Depreciation and amortization | | | | | 5,201 | | | | | | 752 | | | | | | — | | | | | | 5,953 | | |
Adjusted EBITDA | | | | | 10,574 | | | | | | 776 | | | | | | (69) | | | | | | 11,281 | | |
| | | Karat Packaging, Inc. | | | Global Wells Investment Group | | | Eliminations | | | Consolidated | | ||||||||||||
| | | (in thousands) | | |||||||||||||||||||||
Total assets | | | | | 137,146 | | | | | | 50,617 | | | | | | (6,659) | | | | | | 181,104 | | |
Long term debt, current portion | | | | | 10,670 | | | | | | 694 | | | | | | — | | | | | | 11,364 | | |
Long term debt, net of current portion. | | | | | 16,713 | | | | | | 36,697 | | | | | | — | | | | | | 53,410 | | |
Line of credit | | | | | 33,169 | | | | | | — | | | | | | — | | | | | | 33,169 | | |
Other liabilities | | | | | 44,190 | | | | | | 4,597 | | | | | | (5,494) | | | | | | 43,293 | | |
Total liabilities | | | | | 104,742 | | | | | | 41,988 | | | | | | (5,494) | | | | | | 141,236 | | |
Total stockholders’ equity | | | | | 32,404 | | | | | | 756 | | | | | | (756) | | | | | | 32,404 | | |
Total noncontrolling interest equity | | | | | — | | | | | | 7,873 | | | | | | (409) | | | | | | 7,464 | | |
Total liabilities and stockholders’ equity | | | | | 137,146 | | | | | | 50,617 | | | | | | (6,659) | | | | | | 181,104 | | |
| | | Karat Packaging, Inc. | | | Global Wells Investment Group | | | Eliminations | | | Consolidated | | ||||||||||||
| | | (in thousands) | | |||||||||||||||||||||
Total assets | | | | | 102,104 | | | | | | 33,938 | | | | | | (2,689) | | | | | | 133,353 | | |
Long term debt, current portion | | | | | 6,587 | | | | | | 304 | | | | | | — | | | | | | 6,891 | | |
Long term debt, net of current portion. | | | | | 19,678 | | | | | | 21,017 | | | | | | — | | | | | | 40,695 | | |
Line of credit | | | | | 26,679 | | | | | | — | | | | | | — | | | | | | 26,679 | | |
Other liabilities | | | | | 33,419 | | | | | | 3,007 | | | | | | (1,392) | | | | | | 35,034 | | |
Total liabilities | | | | | 86,363 | | | | | | 24,328 | | | | | | (1,392) | | | | | | 109,299 | | |
Total stockholders’ equity | | | | | 15,741 | | | | | | 1,737 | | | | | | (1,737) | | | | | | 15,741 | | |
Total noncontrolling interest equity | | | | | — | | | | | | 7,873 | | | | | | 440 | | | | | | 8,313 | | |
Total liabilities and stockholders’ equity | | | | | 102,104 | | | | | | 33,938 | | | | | | (2,689) | | | | | | 133,353 | | |
| | (unaudited) | | | Year Ended December 31, | | ||||||||||||||||||||
| | Three Months Ended June 30, | | | 2020 | | 2019 | | ||||||||||||||||||
| | 2019 | | 2018 | | | (in thousands) | | ||||||||||||||||||
Net sales | | | $ | 60,010,000 | | | | $ | 46,262,000 | | | | | $ | 295,518 | | | | $ | 224,910 | | | ||||
Cost of goods sold | | | | 43,025,000 | | | | | 33,374,000 | | | | | | 206,393 | | | | | 163,891 | | | ||||
Gross profit | | | | 16,985,000 | | | | | 12,888,000 | | | | | | 89,125 | | | | | 61,019 | | | ||||
Operating expenses | | | | 14,336,000 | | | | | 10,247,000 | | | | | | 61,428 | | | | | 55,183 | | | ||||
Operating income | | | | 2,649,000 | | | | | 2,641,000 | | | | | | 27,697 | | | | | 5,836 | | | ||||
Other income (expense) | | | | 231,000 | | | | | (166,000) | | | |||||||||||||||
Other expenses | | | | (5,770) | | | | | (2,891) | | | |||||||||||||||
Provision for income tax expense | | | | 5,259 | | | | | 781 | | | |||||||||||||||
Net income | | | | 2,685,000 | | | | | 1,821,000 | | | | | | 16,668 | | | | | 2,164 | | | ||||
Other non-GAAP financial data (unaudited): | | | ||||||||||||||||||||||||
Adjusted EBITDA | | | $ | 6,437,000 | | | | $ | 3,823,000 | | | | | $ | 35,988 | | | | $ | 11,281 | | |
| | | (unaudited) | | |||||||||
| | | Three Months Ended June 30, | | |||||||||
Reconciliation of Adjusted EBITDA: | | | 2019 | | | 2018 | | ||||||
Net income: | | | | $ | 2,685,000 | | | | | $ | 1,821,000 | | |
Add (deduct): | | | | ||||||||||
Interest expense | | | | | 2,256,000 | | | | | | 349,000 | | |
Income tax expense | | | | | 195,000 | | | | | | 654,000 | | |
Depreciation and amortization | | | | | 1,301,000 | | | | | | 999,000 | | |
Adjusted EBITDA | | | | $ | 6,437,000 | | | | | $ | 3,823,000 | | |
| | | (unaudited) | | |||||||||
| | | Six Months Ended June 30, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Net sales | | | | $ | 108,459,000 | | | | | $ | 82,986,000 | | |
Cost of goods sold | | | | | 78,824,000 | | | | | | 61,951,000 | | |
Gross profit | | | | | 29,635,000 | | | | | | 21,035,000 | | |
Operating expenses | | | | | 26,153,000 | | | | | | 18,830,000 | | |
Operating income | | | | | 3,482,000 | | | | | | 2,205,000 | | |
Other expense | | | | | (644,000) | | | | | | (622,000) | | |
Net income | | | | | 2,557,000 | | | | | | 7,000 | | |
Adjusted EBITDA | | | | $ | 8,023,000 | | | | | $ | 4,079,000 | | |
| | | (unaudited) | | |||||||||
| | | Six Months Ended June 30, | | |||||||||
Reconciliation of Adjusted EBITDA: | | | 2019 | | | 2018 | | ||||||
Net income: | | | | $ | 2,557,000 | | | | | $ | 7,000 | | |
Add (deduct): | | | | ||||||||||
Interest expense | | | | | 2,806,000 | | | | | | 564,000 | | |
Income tax expense | | | | | 281,000 | | | | | | 1,576,000 | | |
Depreciation and amortization | | | | | 2,379,000 | | | | | | 1,932,000 | | |
Adjusted EBITDA | | | | $ | 8,023,000 | | | | | $ | 4,079,000 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2018 | | | 2017 | | ||||||
Net sales | | | | $ | 175,434,000 | | | | | $ | 140,058,000 | | |
Cost of goods sold | | | | | 131,979,000 | | | | | | 98,753,000 | | |
Gross profit | | | | | 43,455,000 | | | | | | 41,305,000 | | |
Operating expenses | | | | | 41,323,000 | | | | | | 35,297,000 | | |
Operating income | | | | | 2,132,000 | | | | | | 6,008,000 | | |
Other expense | | | | | (585,000) | | | | | | (1,363,000) | | |
Net income (loss) | | | | | (124,000) | | | | | | 4,549,000 | | |
Adjusted EBITDA | | | | $ | 6,962,000 | | | | | $ | 9,042,000 | | |
| | | Year Ended December 31, | | |||||||||
Reconciliation of Adjusted EBITDA: | | | 2018 | | | 2017 | | ||||||
Net income (loss): | | | | $ | (124,000) | | | | | $ | 4,549,000 | | |
Add: | | | | ||||||||||
Interest expense | | | | | 1,455,000 | | | | | | 1,278,000 | | |
Income tax expense | | | | | 1,671,000 | | | | | | 96,000 | | |
Depreciation and amortization | | | | | 3,960,000 | | | | | | 3,119,000 | | |
Adjusted EBITDA | | | | $ | 6,962,000 | | | | | $ | 9,042,000 | | |
| | | Year Ended December 31, | | |||||||||
Reconciliation of Adjusted EBITDA (unaudited): | | | 2020 | | | 2019 | | ||||||
| | | (in thousands) | | |||||||||
Net income: | | | | $ | 16,668 | | | | | $ | 2,164 | | |
Add (deduct): | | | | | | | | | | | | | |
Interest expense | | | | | 5,492 | | | | | | 4,752 | | |
Income tax expense | | | | | 5,259 | | | | | | 781 | | |
Depreciation and amortization | | | | | 8,569 | | | | | | 5,953 | | |
Gain on sale of asset | | | | | — | | | | | | (2,369) | | |
Other non-GAAP financial data: | | | | ||||||||||
Adjusted EBITDA | | | | $ | 35,988 | | | | | $ | 11,281 | | |
| | | (unaudited) June 30, 2019 | | | (audited) December 31, 2018 | | | Increase/ (Decrease) | | |||||||||
Current assets | | | | $ | 67,525,000 | | | | | $ | 47,619,000 | | | | | $ | 19,906,000 | | |
Current liabilities | | | | | 33,291,000 | | | | | | 60,510,000 | | | | | | (27,219,000) | | |
Working capital surplus (deficit) | | | | $ | 34,234,000 | | | | | $ | (12,891,000) | | | | | $ | 47,125,000 | | |
| | | December 31, 2020 | | | December 31, 2019 | | | Increase | | |||||||||
| | | (in thousands) | | |||||||||||||||
Current assets | | | | $ | 79,777 | | | | | $ | 61,027 | | | | | $ | 18,750 | | |
Current liabilities | | | | | 43,137 | | | | | | 35,928 | | | | | | 7,209 | | |
Working capital | | | | $ | 36,640 | | | | | $ | 25,099 | | | | | $ | 11,541 | | |
| | (unaudited) | | |||||||||||||||||||||||
| | Six Months Ended June 30, | | | Year Ended December 31, | | ||||||||||||||||||||
Cash flows data: | | 2019 | | 2018 | | | 2020 | | 2019 | | ||||||||||||||||
Net cash (used in) provided by operating activities | | | $ | (9,566,000) | | | | $ | 2,257,000 | | | |||||||||||||||
Net cash (used in) provided by investing activities | | | | (14,542,000) | | | | | 643,000 | | | |||||||||||||||
| | (in thousands) | | |||||||||||||||||||||||
Net cash provided by (used in) operating activities | | | $ | 14,547 | | | | $ | (32) | | | |||||||||||||||
Net cash used in investing activities | | | | (37,351) | | | | | (24,756) | | | |||||||||||||||
Net cash provided by financing activities | | | | 27,483,000 | | | | | 1,840,000 | | | | | | 22,450 | | | | | 24,625 | | | ||||
Net change in cash and cash equivalents | | | | 3,375,000 | | | | | 4,740,000 | | | | | | (354) | | | | | (163) | | |
| | | Year Ended December 31, | | |||||||||
Cash flows data: | | | 2018 | | | 2017 | | ||||||
Net cash provided by operating activities | | | | $ | 2,717,000 | | | | | $ | 1,002,000 | | |
Net cash used in investing activities | | | | | (24,306,000) | | | | | | (6,352,000) | | |
Net cash provided by financing activities | | | | | 21,763,000 | | | | | | 5,960,000 | | |
Net change in cash | | | | | 174,000 | | | | | | 610,000 | | |
| | Payments Due by Period | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Payments Due by Period | | | Total | | Less than 1 year | | 1 – 3 years | | 3 – 5 years | | More than 5 years | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | Total | | Less than 1 year | | 1 – 3 years | | 3 – 5 years | | More than 5 years | | | (in thousands) | | ||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt(1) | | | $ | 50,655,000 | | | | $ | 6,957,000 | | | | $ | 12,639,000 | | | | $ | 10,776,000 | | | | $ | 20,283,000 | | | | | $ | 64,876 | | | | $ | 11,364 | | | | $ | 14,285 | | | | $ | 19,894 | | | | $ | 19,333 | | | ||||||||||
Line of credit | | | | 26,429,000 | | | | | — | | | | | 26,429,000 | | | | | — | | | | | — | | | | | | 33,169 | | | | | — | | | | | 33,169 | | | | | — | | | | | — | | | ||||||||||
Interest on long-term debt and line of credit(1) | | | | 17,071,000 | | | | | 3,934,000 | | | | | 5,376,000 | | | | | 2,787,000 | | | | | 4,974,000 | | | | | | 15,498 | | | | | 4,081 | | | | | 5,030 | | | | | 3,126 | | | | | 3,261 | | | ||||||||||
Operating leases(2) | | | | 37,065,000 | | | | | 4,538,000 | | | | | 9,939,000 | | | | | 9,872,000 | | | | | 12,716,000 | | | | | | 36,683 | | | | | 6,242 | | | | | 12,599 | | | | | 8,671 | | | | | 9,171 | | | ||||||||||
Capital lease obligations including interest | | | | 1,136,000 | | | | | 337,000 | | | | | 655,000 | | | | | 144,000 | | | | | — | | | | | | 655 | | | | | 346 | | | | | 276 | | | | | 33 | | | | | — | | | ||||||||||
Capital expenditures(3) | | | | 40,300,000 | | | | | 13,800,000 | | | | | 26,500,000 | | | | | — | | | | | — | | | | | | 34,425 | | | | | 5,100 | | | | | 12,615 | | | | | 16,710 | | | | | — | | | ||||||||||
| | | $ | 172,656,000 | | | | $ | 29,566,000 | | | | $ | 81,538,000 | | | | $ | 23,579,000 | | | | $ | 37,973,000 | | | ||||||||||||||||||||||||||||||||||||
Total | | | $ | 185,306 | | | | $ | 27,133 | | | | $ | 77,974 | | | | $ | 48,434 | | | | $ | 31,765 | | |
Name | | | Age | | | Position | |
Executive Officers | | | | | | ||
Alan Yu | | | | | Chief Executive Officer and Chairman of the Board of Directors | | |
| | | | | |||
Marvin Cheng | | | | | Vice President – Manufacturing, Secretary and Director | | |
Joanne Wang | | | | | Chief Operating Officer | | |
Independent Directors | | | | | | ||
Paul Y. Chen | | | | | Director | | |
Eric Chen | | | | | Director | | |
Eve Yen | | | | | Director | |
Name and Principal Position | | Year | | Salary ($) | | All Other Compensation(2)($) | | Total ($) | | | Year | | Salary ($) | | All Other Compensation(1)($) | | Total ($) | | ||||||||||||||||||||||||||||||||
Alan Yu Chief Executive Officer | | | | | 2018 | | | | $ | 162,000 | | | | $ | 37,901 | | | | $ | 199,901 | | | | | | | 2020 | | | | $ | 180,000 | | | | $ | 35,963 | | | | $ | 215,963 | | | ||||||
| | | 2017 | | | | $ | 126,500 | | | | $ | 22,418 | | | | $ | 148,918 | | | | | | 2019 | | | | $ | 180,000 | | | | $ | 33,311 | | | | $ | 213,311 | | | |||||||||
Peter Lee(1) Interim Chief Financial Officer | | | | | 2018 | | | | $ | — | | | | $ | — | | | | $ | — | | | ||||||||||||||||||||||||||||
| | | 2017 | | | | $ | — | | | | $ | — | | | | $ | — | | | ||||||||||||||||||||||||||||||
Ann T. Sabahat Chief Financial Officer (2) | | | | | 2020 | | | | $ | 56,477 | | | | $ | — | | | | $ | 56,477 | | | ||||||||||||||||||||||||||||
| | | 2019 | | | | $ | — | | | | $ | — | | | | $ | — | | | ||||||||||||||||||||||||||||||
Marvin Cheng Vice President – Manufacturing and Secretary | | | | | 2018 | | | | $ | 174,000 | | | | $ | 24,777 | | | | $ | 198,777 | | | | | | | 2020 | | | | $ | 204,000 | | | | $ | 19,469 | | | | $ | 223,469 | | | ||||||
| | | 2017 | | | | $ | 116,500 | | | | $ | 25,133 | | | | $ | 141,633 | | | | | | 2019 | | | | $ | 204,000 | | | | $ | 24,906 | | | | $ | 228,906 | | | |||||||||
Joanne Wang Chief Operating Officer | | | | | 2018 | | | | $ | 160,024 | | | | $ | 15,469 | | | | $ | 175,493 | | | | | | | 2020 | | | | $ | 197,655 | | | | $ | 13,735 | | | | $ | 211,390 | | | ||||||
| | | 2017 | | | | $ | 119,816 | | | | $ | 5,391 | | | | $ | 125,207 | | | | | | 2019 | | | | $ | 203,396 | | | | $ | 13,735 | | | | $ | 217,131 | | |
| | Common Stock Beneficially Owned Before This Offering(1) | | Common Stock Beneficially Owned After This Offering(2) | | | Common Stock Beneficially Owned Before This Offering(1) | | Common Stock Beneficially Owned After This Offering(2) | | ||||||||||||||||||||||||||||||||||||||||
Name of Beneficial Owner | | Number of Shares | | Percentage of Class | | Number of Shares | | Percentage of Class | | | Number of Shares | | Percentage of Class | | Number of Shares | | Percentage of Class | | ||||||||||||||||||||||||||||||||
Directors and Named Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||
Alan Yu Chief Executive Officer and Chairman | | | | 7,362,498 | | | | | 48.47% | | | | | 7,362,498 | | | | | 36.47% | | | | | | 7,362,498 | | | | | 48.54% | | | | | 7,362,498 | | | | | 38.51% | | | ||||||||
Peter Lee Interim Chief Financial Officer | | | | — | | | | | — | | | | | — | | | | | — | | | |||||||||||||||||||||||||||||
Ann T. Sabahat Chief Financial Officer | | | | — | | | | | — | | | | | — | | | | | — | | | |||||||||||||||||||||||||||||
Marvin Cheng Vice President – Manufacturing, Secretary and Director | | | | 7,362,498 | | | | | 48.47% | | | | | 7,362,498 | | | | | 36.47% | | | | | | 7,327,498 | | | | | 48.31% | | | | | 7,327,498 | | | | | 38.33% | | | ||||||||
Joanne Wang Chief Operating Officer | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | ||||||||
Eve Yen Director | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | ||||||||
Paul Y. Chen Director | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | ||||||||
Eric Chen Director | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | ||||||||
All executive officers and directors as a group | | | | 14,724,996 | | | | | 96.94% | | | | | 14,724,996 | | | | | 72.94% | | | |||||||||||||||||||||||||||||
All executive officers and directors as a group (7 persons) | | | | 14,689,996 | | | | | 96.85% | | | | | 14,689,996 | | | | | 76.84% | | |
| | Number of Shares | | ||||
Stifel, Nicolaus & Company, Incorporated | | | | | | | |
William Blair & Company, L.L.C. | | | | | | | |
Truist Securities, Inc. | | | | | | | |
National Securities Corporation | | | | | | | |
| | | | | | | |
Total | | | | | | |
| | | Total | | |||||||||||||||
| | | Per Share | | | Without Option | | | With Option | | |||||||||
| | | | | | | | | | ||||||||||
Underwriting discounts and commissions | | | | | | | | | | | |||||||||
Proceeds, before estimated expenses, to us | | | | | | | | | | |
| |||||
Audited Consolidated Financial Statements | | | |||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Assets | | | | ||||||||||
Current assets | | | | ||||||||||
Cash and cash equivalents (including $1.3 million and $37,000 associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) | | | | $ | 4,340,000 | | | | | $ | 965,000 | | |
Accounts receivable, net of allowance for doubtful accounts of $147,000 and $64,000, respectively | | | | | 21,165,000 | | | | | | 14,714,000 | | |
Inventories | | | | | 38,857,000 | | | | | | 29,518,000 | | |
Prepaid expenses and other current assets | | | | | 2,350,000 | | | | | | 2,041,000 | | |
Due from affiliated companies | | | | | 813,000 | | | | | | 381,000 | | |
Total current assets | | | | | 67,525,000 | | | | | | 47,619,000 | | |
Property and equipment, net (including $23.5 million and $19.2 million associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) | | | | | 43,969,000 | | | | | | 38,115,000 | | |
Deposits (including $1.5 million and $0 associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) | | | | | 21,766,000 | | | | | | 9,252,000 | | |
Other assets (including $69,000 and $1.0 million associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) | | | | | 89,000 | | | | | | 1,027,000 | | |
Total assets | | | | $ | 133,349,000 | | | | | $ | 96,013,000 | | |
Liabilities and Stockholders’ Equity | | | | ||||||||||
Current liabilities | | | | ||||||||||
Accounts payable (including $62,000 and $36,000 associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) | | | | $ | 19,097,000 | | | | | $ | 15,110,000 | | |
Accrued expenses (including $50,000 and $0 associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) | | | | | 2,284,000 | | | | | | 1,660,000 | | |
Related party payable | | | | | 3,262,000 | | | | | | 3,393,000 | | |
Credit cards payable | | | | | 784,000 | | | | | | 611,000 | | |
Line of credit | | | | | — | | | | | | 22,783,000 | | |
Customer deposits (including $0 and $1.5 million associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) | | | | | 667,000 | | | | | | 2,097,000 | | |
Capital leases, current portion | | | | | 240,000 | | | | | | 38,000 | | |
Long-term debt, current portion (including $292,000 and $10.7 million associated with variable interest entity at June 30, 2019 and December 31, 2018 respectively) | | | | | 6,957,000 | | | | | | 14,818,000 | | |
Total current liabilities | | | | | 33,291,000 | | | | | | 60,510,000 | | |
Deferred tax liability | | | | | 1,658,000 | | | | | | 1,658,000 | | |
Line of credit | | | | | 26,429,000 | | | | | | — | | |
Long-term debt, net of current portion (including $21.2 million and $0 associated with variable interest entity at June 30, 2019 and December 31, 2018, respectively) and debt discount of $119,000 and $0 at June 30, 2019 and December 31, 2018 (including $119,000 and $0 associated with variable interest entity at June 30, 2018 and December 31, 2018, respectively) | | | | | 43,579,000 | | | | | | 11,832,000 | | |
Capital leases, net of current portion | | | | | 783,000 | | | | | | 123,000 | | |
Other liabilities (including $2.4 million and $0 associated with variable interest entity at June 30, 2019 and December 31, 2018 respectively) | | | | | 3,162,000 | | | | | | — | | |
Total liabilities | | | | | 108,902,000 | | | | | | 74,123,000 | | |
Commitments and Contingencies (Note 13) | | | | ||||||||||
Karat Packaging Inc. stockholders’ equity | | | | ||||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized, 15,190,000 shares issued and outstanding at June 30, 2019 and December 31, 2018 | | | | | 15,000 | | | | | | 15,000 | | |
Additional paid in capital | | | | | 13,981,000 | | | | | | 13,981,000 | | |
Retained earnings | | | | | 1,700,000 | | | | | | 21,000 | | |
Total Karat Packaging Inc. stockholders’ equity | | | | | 15,696,000 | | | | | | 14,017,000 | | |
Noncontrolling interest | | | | | 8,751,000 | | | | | | 7,873,000 | | |
Total stockholders’ equity | | | | | 24,447,000 | | | | | | 21,890,000 | | |
Total liabilities and stockholders’ equity | | | | $ | 133,349,000 | | | | | $ | 96,013,000 | | |
|
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Net sales | | | | $ | 60,010,000 | | | | | $ | 46,262,000 | | | | | $ | 108,459,000 | | | | | $ | 82,986,000 | | |
Cost of goods sold | | | | | 43,025,000 | | | | | | 33,374,000 | | | | | | 78,824,000 | | | | | | 61,951,000 | | |
Gross profit | | | | | 16,985,000 | | | | | | 12,888,000 | | | | | | 29,635,000 | | | | | | 21,035,000 | | |
Operating expenses: | | | | | | ||||||||||||||||||||
Selling expense | | | | | 4,214,000 | | | | | | 2,190,000 | | | | | | 7,528,000 | | | | | | 3,962,000 | | |
General and administrative expense (including $450,000 and $30,000 associated with variable interest entity for the six months ended June 30, 2019 and 2018, respectively and $291,000 and $40,000 for the three months ended June 30, 2019 and 2018, respectively) | | | | | 10,122,000 | | | | | | 8,057,000 | | | | | | 18,625,000 | | | | | | 14,868,000 | | |
Total operating expenses | | | | | 14,336,000 | | | | | | 10,247,000 | | | | | | 26,153,000 | | | | | | 18,830,000 | | |
Operating income | | | | | 2,649,000 | | | | | | 2,641,000 | | | | | | 3,482,000 | | | | | | 2,205,000 | | |
Other income (expense) | | | | | | ||||||||||||||||||||
Other income (expense) | | | | | 25,000 | | | | | | (28,000) | | | | | | (264,000) | | | | | | (62,000) | | |
Gain on foreign currency transactions | | | | | 93,000 | | | | | | 211,000 | | | | | | 57,000 | | | | | | 4,000 | | |
Gain on sale of asset (including $2.4 million and $0 associated with variable interest entity for the six months ended June 30, 2019 and 2018, respectively, and $2.4 million and $0 for the three months ended June 30, 2019 and 2018, respectively) | | | | | 2,369,000 | | | | | | — | | | | | | 2,369,000 | | | | | | — | | |
Interest expense (including $1.3 million of interest expense and $39,000 of interest income associated with variable interest entity for the six months ended June 30, 2019 and 2018, respectively, and interest expense of $1.3 million and interest income of $18,000 for the three months ended June 30, 2019 and 2018, respectively) | | | | | (2,256,000) | | | | | | (349,000) | | | | | | (2,806,000) | | | | | | (564,000) | | |
Total other income (expense) | | | | | 231,000 | | | | | | (166,000) | | | | | | (644,000) | | | | | | (622,000) | | |
Income before provision for income tax | | | | | 2,880,000 | | | | | | 2,475,000 | | | | | | 2,838,000 | | | | | | 1,583,000 | | |
Provision for income tax | | | | | 195,000 | | | | | | 654,000 | | | | | | 281,000 | | | | | | 1,576,000 | | |
Net income | | | | | 2,685,000 | | | | | | 1,821,000 | | | | | | 2,557,000 | | | | | | 7,000 | | |
Net income (loss) attributable to noncontrolling interest | | | | | 1,004,000 | | | | | | (19,000) | | | | | | 878,000 | | | | | | 8,000 | | |
Net income (loss) attributable to Karat Packaging Inc. | | | | $ | 1,681,000 | | | | | $ | 1,840,000 | | | | | $ | 1,679,000 | | | | | $ | (1,000) | | |
Basic and diluted earnings (loss) per share: | | | | | | ||||||||||||||||||||
Basic | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
Diluted | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
Weighted average common shares outstanding, basic | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | |
Weighted average common shares outstanding, diluted | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | |
Pro Forma Information (unaudited): | | | | | | ||||||||||||||||||||
Pro forma provision from income tax | | | | | | | | | | | 654,000 | | | | | | | | | | | | 423,000 | | |
Pro forma net income | | | | | | | | | | | 1,821,000 | | | | | | | | | | | | 1,160,000 | | |
Pro forma net income (loss) attributable to noncontrolling interest | | | | | | | | | | | (19,000) | | | | | | | | | | | | 8,000 | | |
Pro forma net income attributable to Karat Packaging inc. | | | | | | | | | | $ | 1,802,000 | | | | | | | | | | | $ | 1,168,000 | | |
Pro forma earnings per share, basic and diluted: | | | | | | ||||||||||||||||||||
Basic | | | | | | | | | | $ | 0.12 | | | | | | | | | | | $ | 0.08 | | |
Diluted | | | | | | | | | | $ | 0.12 | | | | | | | | | | | $ | 0.08 | | |
Weighted average common shares outstanding used in computing pro forma net earnings per share: | | | | | | ||||||||||||||||||||
Basic | | | | | | | | | | | 14,724,996 | | | | | | | | | | | | 14,724,996 | | |
Diluted | | | | | | | | | | | 14,724,996 | | | | | | | | | | | | 14,724,996 | | |
| | | Common Stock | | | Additional Paid-in Capital | | | Retained Earnings (Accumulated Deficit) | | | Receivable from Stockholders | | | Total Stockholder’s Equity attributable to Karat Packaging Inc. | | | Noncontrolling interest | | | Total Stockholder’s Equity | | |||||||||||||||||||||||||||
| | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2018 | | | | | 14,724,996 | | | | | $ | 15,000 | | | | | $ | 3,533,000 | | | | | $ | 7,934,000 | | | | | $ | (784,000) | | | | | $ | 10,698,000 | | | | | $ | — | | | | | $ | 10,698,000 | | |
Effect of change in tax status from S-Corporation to C-Corporation | | | | | — | | | | | | — | | | | | | 7,934,000 | | | | | | (7,934,000) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Effect on initial consolidation of Global Wells | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Investment Group | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,508,000 | | | | | | 6,508,000 | | |
Contribution from noncontrolling interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,510,000 | | | | | | 1,510,000 | | |
Advances to stockholders | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (34,000) | | | | | | (34,000) | | | | | | — | | | | | | (34,000) | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | (1,841,000) | | | | | | — | | | | | | (1,841,000) | | | | | | 27,000 | | | | | | (1,814,000) | | |
Balance, March 31, 2018 | | | | | 14,724,996 | | | | | | 15,000 | | | | | | 11,467,000 | | | | | | (1,841,000) | | | | | | (818,000) | | | | | | 8,823,000 | | | | | | 8,045,000 | | | | | | 16,868,000 | | |
Advances to stockholders | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (81,000) | | | | | | (81,000) | | | | | | — | | | | | | (81,000) | | |
Distributions paid to stockholders ($0.028 per share) | | | | | — | | | | | | — | | | | | | (413,000) | | | | | | — | | | | | | — | | | | | | (413,000) | | | | | | — | | | | | | (413,000) | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | 1,840,000 | | | | | | — | | | | | | 1,840,000 | | | | | | (19,000) | | | | | | 1,821,000 | | |
Balance, June 30, 2018 | | | | | 14,724,996 | | | | | $ | 15,000 | | | | | $ | 11,054,000 | | | | | $ | (1,000) | | | | | $ | (899,000) | | | | | $ | 10,169,000 | | | | | $ | 8,026,000 | | | | | $ | 18,195,000 | | |
|
| | | Common Stock | | | Additional Paid-in Capital | | | Retained Earnings | | | Receivable from Stockholders | | | Total Stockholder’s Equity attributable to Karat Packaging Inc. | | | Noncontrolling interest | | | Total Stockholder’s Equity | | |||||||||||||||||||||||||||
| | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2019 | | | | | 15,190,000 | | | | | $ | 15,000 | | | | | $ | 13,981,000 | | | | | $ | 21,000 | | | | | $ | — | | | | | $ | 14,017,000 | | | | | $ | 7,873,000 | | | | | $ | 21,890,000 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | (2,000) | | | | | | — | | | | | | (2,000) | | | | | | (126,000) | | | | | | (128,000) | | |
Balance, March 31, 2019 | | | | | 15,190,000 | | | | | | 15,000 | | | | | | 13,981,000 | | | | | | 19,000 | | | | | | — | | | | | | 14,015,000 | | | | | | 7,747,000 | | | | | | 21,762,000 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | 1,681,000 | | | | | | — | | | | | | 1,681,000 | | | | | | 1,004,000 | | | | | | 2,685,000 | | |
Balance, June 30, 2019 | | | | | 15,190,000 | | | | | $ | 15,000 | | | | | $ | 13,981,000 | | | | | $ | 1,700,000 | | | | | $ | — | | | | | $ | 15,696,000 | | | | | $ | 8,751,000 | | | | | $ | 24,447,000 | | |
|
| | | Six Months Ended June 30, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Cash flows from operating activities | | | | ||||||||||
Net income | | | | $ | 2,557,000 | | | | | $ | 7,000 | | |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | ||||||||||
Depreciation and amortization | | | | | 2,379,000 | | | | | | 1,932,000 | | |
Provision for bad debt | | | | | 83,000 | �� | | | | | — | | |
Reserve for inventory obsolescence | | | | | (31,000) | | | | | | 44,000 | | |
Gain on sale of asset | | | | | (2,369,000) | | | | | | — | | |
Change in fair value of interest rate swap | | | | | 1,260,000 | | | | | | — | | |
Amortization of loan fees | | | | | — | | | | | | 48,000 | | |
Deferred income taxes | | | | | — | | | | | | 1,153,000 | | |
(Increase) decrease in operating assets | | | | | | | | | | | | | |
Accounts receivable | | | | | (6,534,000) | | | | | | (3,756,000) | | |
Inventories | | | | | (9,308,000) | | | | | | (1,421,000) | | |
Prepaid expenses and other current assets | | | | | (309,000) | | | | | | (417,000) | | |
Due from affiliated companies | | | | | (432,000) | | | | | | 15,000 | | |
Deposits | | | | | (1,912,000) | | | | | | 107,000 | | |
Other assets | | | | | (64,000) | | | | | | (2,000) | | |
Increase (decrease) in operating liabilities | | | | ||||||||||
Accounts payable | | | | | 3,976,000 | | | | | | 4,834,000 | | |
Accrued expenses | | | | | 624,000 | | | | | | (654,000) | | |
Related party payable | | | | | (131,000) | | | | | | (210,000) | | |
Credit cards payable | | | | | 173,000 | | | | | | (185,000) | | |
Customer deposits | | | | | (1,430,000) | | | | | | 762,000 | | |
Other liabilities | | | | | 1,902,000 | | | | | | — | | |
Net cash (used in) provided by operating activities | | | | $ | (9,566,000) | | | | | $ | 2,257,000 | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment | | | | | (13,995,000) | | | | | | (6,113,000) | | |
Proceeds on disposal of property and equipment | | | | | 10,055,000 | | | | | | — | | |
Deposits paid for property and equipment | | | | | (10,602,000) | | | | | | (756,000) | | |
Impact to cash resulting from initial consolidation of Global Wells Investment Group LLC | | | | | — | | | | | | 7,512,000 | | |
Net cash (used in) provided by investing activities | | | | $ | (14,542,000) | | | | | $ | 643,000 | | |
Cash flows from financing activities | | | | ||||||||||
Net proceeds from line of credit | | | | | 3,646,000 | | | | | | 1,721,000 | | |
Proceeds from long-term debt, net of issuance cost | | | | | 46,363,000 | | | | | | 6,495,000 | | |
Payments on long-term debt | | | | | (22,358,000) | | | | | | (7,330,000) | | |
Payments for debt issuance costs | | | | | (119,000) | | | | | | — | | |
Payments on capital lease obligations | | | | | (49,000) | | | | | | (28,000) | | |
Distribution to stockholders | | | | | — | | | | | | (413,000) | | |
Contribution from noncontrolling interest due to consolidation of variable interest entity | | | | | — | | | | | | 1,510,000 | | |
Receivable from shareholders | | | | | — | | | | | | (115,000) | | |
Net cash provided by financing activities | | | | $ | 27,483,000 | | | | | $ | 1,840,000 | | |
Net increase in cash and cash equivalents | | | | | 3,375,000 | | | | | | 4,740,000 | | |
Cash and cash equivalents | | | | ||||||||||
Beginning of year | | | | $ | 965,000 | | | | | $ | 791,000 | | |
End of year | | | | $ | 4,340,000 | | | | | $ | 5,531,000 | | |
Supplemental disclosures of non-cash investing and financing activities: | | | | ||||||||||
Capital expenditures funded by capital lease borrowings | | | | $ | 922,000 | | | | | $ | 76,000 | | |
Supplemental disclosures of cash flow information: | | | | ||||||||||
Cash paid for income tax | | | | $ | 4,000 | | | | | $ | 300,000 | | |
Cash paid for interest | | | | $ | 1,349,000 | | | | | $ | 630,000 | | |
| Cash | | | | $ | 7,512,000 | | |
| Property and equipment | | | | | 205,000 | | |
| Other liabilities | | | | | (3,000) | | |
| Accounts Payable | | | | | (205,000) | | |
| Net assets | | | | $ | 7,509,000 | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Cash | | | | $ | 1,338,000 | | | | | $ | 37,000 | | |
Property and equipment, net | | | | | 23,477,000 | | | | | | 19,243,000 | | |
Due from Lollicup USA Inc. | | | | | 7,721,000 | | | | | | 1,049,000 | | |
Deposits | | | | | 1,500,000 | | | | | | — | | |
Other assets | | | | | 69,000 | | | | | | 1,008,000 | | |
Total assets | | | | $ | 34,105,000 | | | | | $ | 21,337,000 | | |
Accounts payable | | | | $ | 62,000 | | | | | $ | 36,000 | | |
Accrued expenses | | | | | 50,000 | | | | | | — | | |
Customer deposits | | | | | — | | | | | | 1,500,000 | | |
Short-term debt | | | | | 292,000 | | | | | | 10,699,000 | | |
Long-term debt | | | | | 21,168,000 | | | | | | — | | |
Other liabilities | | | | | 2,417,000 | | | | | | — | | |
Total liabilities | | | | $ | 23,989,000 | | | | | $ | 12,235,000 | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Due from affiliated companies | | | | $ | 813,000 | | | | | $ | 381,000 | | |
Accounts Payable | | | | | 51,000 | | | | | | — | | |
| | | Six-months ended June 30, | | | Three-months ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Keary Global Ltd. (“Keary Global”) and its affiliate, Karat International, Ltd. (“Karat International”) – related parties | | | | | 11% | | | | | | 20% | | | | | | 11% | | | | | | 21% | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Keary Global and its affiliate, Karat International – related parties | | | | | 15% | | | | | | 19% | | |
Taizhou Fuling Plastics Co., Ltd | | | | | 18% | | | | | | 16% | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | |||||||||
Cash equivalents | | | | $ | 4,404,000 | | | | | $ | — | | | | | $ | — | | |
Interest rate swaps | | | | | — | | | | | | (1,260,000) | | | | | | — | | |
Fair value, June 30, 2019 | | | | $ | 4,404,000 | | | | | $ | (1,260,000) | | | | | $ | — | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Raw materials | | | | $ | 3,850,000 | | | | | $ | 2,243,000 | | |
Work in progress | | | | | 104,000 | | | | | | 35,000 | | |
Manufactured and purchased finished goods | | | | | 35,191,000 | | | | | | 27,559,000 | | |
Subtotal | | | | | 39,145,000 | | | | | | 29,837,000 | | |
Less inventory reserve | | | | | (288,000) | | | | | | (319,000) | | |
Total inventories | | | | $ | 38,857,000 | | | | | $ | 29,518,000 | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Machinery and equipment | | | | $ | 27,187,000 | | | | | $ | 24,340,000 | | |
Leasehold improvements | | | | | 6,663,000 | | | | | | 6,103,000 | | |
Vehicles | | | | | 2,365,000 | | | | | | 3,044,000 | | |
Furniture and fixtures | | | | | 660,000 | | | | | | 527,000 | | |
Building | | | | | 20,867,000 | | | | | | 278,000 | | |
Land | | | | | 3,017,000 | | | | | | 3,000,000 | | |
Property held under capital leases | | | | | 1,512,000 | | | | | | 590,000 | | |
Construction in progress | | | | | — | | | | | | 16,243,000 | | |
Computer hardware and software | | | | | 244,000 | | | | | | 223,000 | | |
| | | | | 62,515,000 | | | | | | 54,348,000 | | |
Less accumulated depreciation | | | | | (18,546,000) | | | | | | (16,233,000) | | |
Total property and equipment, net | | | | $ | 43,969,000 | | | | | $ | 38,115,000 | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Accrued expense | | | | $ | 399,000 | | | | | $ | 316,000 | | |
Accrued interest | | | | | 216,000 | | | | | | 4,000 | | |
Accrued payroll | | | | | 959,000 | | | | | | 845,000 | | |
Accrued vacation and sick pay | | | | | 373,000 | | | | | | 287,000 | | |
Dividends payable | | | | | 107,000 | | | | | | 107,000 | | |
Deferred rent liability | | | | | 230,000 | | | | | | 101,000 | | |
Total accrued expenses | | | | $ | 2,284,000 | | | | | $ | 1,660,000 | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
A promissory note that allowed for advances up to $5,000,000 through March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,814,677 was converted in March 2018, maturing in March 2023. Principal and interest payment of $90,815 due monthly at the fixed rate of 4.98%. The loan is secured by certain machinery and equipment. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. | | | | $ | 3,721,000 | | | | | $ | 4,093,000 | | |
A construction loan with advances up to $21,640,000 that expired May 2019. Funds were disbursed upon request from the construction disbursement company. In May 2019, Global Wells entered into a loan agreement with another financial institution and used the proceeds from the new loan to pay off the principal balance and accrued interest of the construction loan. Interest payment was payable monthly at the rate of prime plus 0.50% (6.00% as of December 31, 2018), with the principal balance due at maturity. The loan was secured by GWIG’s assets and guaranteed by the Company and Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum cash or equity balance. | | | | | — | | | | | | 10,699,000 | | |
An equipment loan with a draw down period ending August 28, 2019 for up to $10,000,000, at which point the entire principal outstanding is due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, maturing in June 2024. Principal and interest payment of $192,572 due monthly starting August 2019 at the fixed rate of 5.75%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 9,476,000 | | | | | | 4,937,000 | | |
A $2,130,000 term loan that expires April 30, 2021. Principal and interest payment of $53,539 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate (5.50% as of June 30, 2019 and December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 1,128,000 | | | | | | 1,417,000 | | |
Subtotal, continue on following page | | | | $ | 14,325,000 | | | | | $ | 21,146,000 | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Subtotal from previous page | | | | $ | 14,325,000 | | | | | $ | 21,146,000 | | |
A $1,620,000 term loan that expires September 30, 2020. Principal and interest payment of $50,282 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 5.25%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 728,000 | | | | | | 1,006,000 | | |
A $935,000 term loan that expires December 31, 2021.Principal and interest payment of $19,834 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 3.50%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 569,000 | | | | | | 676,000 | | |
A $1,170,000 term loan that expires December 31, 2019. Principal and interest payment of $45,621 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate minus 0.25% (5.25% as of June 30, 2019 and December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 271,000 | | | | | | 535,000 | | |
A $1,070,000 term loan that expires September 30, 2019. Principal and interest payment of $47,829 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate plus 0.50% with 5.00% minimum (6.00% as of June 30, 2019 and December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 143,000 | | | | | | 421,000 | | |
Subtotal, continue on following page | | | | $ | 16,036,000 | | | | | $ | 23,784,000 | | |
| | | June 30, 2019 | | | December 31, 2018 | | ||||||
Subtotal from previous page | | | | $ | 16,036,000 | | | | | $ | 23,784,000 | | |
An equipment loan with a draw down period ending May 31, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance converted to a term loan payable, maturing on May 31, 2024. The first principal and interest payment is due commencing July 2019. Interest accrues based on prime rate (5.50% as of June 30, 2019 and December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. | | | | | 10,000,000 | | | | | | 2,746,000 | | |
A $724,445 term loan that expires September 1, 2019. Principal and interest payment of $13,651 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 4.94%.The loan is secured by certain machinery and equipment and guaranteed by the Company’s stockholders. | | | | | 39,000 | | | | | | 120,000 | | |
A $3,000,000 term loan that expires December 2024. Interest only payment due for the first six months. Principal and interest payment of $57,769 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25% (5.75% at June 30, 2019).The loan is secured the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service charge ratio, and debt to EBITDA rolling ratio. | | | | | 3,000,000 | | | | | | — | | |
A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (5.25% at June 30, 2019) and principal payments ranging from $24,356 to $39,581 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and its stockholders. The Company incurred debt issuance costs of approximately $119,000, which is reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. | | | | | 21,580,000 | | | | | | — | | |
Long-term debt | | | | | 50,655,000 | | | | | | 26,650,000 | | |
Less: unamortized loan fees | | | | | 119,000 | | | | | | — | | |
Less: current portion | | | | | 6,957,000 | | | | | | 14,818,000 | | |
Long-term debt, net of current portion | | | | $ | 43,579,000 | | | | | $ | 11,832,000 | | |
|
| | | Number of Options | | | Weighted- Average Exercise Price | | | Weighted- Average Remaining Contract Life (In Years) | | | Aggregate Intrinsic Value | | ||||||||||||
Outstanding at December 31, 2018 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
Granted | | | | | 15,000 | | | | | | 10.00 | | | | | | | | | | | | | | |
Exercised | | | | | — | | | | | | — | | | | | | | | | | | | | | |
Canceled/forfeited | | | | | — | | | | | | — | | | | | | | | | | | | | | |
Outstanding at June 30, 2019 | | | | | 15,000 | | | | | $ | 10.00 | | | | | | 9.5 | | | | | $ | — | | |
Expected to vest at June 30, 2019 | | | | | 15,000 | | | | | $ | 10.00 | | | | | | 9.5 | | | | | $ | — | | |
Exercisable at June 30, 2019 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
| | | Number of Shares Outstanding | | | Weighted Average Grant Date Fair Value | | ||||||
Unvested at December 31, 2018 | | | | | — | | | | | $ | — | | |
Granted | | | | | 267,000 | | | | | | 10.00 | | |
Vested | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | |
Unvested at June 30, 2019 | | | | | 267,000 | | | | | $ | 10.00 | | |
|
| | | Three-months ended June 30, | | | Six-months ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Net income (loss) attributable to Karat Packaging, Inc. | | | | $ | 1,681,000 | | | | | $ | 1,840,000 | | | | | $ | 1,679,000 | | | | | $ | (1,000) | | |
Weighted average number of ordinary shares in issue | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | |
Basic earnings (loss) per share | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
| | | Three-months ended June 30, | | | Six-months ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Net income (loss) attributable to Karat Packaging, Inc. | | | | $ | 1,681,000 | | | | | $ | 1,840,000 | | | | | $ | 1,679,000 | | | | | $ | (1,000) | | |
Add: Interest expense related to convertible debt | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | $ | 1,681,000 | | | | | $ | 1,840,000 | | | | | $ | 1,679,000 | | | | | $ | (1,000) | | |
Weighted average number of ordinary shares in issue | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | |
Dilutive shares: | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock options and restricted stock units | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Convertible debt | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Adjusted weighted average number of ordinary shares | | | | | 15,190,000 | | | | | | 14,724,996 | | | | | | 15,190,000 | | | | | | 14,724,996 | | |
Diluted earnings (loss) per share | | | | $ | 0.11 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
| | December 31, 2018 | | December 31, 2017 | | | December 31, 2020 | | December 31, 2019 | | ||||||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | ||||
Current assets | | | | | | | | | | | | | | | | | | | | | | | ||||
Cash (including $37,000 and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | $ | 965,000 | | | | $ | 791,000 | | | |||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $64,000 and $39,000 | | | | 14,714,000 | | | | | 11,226,000 | | | |||||||||||||||
Cash and cash equivalents (including $0.1 million and $0.2 million associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | $ | 448,000 | | | | $ | 802,000 | | | |||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $0.3 million and $0.1 million, respectively | | | | 23,838,000 | | | | | 21,020,000 | | | |||||||||||||||
Inventories | | | | 29,518,000 | | | | | 28,517,000 | | | | | | 48,961,000 | | | | | 35,428,000 | | | ||||
Prepaid expenses and other current assets | | | | 2,041,000 | | | | | 1,368,000 | | | |||||||||||||||
Prepaid expenses and other current assets (including $0.1 million and $0 associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | | 6,530,000 | | | | | 3,085,000 | | | |||||||||||||||
Due from affiliated companies | | | | 381,000 | | | | | 117,000 | | | | | | — | | | | | 692,000 | | | ||||
Due from stockholders | | | | — | | | | | 300,000 | | | |||||||||||||||
Total current assets | | | | 47,619,000 | | | | | 42,319,000 | | | | | | 79,777,000 | | | | | 61,027,000 | | | ||||
Property and equipment, net (including $19.2 million and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | | 38,115,000 | | | | | 19,813,000 | | | |||||||||||||||
Investment in other entities | | | | — | | | | | 1,251,000 | | | |||||||||||||||
Deposits | | | | 9,252,000 | | | | | 689,000 | | | |||||||||||||||
Other assets (including $1.0 million and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | | 1,027,000 | | | | | 19,000 | | | |||||||||||||||
Property and equipment, net (including $47.8 million and $27.1 million associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | | 95,533,000 | | | | | 59,020,000 | | | |||||||||||||||
Deposits (including $0 and $1.7 million associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | | 2,456,000 | | | | | 13,217,000 | | | |||||||||||||||
Goodwill | | | | 3,113,000 | | | | | — | | | |||||||||||||||
Deferred tax asset | | | | 64,000 | | | | | — | | | |||||||||||||||
Other assets (including $141,000 and $69,000 associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | | 161,000 | | | | | 89,000 | | | |||||||||||||||
Total assets | | | $ | 96,013,000 | | | | $ | 64,091,000 | | | | | $ | 181,104,000 | | | | $ | 133,353,000 | | | ||||
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | ||||
Current liabilities | | | | | | | | | | | | | | | | | | | | | | | ||||
Accounts payable (including $36,000 and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | $ | 15,110,000 | | | | $ | 11,622,000 | | | |||||||||||||||
Accrued expenses | | | | 1,660,000 | | | | | 2,469,000 | | | |||||||||||||||
Accounts payable (including $0.6 million and $0.5 million associated with variable interest entity at December 31, 2020 and 2019, respectively) entity at December 31, 2020 and 2019, respectively) | | | $ | 20,069,000 | | | | $ | 19,025,000 | | | |||||||||||||||
Accrued expenses (including $0.1 million and $0.1 million associated with variable interest entity at December 31, 2020 and 2019, respectively) entity at December 31, 2020 and 2019, respectively) | | | | 4,959,000 | | | | | 2,810,000 | | | |||||||||||||||
Related party payable | | | | 3,393,000 | | | | | 5,844,000 | | | | | | 5,038,000 | | | | | 5,110,000 | | | ||||
Credit cards payable | | | | 611,000 | | | | | 405,000 | | | | | | 794,000 | | | | | 1,074,000 | | | ||||
Line of credit | | | | 22,783,000 | | | | | 19,398,000 | | | |||||||||||||||
Customer deposits (including $1.5 million and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | | 2,097,000 | | | | | 187,000 | | | |||||||||||||||
Income taxes payable | | | | 41,000 | | | | | 26,000 | | | |||||||||||||||
Customer deposits | | | | 551,000 | | | | | 676,000 | | | |||||||||||||||
Capital leases, current portion | | | | 38,000 | | | | | 28,000 | | | | | | 321,000 | | | | | 316,000 | | | ||||
Related party convertible debt, current portion | | | | — | | | | | 2,150,000 | | | |||||||||||||||
Convertible debt, current portion | | | | — | | | | | 250,000 | | | |||||||||||||||
Long-term debt, current portion (including $10.7 million and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | | 14,818,000 | | | | | 3,274,000 | | | |||||||||||||||
Long-term debt, current portion (including $0.7 million and $0.3 million associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | | 11,364,000 | | | | | 6,891,000 | | | |||||||||||||||
Total current liabilities | | | | 60,510,000 | | | | | 45,627,000 | | | | | | 43,137,000 | | | | | 35,928,000 | | | ||||
Deferred tax liability | | | | 1,658,000 | | | | | — | | | | | | 6,181,000 | | | | | 2,179,000 | | | ||||
Long-term debt, net of current portion | | | | 11,832,000 | | | | | 7,416,000 | | | |||||||||||||||
Line of credit | | | | 33,169,000 | | | | | 26,679,000 | | | |||||||||||||||
Long-term debt, net of current portion (including $36.7 million and $21.0 million associated with variable interest entity at December 31, 2020 and 2019, respectively, and debt discount of $0.1 million and $0.1 million associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | | 53,410,000 | | | | | 40,695,000 | | | |||||||||||||||
Capital leases, net of current portion | | | | 123,000 | | | | | — | | | | | | 290,000 | | | | | 635,000 | | | ||||
Related party convertible debt, net of current portion | | | | — | | | | | 350,000 | | | |||||||||||||||
Other liabilities (including $3.9 million and $2.5 million associated with variable interest entity at December 31, 2020 and 2019, respectively) | | | | 5,049,000 | | | | | 3,183,000 | | | |||||||||||||||
Total liabilities | | | | 74,123,000 | | | | | 53,393,000 | | | | | | 141,236,000 | | | | | 109,299,000 | | | ||||
Commitments and Contingencies(Note 13) | | | | | | | | | | | | |||||||||||||||
Karat Packaging, Inc. stockholders’ equity | | | | | | | | | | | | |||||||||||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized | | | | — | | | | | — | | | |||||||||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized, 15,190,000 and 14,724,996 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively | | | | 15,000 | | | | | 15,000 | | | |||||||||||||||
Receivable from stockholders | | | | — | | | | | (784,000) | | | |||||||||||||||
Commitments and Contingencies (Note 13) | | | | | | | | | | | | |||||||||||||||
Karat Packaging Inc. stockholders’ equity | | | | | | | | | | | | |||||||||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized, 15,190,000 shares issued, and 15,167,000 shares outstanding at December 31, 2020 and 15,190,000 shares issued and outstanding at December 31, 2019 | | | | 15,000 | | | | | 15,000 | | | |||||||||||||||
Additional paid in capital | | | | 13,981,000 | | | | | 3,533,000 | | | | | | 13,981,000 | | | | | 13,981,000 | | | ||||
Treasury stock, $0.001 par value, 23,000 shares and 0 shares on December 31, 2020 and 2019, respectively | | | | (248,000) | | | | | — | | | |||||||||||||||
Retained earnings | | | | 21,000 | | | | | 7,934,000 | | | | | | 18,656,000 | | | | | 1,745,000 | | | ||||
Total Karat Packaging Inc. stockholders’ equity | | | | 14,017,000 | | | | | 10,698,000 | | | | | | 32,404,000 | | | | | 15,741,000 | | | ||||
Noncontrolling interest | | | | 7,873,000 | | | | | — | | | | | | 7,464,000 | | | | | 8,313,000 | | | ||||
Total stockholders’ equity | | | | 21,890,000 | | | | | 10,698,000 | | | | | | 39,868,000 | | | | | 24,054,000 | | | ||||
Total liabilities and stockholders’ equity | | | $ | 96,013,000 | | | | $ | 64,091,000 | | | | | $ | 181,104,000 | | | | $ | 133,353,000 | | | ||||
|
| | Year ended December 31, | | |||||||||||||||||||||||
| | 2018 | | 2017 | | | 2020 | | 2019 | | ||||||||||||||||
Net sales | | | $ | 175,434,000 | | | | $ | 140,058,000 | | | | | $ | 295,518,000 | | | | $ | 224,910,000 | | | ||||
Cost of goods sold | | | | 131,979,000 | | | | | 98,753,000 | | | | | | 206,393,000 | | | | | 163,891,000 | | | ||||
Gross profit | | | | 43,455,000 | | | | | 41,305,000 | | | | | | 89,125,000 | | | | | 61,019,000 | | | ||||
Operating expenses | | | | | | | | | | | | |||||||||||||||
Selling expense | | | | 9,324,000 | | | | | 6,506,000 | | | |||||||||||||||
General and administrative expense (including $216,000 and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | | 31,999,000 | | | | | 28,791,000 | | | |||||||||||||||
Operating expenses: | | | | | | | | | | | | |||||||||||||||
Selling expenses | | | | 22,186,000 | | | | | 16,473,000 | | | |||||||||||||||
General and administrative expenses (including $2.0 million and $1.6 million associated with variable interest entity for the years ended December 31, 2020 and 2019, respectively) | | | | 39,242,000 | | | | | 38,710,000 | | | |||||||||||||||
Total operating expenses | | | | 41,323,000 | | | | | 35,297,000 | | | | | | 61,428,000 | | | | | 55,183,000 | | | ||||
Operating income | | | | 2,132,000 | | | | | 6,008,000 | | | | | | 27,697,000 | | | | | 5,836,000 | | | ||||
Other income (expenses) | | | | | | | | | | | | |||||||||||||||
Rental income (including $0.3 million and $0 associated with variable interest entity for the years ended December 31, 2020 and 2019, respectively) | | | | 322,000 | | | | | — | | | |||||||||||||||
Other income (expense) | | | | | | | | | | | | | | | 72,000 | | | | | (219,000) | | | ||||
Other income | | | | 464,000 | | | | | 277,000 | | | |||||||||||||||
Gain (loss) on foreign exchange | | | | 406,000 | | | | | (362,000) | | | |||||||||||||||
Interest expense (including $48,000 and $0 associated with variable interest entities at December 31, 2018 and 2017, respectively) | | | | (1,455,000) | | | | | (1,278,000) | | | |||||||||||||||
Total other expense | | | | (585,000) | | | | | (1,363,000) | | | |||||||||||||||
Loss on foreign currency transactions | | | | (688,000) | | | | | (289,000) | | | |||||||||||||||
Gain on sale of asset (including $0 and $2.4 million associated with variable interest entity for the years ended December 31, 2020 and 2019, respectively) | | | | 16,000 | | | | | 2,369,000 | | | |||||||||||||||
Interest expense (including $2.9 million and $1.9 million associated with variable interest entity for the years ended December 31, 2020 and 2019, respectively) | | | | (5,492,000) | | | | | (4,752,000) | | | |||||||||||||||
Total other expenses | | | | (5,770,000) | | | | | (2,891,000) | | | |||||||||||||||
Income before provision for income tax | | | | 1,547,000 | | | | | 4,645,000 | | | | | | 21,927,000 | | | | | 2,945,000 | | | ||||
Provision for income tax | | | | 1,671,000 | | | | | 96,000 | | | | | | 5,259,000 | | | | | 781,000 | | | ||||
Net income (loss) | | | | (124,000) | | | | | 4,549,000 | | | |||||||||||||||
Net loss attributable to noncontrolling interest | | | | 145,000 | | | | | — | | | |||||||||||||||
Net income | | | | 16,668,000 | | | | | 2,164,000 | | | |||||||||||||||
Net (loss) income attributable to noncontrolling interest | | | | (849,000) | | | | | 440,000 | | | |||||||||||||||
Net income attributable to Karat Packaging Inc. | | | $ | 21,000 | | | | $ | 4,549,000 | | | | | $ | 17,517,000 | | | | $ | 1,724,000 | | | ||||
Basic and diluted earnings per share: | | | | | | | | | | | | | | | | | | | | | | | ||||
Basic | | | $ | 0.00 | | | | $ | 0.31 | | | | | $ | 1.15 | | | | $ | 0.11 | | | ||||
Diluted | | | $ | 0.00 | | | | $ | 0.31 | | | | | $ | 1.13 | | | | $ | 0.11 | | | ||||
Weighted average common shares outstanding, basic | | | | 14,830,312 | | | | | 14,724,996 | | | | | | 15,176,809 | | | | | 15,190,000 | | | ||||
Weighted average common shares outstanding, diluted | | | | 14,830,312 | | | | | 14,724,996 | | | | | | 15,447,809 | | | | | 15,190,000 | | | ||||
Pro Forma Information (Unaudited): | | | | | | | | | | | | |||||||||||||||
Pro forma provision for income tax | | | | 518,000 | | | | | 1,547,000 | | | |||||||||||||||
Pro forma net income | | | | 1,029,000 | | | | | 3,098,000 | | | |||||||||||||||
Pro forma net loss attributable to noncontrolling interest | | | | 145,000 | | | | | — | | | |||||||||||||||
Pro forma net income attributable to Karat Packaging inc. | | | $ | 1,174,000 | | | | $ | 3,098,000 | | | |||||||||||||||
Pro forma earnings per share, basic and diluted: | | | | | | | | | | | | |||||||||||||||
Basic | | | $ | 0.08 | | | | $ | 0.21 | | | |||||||||||||||
Diluted | | | $ | 0.08 | | | | $ | 0.21 | | | |||||||||||||||
Weighted average common shares outstanding used in computing pro forma net earnings per share: | | | | | | | | | | | | |||||||||||||||
Basic | | | | 14,830,312 | | | | | 14,724,996 | | | |||||||||||||||
Diluted | | | | 14,830,312 | | | | | 14,724,996 | | |
| | | Common Stock | | | Treasury Stock | | | Additional Paid-in Capital | | | Retained Earnings | | | Total Stockholders’ Equity attributable to Karat Packaging Inc. | | | Noncontrolling Interest | | | Total Stockholders’ Equity | | |||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2019 | | | | | 15,190,000 | | | | | $ | 15,000 | | | | | | — | | | | | | — | | | | | $ | 13,981,000 | | | | | | 21,000 | | | | | $ | 14,017,000 | | | | | $ | 7,873,000 | | | | | $ | 21,890,000 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,724,000 | | | | | | 1,724,000 | | | | | | 440,000 | | | | | | 2,164,000 | | |
Balance, December 31, 2019 | | | | | 15,190,000 | | | | | $ | 15,000 | | | | | | — | | | | | $ | — | | | | | $ | 13,981,000 | | | | | $ | 1,745,000 | | | | | $ | 15,741,000 | | | | | $ | 8,313,000 | | | | | $ | 24,054,000 | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 17,517,000 | | | | | | 17,517,000 | | | | | | (849,000) | | | | | | 16,668,000 | | |
Treasury stock purchases | | | | | — | | | | | | — | | | | | | (23,000) | | | | | | (248,000) | | | | | | — | | | | | | — | | | | | | (248,000) | | | | | | — | | | | | | (248,000) | | |
Dividends paid to stockholders ($0.04 per share) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (606,000) | | | | | | (606,000) | | | | | | — | | | | | | (606,000) | | |
Balance, December 31, 2020 | | | | | 15,190,000 | | | | | $ | 15,000 | | | | | | (23,000) | | | | | $ | (248,000) | | | | | $ | 13,981,000 | | | | | $ | 18,656,000 | | | | | $ | 32,404,000 | | | | | $ | 7,464,000 | | | | | $ | 39,868,000 | | |
| | | Common Stock | | | Additional Paid-in Capital | | | Retained Earnings | | | Receivable from Stockholders | | | Total Stockholder’s Equity attributable to Karat Packaging Inc. | | | Non-controlling interest | | | Total Stockholder’s Equity | | |||||||||||||||||||||||||||
| | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2017 | | | | | 14,724,996 | | | | | $ | 15,000 | | | | | $ | 3,533,000 | | | | | $ | 4,085,000 | | | | | $ | — | | | | | $ | 7,633,000 | | | | | $ | — | | | | | $ | 7,633,000 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | 4,549,000 | | | | | | — | | | | | | 4,549,000 | | | | | | — | | | | | | 4,549,000 | | |
Receivable from stockholders | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (784,000) | | | | | | (784,000) | | | | | | — | | | | | | (784,000) | | |
Distributions paid to stockholders | | | | | — | | | | | | — | | | | | | — | | | | | | (700,000) | | | | | | — | | | | | | (700,000) | | | | | | — | | | | | | (700,000) | | |
Balance, December 31, 2017 | | | | | 14,724,996 | | | | | | 15,000 | | | | | | 3,533,000 | | | | | | 7,934,000 | | | | | | (784,000) | | | | | | 10,698,000 | | | | | | — | | | | | | 10,698,000 | | |
Effect of change in tax status from S-Corporation to C-Corporation | | | | | — | | | | | | — | | | | | | 7,934,000 | | | | | | (7,934,000) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Effect on initial consolidation of Global Wells Investment Group | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,508,000 | | | | | | 6,508,000 | | |
Contribution from noncontrolling interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,510,000 | | | | | | 1,510,000 | | |
Conversion of convertible note | | | | | 275,004 | | | | | | — | | | | | | 2,750,000 | | | | | | — | | | | | | — | | | | | | 2,750,000 | | | | | | — | | | | | | 2,750,000 | | |
Issuance of common stock | | | | | 190,000 | | | | | | — | | | | | | 1,900,000 | | | | | | — | | | | | | — | | | | | | 1,900,000 | | | | | | — | | | | | | 1,900,000 | | |
Deemed distribution to stockholders | | | | | — | | | | | | — | | | | | | (784,000) | | | | | | — | | | | | | 784,000 | | | | | | — | | | | | | — | | | | | | — | | |
Dividend declared to stockholders at $0.0814 per share | | | | | — | | | | | | — | | | | | | (1,352,000) | | | | | | — | | | | | | — | | | | | | (1,352,000) | | | | | | — | | | | | | (1,352,000) | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | 21,000 | | | | | | — | | | | | | 21,000 | | | | | | (145,000) | | | | | | (124,000) | | |
Balance, December 31, 2018 | | | | | 15,190,000 | | | | | $ | 15,000 | | | | | $ | 13,981,000 | | | | | $ | 21,000 | | | | | $ | — | | | | | $ | 14,017,000 | | | | | $ | 7,873,000 | | | | | $ | 21,890,000 | | |
|
| | | 2018 | | | 2017 | | ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income (loss) | | | | $ | (124,000) | | | | | $ | 4,549,000 | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | | | | | | | | | | | | | |
Depreciation and amortization expense | | | | | 3,960,000 | | | | | | 3,119,000 | | |
(Gain) loss on sale of property and equipment | | | | | 182,000 | | | | | | (69,000) | | |
Provision for bad debt | | | | | 25,000 | | | | | | 39,000 | | |
Reserve for inventory obsolescence | | | | | (16,000) | | | | | | 335,000 | | |
Deferred tax | | | | | 1,658,000 | | | | | | — | | |
(Increase) decrease in operating assets | | | | | | | | | | | | | |
Accounts receivable | | | | | (3,513,000) | | | | | | (1,348,000) | | |
Inventories | | | | | (985,000) | | | | | | (7,787,000) | | |
Prepaid expenses and other current assets | | | | | (673,000) | | | | | | (61,000) | | |
Deposits | | | | | 444,000 | | | | | | (630,000) | | |
Due from affiliated companies | | | | | (264,000) | | | | | | (117,000) | | |
Other assets | | | | | (9,000) | | | | | | — | | |
Increase (decrease) in operating liabilities | | | | | | | | | | | | | |
Accounts payable | | | | | 3,283,000 | | | | | | 1,719,000 | | |
Accrued expenses | | | | | (916,000) | | | | | | 389,000 | | |
Related party payable | | | | | (2,451,000) | | | | | | 1,398,000 | | |
Credit cards payable | | | | | 206,000 | | | | | | (351,000) | | |
Customer deposits | | | | | 1,910,000 | | | | | | (183,000) | | |
Net cash provided by operating activities | | | | $ | 2,717,000 | | | | | $ | 1,002,000 | | |
Cash flows from investing activities | | | | ||||||||||
Purchases of property and equipment | | | | | (22,149,000) | | | | | | (5,510,000) | | |
Deposits paid for property and equipment | | | | | (9,759,000) | | | | | | — | | |
Proceeds from sale of property and equipment | | | | | 90,000 | | | | | | 409,000 | | |
Investment in Global Wells Investment Group | | | | | — | | | | | | (1,251,000) | | |
Impact to cash resulting from initial consolidation of Global Wells Investment Group LLC | | | | | 7,512,000 | | | | | | — | | |
Net cash used in investing activities | | | | $ | (24,306,000) | | | | | $ | (6,352,000) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Net proceeds from line of credit | | | | | 3,385,000 | | | | | | 4,840,000 | | |
Proceeds from long-term debt | | | | | 24,949,000 | | | | | | 5,073,000 | | |
Payments on long-term debt | | | | | (8,989,000) | | | | | | (2,534,000) | | |
Issuance of common stock | | | | | 1,900,000 | | | | | | — | | |
Contribution from noncontrolling interest of variable interest entity | | | | | 1,510,000 | | | | | | — | | |
Receivable from shareholders | | | | | 300,000 | | | | | | (626,000) | | |
Principal payments on obligations under capital leases | | | | | (47,000) | | | | | | (93,000) | | |
Dividends paid to shareholders | | | | | (1,245,000) | | | | | | (700,000) | | |
Net cash provided by financing activities | | | | $ | 21,763,000 | | | | | $ | 5,960,000 | | |
Net increase in cash | | | | | 174,000 | | | | | | 610,000 | | |
Cash | | | | | | | | | | | | | |
Beginning of year | | | | $ | 791,000 | | | | | $ | 181,000 | | |
End of year | | | | $ | 965,000 | | | | | $ | 791,000 | | |
Supplemental disclosures of non-cash investing and financing activities: | | | | | | | | | | | | | |
Conversion of convertible note | | | | $ | 2,750,000 | | | | | $ | — | | |
Accrued dividends | | | | $ | 107,000 | | | | | $ | — | | |
Deemed distribution to stockholders | | | | $ | 784,000 | | | | | $ | — | | |
Capital expenditures funded by capital lease borrowings | | | | $ | 180,000 | | | | | $ | — | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | |
Cash paid for income tax | | | | $ | 530,000 | | | | | $ | 97,000 | | |
Cash paid for interest | | | | $ | 1,499,000 | | | | | $ | 1,269,000 | | |
| | | 2020 | | | 2019 | | ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income | | | | $ | 16,668,000 | | | | | $ | 2,164,000 | | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | | | | | | |
Depreciation and amortization | | | | | 8,569,000 | | | | | | 5,953,000 | | |
Provision for bad debt | | | | | 149,000 | | | | | | 37,000 | | |
Reserve for inventory obsolescence | | | | | 321,000 | | | | | | 35,000 | | |
Gain on sale of asset | | | | | (16,000) | | | | | | (2,369,000) | | |
Change in fair value of interest rate swap | | | | | 1,566,000 | | | | | | 1,281,000 | | |
Amortization of loan fees | | | | | 12,000 | | | | | | 6,000 | | |
Deferred income taxes | | | | | 3,938,000 | | | | | | 521,000 | | |
(Increase) decrease in operating assets | | | | | | | | | | | | | |
Accounts receivable | | | | | (2,864,000) | | | | | | (6,343,000) | | |
Inventories | | | | | (13,833,000) | | | | | | (5,945,000) | | |
Prepaid expenses and other current assets | | | | | (3,445,000) | | | | | | (1,044,000) | | |
Due from affiliated companies | | | | | (840,000) | | | | | | (311,000) | | |
Deposits | | | | | 2,432,000 | | | | | | (1,705,000) | | |
Other assets | | | | | (72,000) | | | | | | (64,000) | | |
Increase (decrease) in operating liabilities | | | | | | | | | | | | | |
Accounts payable | | | | | 1,001,000 | | | | | | 3,915,000 | | |
Accrued expenses | | | | | 1,123,000 | | | | | | 1,176,000 | | |
Related party payable | | | | | (72,000) | | | | | | 1,717,000 | | |
Credit cards payable | | | | | (280,000) | | | | | | 463,000 | | |
Income taxes payable | | | | | 15,000 | | | | | | — | | |
Customer deposits | | | | | (125,000) | | | | | | (1,421,000) | | |
Other liabilities | | | | | 300,000 | | | | | | 1,902,000 | | |
Net cash provided by (used in) operating activities | | | | $ | 14,547,000 | | | | | $ | (32,000) | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment | | | | | (29,536,000) | | | | | | (32,551,000) | | |
Proceeds on disposal of property and equipment | | | | | 24,000 | | | | | | 10,055,000 | | |
Deposits paid for property and equipment | | | | | (6,946,000) | | | | | | (2,260,000) | | |
Acquisition of Lollicup Franchising, LLC, net of cash | | | | | (893,000) | | | | | | — | | |
Net cash used in investing activities | | | | $ | (37,351,000) | | | | | $ | (24,756,000) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Net proceeds from line of credit | | | | | 6,490,000 | | | | | | 3,896,000 | | |
Proceeds from long-term debt | | | | | 24,540,000 | | | | | | 46,960,000 | | |
Payments on long-term debt | | | | | (7,364,000) | | | | | | (25,911,000) | | |
Dividends paid to shareholders | | | | | (606,000) | | | | | | — | | |
Payments for debt issuance costs | | | | | — | | | | | | (119,000) | | |
Payments on capital lease obligations | | | | | (362,000) | | | | | | (201,000) | | |
Treasury stock acquired | | | | | (248,000) | | | | | | — | | |
Net cash provided by financing activities | | | | $ | 22,450,000 | | | | | $ | 24,625,000 | | |
Net decrease in cash and cash equivalents | | | | | (354,000) | | | | | | (163,000) | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Beginning of year | | | | $ | 802,000 | | | | | $ | 965,000 | | |
End of year | | | | $ | 448,000 | | | | | $ | 802,000 | | |
Supplemental disclosures of non-cash investing and financing activities: | | | | | | | | | | | | | |
Capital expenditures funded by capital lease borrowings | | | | $ | 23,000 | | | | | $ | 992,000 | | |
Transfers from deposit to property and equipment | | | | $ | 15,275,000 | | | | | $ | 18,990,000 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | |
Cash paid for income tax | | | | $ | 2,495,000 | | | | | $ | 154,000 | | |
Cash paid for interest | | | | $ | 3,887,000 | | | | | $ | 3,316,000 | | |
| Machinery and equipment | | | 5 to 10 years | |
| Leasehold | | | Lower of useful life or lease term | |
| Vehicles | | | 5 years | |
| Furniture and fixtures | | | 7 years | |
| Building | | | 28 to 40 years | |
| Property held under capital leases | | | 3 to 5 years | |
| Computer hardware and software | | | 3 years | |
| Cash | | | | $ | 7,512,000 | | |
| Property and equipment | | | | | 205,000 | | |
| Other liabilities | | | | | (3,000) | | |
| Accounts Payable | | | | | (205,000) | | |
| Net assets | | | | $ | 7,509,000 | | |
| | December 31, 2018 | | | December 31, 2020 | | December 31, 2019 | | ||||||||||||
Cash | | | $ | 37,000 | | | | | $ | 81,000 | | | | $ | 209,000 | | | |||
Total current assets | | | | 37,000 | | | ||||||||||||||
Accounts receivable | | | | 343,000 | | | | | 230,000 | | | |||||||||
Prepaid expenses and other current assets | | | | 98,000 | | | | | — | | | |||||||||
Property and equipment, net | | | | 19,243,000 | | | | | | 47,826,000 | | | | | 27,111,000 | | | |||
Due from Lollicup USA, Inc. | | | | 1,049,000 | | | ||||||||||||||
Due from Lollicup USA Inc. | | | | — | | | | | 3,382,000 | | | |||||||||
Deposits | | | | — | | | | | 1,740,000 | | | |||||||||
Other assets | | | | 1,008,000 | | | | | | 5,260,000 | | | | | 1,266,000 | | | |||
Total assets | | | $ | 21,337,000 | | | | | $ | 53,608,000 | | | | $ | 33,938,000 | | | |||
Accounts payable | | | $ | 36,000 | | | | | $ | 564,000 | | | | $ | 486,000 | | | |||
Customer deposits | | | | 1,500,000 | | | ||||||||||||||
Accrued expenses | | | | 128,000 | | | | | 70,000 | | | |||||||||
Due to Lollicup USA Inc. | | | | 2,990,000 | | | | | — | | | |||||||||
Long-term debt, current portion | | | | 10,699,000 | | | | | | 694,000 | | | | | 304,000 | | | |||
Total current liabilities | | | | 12,235,000 | | | ||||||||||||||
Long-term debt, net of current portion | | | | 36,697,000 | | | | | 21,017,000 | | | |||||||||
Other liabilities | | | | 3,906,000 | | | | | 2,451,000 | | | |||||||||
Total liabilities | | | $ | 12,235,000 | | | | | $ | 44,979,000 | | | | $ | 24,328,000 | | |
| | | December 31, 2018 | | | December 31, 2017 | | ||||||
Due from affiliated companies | | | | $ | 381,000 | | | | | $ | 117,000 | | |
Accounts Payable | | | | | — | | | | | | 236,000 | | |
| | | 2020 | | | 2019 | | ||||||
Distributors | | | | $ | 67,875,000 | | | | | $ | 32,252,000 | | |
National chains | | | | | 157,164,000 | | | | | | 146,257,000 | | |
Retail | | | | | 37,285,000 | | | | | | 26,368,000 | | |
Online | | | | | 33,194,000 | | | | | | 20,033,000 | | |
| | | | $ | 295,518,000 | | | | | $ | 224,910,000 | | |
| | | 2020 | | | 2019 | | ||||||
Keary Global Ltd. (“Keary Global”) and its affiliate, Keary International, Ltd. – related parties | | | | | 11% | | | | | | 12% | | |
| | | 2020 | | | 2019 | | ||||||
Keary Global and its affiliate, Keary International – related parties | | | | | 18% | | | | | | 22% | | |
Taizhou Fuling Plastics Co.,Ltd | | | | | 11% | | | | | | 13% | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | |||||||||
Cash equivalents | | | | $ | 448,000 | | | | | $ | — | | | | | $ | — | | |
Interest rate swaps | | | | | — | | | | | | (2,847,000) | | | | | | — | | |
Fair value, December 31, 2020 | | | | $ | 448,000 | | | | | $ | (2,847,000) | | | | | $ | — | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | |||||||||
Cash equivalents | | | | $ | 802,000 | | | | | $ | — | | | | | $ | — | | |
Interest rate swaps | | | | | — | | | | | | (1,281,000) | | | | | | — | | |
Fair value, December 31, 2019 | | | | $ | 802,000 | | | | | $ | (1,281,000) | | | | | $ | — | | |
| Cash | | | | $ | 7,000 | | |
| Accounts receivable | | | | | 103,000 | | |
| Inventories | | | | | 21,000 | | |
| Property and equipment | | | | | 257,000 | | |
| Accounts payable | | | | | (42,000) | | |
| Accrued expenses | | | | | (104,000) | | |
| Related party payable | | | | | (2,455,000) | | |
| Goodwill | | | | | 3,113,000 | | |
| Total assets acquired and liabilities assumed | | | | $ | 900,000 | | |
| Less: cash acquired | | | | | (7,000) | | |
| Total purchase consideration, net of cash acquired | | | | $ | 893,000 | | |
| | | December 31, 2018 | | | December 31, 2017 | | ||||||
Raw materials | | | | $ | 2,243,000 | | | | | $ | 6,382,000 | | |
Work in progress | | | | | 35,000 | | | | | | 1,000 | | |
Manufactured and purchased finished goods | | | | | 27,559,000 | | | | | | 22,469,000 | | |
| | | | | 29,837,000 | | | | | | 28,852,000 | | |
Less inventory reserve | | | | | (319,000) | | | | | | (335,000) | | |
| | | | $ | 29,518,000 | | | | | $ | 28,517,000 | | |
| | | 2020 | | | 2019 | | ||||||
Raw materials | | | | $ | 4,251,000 | | | | | $ | 3,698,000 | | |
Work in progress | | | | | 133,000 | | | | | | 127,000 | | |
Finished goods | | | | | 45,252,000 | | | | | | 31,957,000 | | |
Subtotal | | | | | 49,636,000 | | | | | | 35,782,000 | | |
Less inventory reserve | | | | | (675,000) | | | | | | (354,000) | | |
Total inventories | | | | $ | 48,961,000 | | | | | $ | 35,428,000 | | |
| | December 31, 2018 | | December 31, 2017 | | | 2020 | | 2019 | | ||||||||||||||||
Machinery and equipment | | | $ | 24,340,000 | | | | $ | 23,374,000 | | | | | $ | 55,528,000 | | | | $ | 40,575,000 | | | ||||
Leasehold improvements | | | | 6,103,000 | | | | | 5,736,000 | | | | | | 17,832,000 | | | | | 15,071,000 | | | ||||
Vehicles | | | | 3,044,000 | | | | | 2,331,000 | | | | | | 3,447,000 | | | | | 2,424,000 | | | ||||
Furniture and fixtures | | | | 527,000 | | | | | 515,000 | | | | | | 851,000 | | | | | 729,000 | | | ||||
Building | | | | 278,000 | | | | | 278,000 | | | | | | 34,134,000 | | | | | 17,237,000 | | | ||||
Land | | | | 3,000,000 | | | | | — | | | | | | 11,907,000 | | | | | 3,017,000 | | | ||||
Property held under capital leases (Note 8) | | | | 590,000 | | | | | 407,000 | | | |||||||||||||||
Construction in progress | | | | 16,243,000 | | | | | — | | | |||||||||||||||
Property held under capital leases | | | | 1,607,000 | | | | | 1,582,000 | | | |||||||||||||||
Computer hardware and software | | | | 223,000 | | | | | 152,000 | | | | | | 546,000 | | | | | 502,000 | | | ||||
| | | | 54,348,000 | | | | | 32,793,000 | | | | | | 125,852,000 | | | | | 81,137,000 | | | ||||
Less accumulated depreciation | | | | (16,233,000) | | | | | (12,980,000) | | | | | | (30,319,000) | | | | | (22,117,000) | | | ||||
| | | $ | 38,115,000 | | | | $ | 19,813,000 | | | |||||||||||||||
Total property and equipment, net | | | $ | 95,533,000 | | | | $ | 59,020,000 | | |
| | December 31, 2018 | | December 31, 2017 | | | 2020 | | 2019 | | ||||||||||||||||
Accrued expense | | | $ | 316,000 | | | | $ | 1,195,000 | | | |||||||||||||||
Accrued expenses | | | $ | 2,277,000 | | | | $ | 664,000 | | | |||||||||||||||
Accrued interest | | | | 4,000 | | | | | 107,000 | | | | | | 199,000 | | | | | 181,000 | | | ||||
Accrued payroll | | | | 845,000 | | | | | 529,000 | | | | | | 1,253,000 | | | | | 1,111,000 | | | ||||
Accrued vacation and sick pay | | | | 287,000 | | | | | 199,000 | | | | | | 496,000 | | | | | 379,000 | | | ||||
Dividends payable | | | | 107,000 | | | | | — | | | |||||||||||||||
Accrued shipping expenses | | | | 433,000 | | | | | 153,000 | | | |||||||||||||||
Deferred rent liability | | | | 101,000 | | | | | 439,000 | | | | | | 301,000 | | | | | 322,000 | | | ||||
| | | $ | 1,660,000 | | | | $ | 2,469,000 | | | |||||||||||||||
Total accrued expenses | | | $ | 4,959,000 | | | | $ | 2,810,000 | | |
| | | 2018 | | | 2017 | | ||||||
A promissory note that allow for advances up to $5,000,000 through March 2018, at which point it converts to a term loan. Outstanding principal balance of $4,814,677 was converted in March 2018, maturing in February 2023. Principal and interest payment of $90,815 due monthly at the fixed rate of 4.98%. The loan is secured by certain machinery and equipment. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. | | | | $ | 4,093,000 | | | | | $ | 4,032,000 | | |
A construction loan with advances up to $21,640,000 that expired February 2019. The loan was amended to extend the maturity date to May 2019. Funds are disbursed upon request from the construction disbursement company. Interest payment is payable monthly at the rate of prime plus 0.50% (6.00% as of December 31, 2018), with the principal balance due at maturity. The loan is secured by GWIG’s assets and guaranteed by the Company and Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum cash or equity balance. | | | | | 10,699,000 | | | | | | — | | |
An equipment loan with a draw down period ending August 28, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, with the first principal and interest payment due upon conversion, maturing August 2024. Interest accrues at a rate of prime plus 0.25% (5.75% as of December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 4,937,000 | | | | | | — | | |
A $2,130,000 term loan that expires April 30, 2021. Principal and interest payment of $53,539 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate (5.50% as of December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 1,417,000 | | | | | | — | | |
A $1,620,000 term loan that expires September 30, 2020. Principal and interest payment of $50,282 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 5.25%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 1,006,000 | | | | | | — | | |
A $935,000 term loan that expires December 31, 2021. Principal and interest payment of $19,834 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 3.50%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 676,000 | | | | | | — | | |
Subtotal, continue on following page | | | | $ | 22,828,000 | | | | | $ | 4,032,000 | | |
| | | 2020 | | | 2019 | | ||||||
A promissory note that allowed for advances up to $5,000,000 through March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,814,677 was converted in March 2018, maturing in March 2023. Principal and interest payment of $90,815 due monthly at the fixed rate of 4.98%. The loan is secured by certain machinery and equipment. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. | | | | $ | 2,322,000 | | | | | $ | 3,266,000 | | |
An equipment loan with a draw down period ending August 28, 2019 for up to $10,000,000, at which point the entire principal outstanding is due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, maturing in June 2024. Principal and interest payment of $192,572 due monthly starting August 2019 at the fixed rate of 5.75%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 7,450,000 | | | | | | 9,267,000 | | |
A $2,130,000 term loan that expires April 30, 2021. Principal and interest payment of $53,539 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate (3.25% as of December 31, 2020 and 4.75% as of December 31, 2019). The loan is secured by the company’s assets and guaranteed by the company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 212,000 | | | | | | 831,000 | | |
A $1,620,000 term loan that expired September 30, 2020. Principal and interest payment of $50,282 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 5.25%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | — | | | | | | 442,000 | | |
Subtotal, continue on following page | | | | $ | 9,984,000 | | | | | $ | 13,806,000 | | |
| | | 2018 | | | 2017 | | ||||||
Subtotal from previous page | | | | $ | 22,828,000 | | | | | $ | 4,032,000 | | |
A $1,170,000 term loan that expires December 31, 2019. Principal and interest payment of $45,621 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate minus 0.25% (5.25% as of December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 535,000 | | | | | | — | | |
A $1,070,000 term loan that expires September 30, 2019. Principal and interest payment of $47,829 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate plus 0.50% with 5.00% minimum (6.00% as of December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 421,000 | | | | | | — | | |
An equipment loan with a draw down period ending May 31, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, maturing on May 31, 2024. The first principal and interest payment is due commencing July 2019. Interest accrues based on prime rate (5.50% as of December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. | | | | | 2,746,000 | | | | | | — | | |
A $724,445 term loan that expires September 1, 2019. Principal and interest payment of $13,651 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 4.94%.The loan is secured by certain machinery and equipment and guaranteed by the Company’s stockholders. | | | | | 120,000 | | | | | | 248,000 | | |
A $2,893,000 term loan that expires April 30, 2021. Principal and interest is payable monthly at the prime rate (4.5% at December 31, 2017). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum tangible net worth, maximum debt to tangible net worth, minimum fixed charge coverage ratio, minimum current ratio, minimum quick ratio, maximum investments and distributions, and net income. This loan was extinguished in 2018 and refinanced with another lender. | | | | | — | | | | | | 1,977,000 | | |
A $3,460,000 term loan that expires September 30, 2020. Principal and interest is payable monthly at the fixed rate of 5.25%. The loan is secured by certain machinery and equipment and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum tangible net worth, maximum debt to tangible net worth, minimum fixed charge coverage ratio, minimum current ratio, and net income. This loan was extinguished in 2018 and refinanced with another lender. | | | | | — | | | | | | 1,536,000 | | |
Subtotal, continue on following page | | | | $ | 26,650,000 | | | | | $ | 7,793,000 | | |
| | | 2020 | | | 2019 | | ||||||
Subtotal from previous page | | | | $ | 9,984,000 | | | | | $ | 13,806,000 | | |
A $935,000 term loan that expires December 31, 2021. Principal and interest payment of $19,834 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 3.50%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | | 234,000 | | | | | | 459,000 | | |
An equipment loan with a draw down period ended May 31, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, maturing on May 31, 2024. The first principal and interest payment commenced in July 2019. Interest accrued based on prime rate (3.25% and 4.75% as of December 31, 2020 and 2019, respectively). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain fixed financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. | | | | | 7,000,000 | | | | | | 9,000,000 | | |
A $3,000,000 term loan that expires December 2024. Interest only payment due for the first six months. Principal and interest payment of $57,769 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25% (3.50% and 5.00% at December 31, 2020 and 2019, respectively).The loan is secured the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service charge ratio, and debt to EBITDA rolling ratio. | | | | | 2,444,000 | | | | | | 3,000,000 | | |
A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.00% and 4.50% at December 31, 2020 and 2019, respectively) and principal payments ranging from $24,356 to $39,581 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and its stockholders. The Company incurred debt issuance costs of approximately $119,000, which is reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. | | | | | 21,130,000 | | | | | | 21,434,000 | | |
Subtotal, continue on following page | | | | $ | 40,792,000 | | | | | $ | 47,699,000 | | |
| | 2018 | | 2017 | | | 2020 | | 2019 | | ||||||||||||||||
Subtotal from previous page | | | $ | 26,650,000 | | | | $ | 7,793,000 | | | | | $ | 40,792,000 | | | | $ | 47,699,000 | | | ||||
A $2,000,000 term loan that expires December 31, 2019. Interest payment is payable monthly at the rate of prime minus 0.25% (4.25% as of December 31, 2017). The loan is secured by certain machinery and equipment and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum tangible net worth, maximum debt to tangible net worth, minimum fixed charge coverage ratio, minimum current ratio, minimum quick ratio, maximum investments and distributions, and net income. This loan was extinguished in 2018 and refinanced with another lender. | | | | — | | | | | 1,041,000 | | | |||||||||||||||
A $2,570,000 term loan that expires September 30, 2019. Interest payment is payable monthly at the rate of prime plus 0.5% with 5.0% minimum (5.0% as of December 31, 2017). The loan is secured by certain machinery and equipment and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum tangible net worth, maximum debt to tangible net worth, minimum fixed charge coverage ratio, minimum current ratio, minimum quick ratio, maximum investments and distributions, and net income. This loan was extinguished in 2018 and refinanced with another lender. | | | | — | | | | | 972,000 | | | |||||||||||||||
A $1,067,000 term loan that expires December 31, 2021. Principal and interest is payable monthly at the fixed rate of 3.5%. The loan is securing by certain machinery and equipment and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum tangible net worth, maximum debt to tangible net worth, minimum fixed charge coverage ratio, minimum current ratio, minimum quick ratio, and net income. This loan was extinguished in 2018 and refinanced with another lender. | | | | — | | | | | 884,000 | | | |||||||||||||||
A $3,000,000 term loan that expires June 17, 2025. Principal and interest payment of $54,623 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate plus margin of 0.25% (3.50% as of December 31, 2020). The loan is secured by the company’s assets and guaranteed by the company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. | | | | 2,723,000 | | | | | — | | | |||||||||||||||
A $5,000,000 Paycheck Protection Program loan that expires April 16, 2022. Interest accrues at 1.00%. | | | | 5,000,000 | | | | | — | | | |||||||||||||||
A $16,540,000 term loan that matures June 30, 2025. Interest accrues at 4.5% fixed and principal payments ranging from $30,524 to $37,720 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and its stockholders. | | | | 16,361,000 | | | | | — | | | |||||||||||||||
Long-term debt | | | | 26,650,000 | | | | | 10,690,000 | | | | | | 64,876,000 | | | | | 47,699,000 | | | ||||
Less: unamortized loan fees | | | | (102,000) | | | | | (113,000) | | | |||||||||||||||
Less: current portion | | | | (14,818,000) | | | | | (3,274,000) | | | | | | (11,364,000) | | | | | (6,891,000) | | | ||||
Long-term debt, net of current portion | | | $ | 11,832,000 | | | | $ | 7,416,000 | | | | | $ | 53,410,000 | | | | $ | 40,695,000 | | | |
Years ending December 31, | | | Amount | | |||
2019 | | | | $ | 14,818,000 | | |
2020 | | | | | 3,773,000 | | |
2021 | | | | | 2,985,000 | | |
2022 | | | | | 2,589,000 | | |
2023 | | | | | 1,717,000 | | |
Thereafter | | | | | 768,000 | | |
| | | | $ | 26,650,000 | | |
| 2021 | | | | $ | 11,364,000 | | |
| 2022 | | | | | 7,854,000 | | |
| 2023 | | | | | 6,431,000 | | |
| 2024 | | | | | 4,399,000 | | |
| 2025 | | | | | 15,495,000 | | |
| Thereafter | | | | | 19,333,000 | | |
| | | | | $ | 64,876,000 | | |
| | 2018 | | 2017 | | | 2020 | | 2019 | | ||||||||||||||||
Warehouse vehicles | | | $ | 590,000 | | | | $ | 407,000 | | | | | $ | 1,607,000 | | | | $ | 1,582,000 | | | ||||
Less accumulated depreciation | | | | (359,000) | | | | | (256,000) | | | | | | (1,026,000) | | | | | (652,000) | | | ||||
| | | $ | 231,000 | | | | $ | 151,000 | | | |||||||||||||||
Total property held under capital leases, net | | | $ | 581,000 | | | | $ | 930,000 | | |
December 31, | | | Amount | | |||
2019 | | | | $ | 38,000 | | |
2020 | | | | | 38,000 | | |
2021 | | | | | 38,000 | | |
2022 | | | | | 38,000 | | |
2023 | | | | | 19,000 | | |
Thereafter | | | | | 7,000 | | |
| | | | $ | 178,000 | | |
Less amounts representing interest | | | | | 17,000 | | |
Minimum lease payments | | | | $ | 161,000 | | |
| 2021 | | | | $ | 346,000 | | |
| 2022 | | | | | 202,000 | | |
| 2023 | | | | | 74,000 | | |
| 2024 | | | | | 32,000 | | |
| 2025 | | | | | 1,000 | | |
| | | | | $ | 655,000 | | |
| Less: future finance charges | | | | | (44,000) | | |
| Minimum lease payments | | | | $ | 611,000 | | |
| | 2018 | | 2017 | | | Number of Options | | Weighted- Average Exercise Price | | Weighted- Average Remaining Contract Life (In Years) | | Aggregate Intrinsic Value | | ||||||||||||||||||||||||
A $250,000 note, 5% annual interest, three year term, matured on September 15, 2018, interest only due monthly | | | $ | — | | | | $ | 250,000 | | | |||||||||||||||||||||||||||
Long-term convertible debt | | | | — | | | | | 250,000 | | | |||||||||||||||||||||||||||
Less: current portion | | | | — | | | | | (250,000) | | | |||||||||||||||||||||||||||
| | | $ | — | | | | $ | — | | | |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
Outstanding at December 31, 2019 | | | | 15,000 | | | | $ | 10.00 | | | | | 9.0 | | | | $ | — | | | |||||||||||||||||
Granted | | | | — | | | | | — | | | | | | | | | | | | | |||||||||||||||||
Exercised | | | | — | | | | | — | | | | | | | | | | | | | |||||||||||||||||
Canceled/forfeited | | | | — | | | | | — | | | | | | | | | | | | | |||||||||||||||||
Outstanding at December 31, 2020 | | | | 15,000 | | | | $ | 10.00 | | | | | 8.0 | | | | $ | — | | | |||||||||||||||||
Expected to vest at December 31, 2020 | | | | 15,000 | | | | $ | 10.00 | | | | | 8.0 | | | | $ | — | | | |||||||||||||||||
Exercisable at December 31, 2020 | | | | — | | | | $ | — | | | | | — | | | | $ | — | | |
| | | 2018 | | | 2017 | | ||||||
A $2,150,036 note, 5% annual interest, three year term, matured on September 15, 2018, interest only due monthly, issued to a related party. | | | | $ | — | | | | | $ | 2,150,000 | | |
A $350,000 note, 5% annual interest, three year term, maturing June 1, 2019, interest only due monthly, issued to a related party. | | | | | — | | | | | | 350,000 | | |
Long-term related party convertible debt | | | | | — | | | | | | 2,500,000 | | |
Less: current portion | | | | | — | | | | | | (2,150,000) | | |
| | | | $ | — | | | | | $ | 350,000 | | |
| | | December 31, 2019 | | |||
Risk-free interest rate | | | | | 2.53% | | |
Expected term (years) | | | | | 6.25 | | |
Volatility | | | | | 25% | | |
Dividend yield | | | | | 0.81% | | |
| | | Number of Shares Outstanding | | | Weighted Average Grant Date Fair Value | | ||||||
Unvested at December 31, 2019 | | | | | 267,000 | | | | | $ | 10.00 | | |
Granted | | | | | 5,000 | | | | | | 10.00 | | |
Vested | | | | | — | | | | | | — | | |
Forfeited | | | | | (16,000) | | | | | | (10.00) | | |
Unvested at December 31, 2020 | | | | | 256,000 | | | | | $ | 10.00 | | |
| | | December 31, 2018 | | | December 31, 2017 | | ||||||
Net income attributable to Karat Packaging, Inc. | | | | $ | 21,000 | | | | | $ | 4,549,000 | | |
Weighted average number of ordinary shares in issue | | | | | 14,830,312 | | | | | | 14,724,996 | | |
Basic earnings per share | | | | $ | 0.00 | | | | | $ | 0.31 | | |
|
| | | 2020 | | | 2019 | | ||||||
Net income attributable to Karat Packaging Inc. | | | | $ | 17,517,000 | | | | | $ | 1,724,000 | | |
Weighted average number of ordinary shares in issue | | | | | 15,176,809 | | | | | | 15,190,000 | | |
Basic earnings per share | | | | $ | 1.15 | | | | | $ | 0.11 | | |
| | December 31, 2018 | | December 31, 2017 | | | 2020 | | 2019 | | ||||||||||||||||
Net income attributable to Karat Packaging, Inc. | | | $ | 21,000 | | | | $ | 4,549,000 | | | |||||||||||||||
Add: Interest expense related to convertible debt | | | | — | | | | $ | — | | | |||||||||||||||
| | | $ | 21,000 | | | | $ | 4,549,000 | | | |||||||||||||||
Net income attributable to Karat Packaging Inc. | | | $ | 17,517,000 | | | | $ | 1,724,000 | | | |||||||||||||||
Weighted average number of ordinary shares in issue | | | | 14,830,312 | | | | | 14,724,996 | | | | | | 15,176,809 | | | | | 15,190,000 | | | ||||
Weighted average number of converted ordinary shares | | | ||||||||||||||||||||||||
Dilutive shares | | | | | | | | | — | | | |||||||||||||||
Stock options and restricted stock units | | | | 271,000 | | | | | — | | | |||||||||||||||
Adjusted weighted average number of ordinary shares | | | | 14,830,312 | | | | | 14,724,996 | | | | | | 15,447,809 | | | | | 15,190,000 | | | ||||
Diluted earnings per share | | | $ | 0.00 | | | | $ | 0.31 | | | | | $ | 1.13 | | | | $ | 0.11 | | |
| | | Amount | | |||
2019 | | | | $ | 4,338,000 | | |
2020 | | | | | 3,329,000 | | |
2021 | | | | | 2,854,000 | | |
2022 | | | | | 2,942,000 | | |
2023 | | | | | 2,931,000 | | |
Thereafter | | | | | 14,475,000 | | |
| | | | $ | 30,869,000 | | |
|
| 2021 | | | | $ | 6,242,000 | | |
| 2022 | | | | | 6,263,000 | | |
| 2023 | | | | | 6,336,000 | | |
| 2024 | | | | | 5,203,000 | | |
| 2025 | | | | | 3,468,000 | | |
| Thereafter | | | | | 9,171,000 | | |
| | | | | $ | 36,683,000 | | |
| Current | | | | | | | | 2020 | | 2019 | | |||||||||
Current | | | | | | | | | | | | ||||||||||
Federal | | | $ | 109,000 | | | | $ | — | | | ||||||||||
State | | | | 1,212,000 | | | | | 260,000 | | | ||||||||||
| Federal | | | $ | — | | | | | | 1,320,000 | | | | | 260,000 | | | |||
Deferred | | | | | | | | | | | | ||||||||||
Federal | | | | 4,172,000 | | | | | 508,000 | | | ||||||||||
State | | | | (234,000) | | | | | 13,000 | | | ||||||||||
| State | | | | 13,000 | | | | | | 3,938,000 | | | | | 521,000 | | | |||
| | | | | 13,000 | | | ||||||||||||||
| Deferred | | | | | | | ||||||||||||||
| Federal | | | | 1,502,000 | | | ||||||||||||||
| State | | | | 156,000 | | | ||||||||||||||
| | | | | 1,658,000 | | | ||||||||||||||
| Provision for income taxes | | | $ | 1,671,000 | | | ||||||||||||||
Provision for income taxes | | | $ | 5,259,000 | | | | $ | 781,000 | | |
| | December 31, 2018 | | | 2020 | | 2019 | | ||||||||||||
Deferred tax assets: | | | | | | | | | | | | | | | | | | |||
State Taxes | | | $ | 237,000 | | | | $ | 69,000 | | | |||||||||
Investment in Global Wells Investment Group | | | | — | | | | | 101,000 | | | |||||||||
Reserves | | | $ | 105,000 | | | | | | 590,000 | | | | | 159,000 | | | |||
Accruals & Deferred Expenses | | | | 82,000 | | | | | | 132,000 | | | | | 456,000 | | | |||
State Taxes | | | | 29,000 | | | ||||||||||||||
Inventories | | | | 329,000 | | | ||||||||||||||
Tenant improvement allowance | | | | 1,336,000 | | | | | — | | | |||||||||
R&D Credit | | | | 37,000 | | | | | | 45,000 | | | | | 175,000 | | | |||
Section 263A | | | | 993,000 | | | | | 449,000 | | | |||||||||
Government Grant | | | | 235,000 | | | | | 161,000 | | | |||||||||
Charitable Contributions | | | | — | | | | | 17,000 | | | |||||||||
Net Operating Loss | | | | 333,000 | | | | | | — | | | | | 1,885,000 | | | |||
Total deferred tax assets | | | | 915,000 | | | | | | 3,568,000 | | | | | 3,472,000 | | | |||
Deferred tax liabilities: | | | | | | | | | | | | | | |||||||
Fixed Assets – Depreciation | | | | (2,573,000) | | | | | | (9,613,000) | | | | | (5,651,000) | | | |||
Investment in Global Wells Investment Group | | | | (72,000) | | | | | — | | | |||||||||
Total deferred tax liabilities | | | | (9,685,000) | | | | | (5,651,000) | | | |||||||||
Net deferred tax liability | | | $ | (1,658,000) | | | | | $ | (6,117,000) | | | | $ | (2,179,000) | | |
| | Year ended December 31, 2018 | | | 2020 | | 2019 | | ||||||||||||
Income tax computed at the federal statutory rate | | | $ | 324,000 | | | | | $ | 4,608,000 | | | | $ | 619,000 | | | |||
State taxes, net of federal tax benefits | | | | 96,000 | | | | | | 939,000 | | | | | 152,000 | | | |||
Deferred tax effect due to conversion to C-Corporation | | | | 1,153,000 | | | ||||||||||||||
Noncontrolling Interest – Income not subject to tax | | | | 31,000 | | | ||||||||||||||
Permanent Items | | | | 81,000 | | | ||||||||||||||
Noncontrolling Interest -Income not subjecct to tax | | | | 178,000 | | | | | (92,000) | | | |||||||||
Permanent items | | | | 100,000 | | | | | 156,000 | | | |||||||||
R&D Credit | | | | (37,000) | | | | | | (300,000) | | | | | (87,000) | | | |||
Franchise/Gross Receipts Tax | | | | 5,000 | | | | | 59,000 | | | |||||||||
Other | | | | 23,000 | | | | | | (271,000) | | | | | (26,000) | | | |||
Provision for income taxes | | | $ | 1,671,000 | | | | | $ | 5,259,000 | | | | $ | 781,000 | | |
| Stifel | | | William Blair | | | Truist Securities | |
| National Securities Corporation | | | D.A. Davidson & Co. | |
| | | Amount to be Paid | | |||
SEC registration fee | | | | $ | 6,060 | | |
FINRA filing fee | | | | | 8,000 | | |
The Nasdaq Global Market listing application fees | | | | | 175,000 | | |
Printing and engraving expenses | | | | | 30,000 | | |
Legal fees and expenses | | | | | 780,000 | | |
Accounting fees and expenses | | | | | 485,000 | | |
Transfer agent and registrar fees and expenses | | | | | 30,000 | | |
Miscellaneous fees and expenses | | | | | 50,000 | | |
Total | | | | | 1,564,060 | | |
| | | Amount to be Paid | | |||
SEC registration fee | | | | $ | 9,912 | | |
FINRA filing fee | | | | $ | 11,750 | | |
The Nasdaq Global Market listing application fees | | | | $ | 175,000 | | |
Printing and engraving expenses | | | | $ | 30,000 | | |
Legal fees and expenses | | | | $ | 1,066,000 | | |
Accounting fees and expenses | | | | $ | 659,000 | | |
Transfer agent and registrar fees and expenses | | | | $ | 30,000 | | |
Miscellaneous fees and expenses | | | | $ | 48,271 | | |
Total | | | | $ | 2,029,933 | | |
| Exhibit No. | | | Description | | ||||
| | | 1 | .1* | | | | | |
| | | 3 | .1* | | | | | |
| | | 3 | .2* | | | | | |
| | | 4 | .1* | | | | | |
| | | 5 | .1** | | | | | |
| | | 10 | .1*+ | | | | | |
| | | 10 | .2*+ | | | | Form of Restricted Stock Unit Award Agreement Pursuant to the Karat Packaging Inc. 2019 Stock Incentive Plan | |
| Signature | | | Title | | | Date | |
| /s/ Alan Yu Alan Yu | | | Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) | | | | |
| /s/ | | | (Principal Financial and Accounting Officer) | | | | |
| * Marvin Cheng | | | Vice President — Manufacturing, Secretary and Director | | | | |
| * Eve Yen | | | Director | | | | |
| * Paul Y. Chen | | | Director | | | | |
| * Eric Chen | | | Director | | | |
| *By: | /s/ Alan Yu Alan Yu Attorney-in-Fact | ||||
| | | | | |