Cover
Cover | 12 Months Ended |
Dec. 31, 2021 | |
Cover [Abstract] | |
Document Type | POS AM |
Entity Registrant Name | CompoSecure, Inc. |
Entity Filer Category | Accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Amendment Flag | true |
Entity Central Index Key | 0001823144 |
Amendment Description | This post-effective amendment is being filed to update the Registration Statement to include information contained in the registrant's Annual Report on Form 10-K filed with the SEC on March 14, 2022. |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 21,944 | $ 13,422 |
Accounts receivable, net | 27,925 | 8,792 |
Inventories | 25,806 | 30,197 |
Prepaid expenses and other current assets | 2,596 | 1,077 |
Total current assets | 78,271 | 53,488 |
Property and equipment, net | 22,177 | 27,859 |
Right of use asset, net | 5,246 | 0 |
Deferred tax asset | 25,650 | 0 |
Deposits and other assets | 10 | 10 |
Total assets | 131,354 | 81,357 |
CURRENT LIABILITIES | ||
Current portion of long-term debt | 12,500 | 24,000 |
Current portion of lease liabilities | 1,119 | 0 |
Accounts payable | 7,058 | 2,421 |
Accrued expenses | 13,220 | 11,556 |
Issuance costs payable | 23,107 | 0 |
Bonus payable | 3,512 | 3,638 |
Total current liabilities | 60,516 | 41,615 |
Long-term debt, net of deferred finance costs | 233,132 | 211,887 |
Convertible notes | 126,897 | 0 |
Derivative liability - convertible notes redemption make-whole provision | 552 | 0 |
Warrant liability | 35,271 | 0 |
Line of credit | 15,000 | 20,000 |
Lease liabilities | 4,709 | 0 |
Tax receivable agreement liability | 24,500 | 0 |
Earnouts liability | 38,427 | 0 |
Other liabilities | 0 | 409 |
Total liabilities | 539,004 | 273,911 |
Commitments and contingencies (Note 15) | ||
Redeemable non-controlling interest | 608,311 | 0 |
Preferred stock, $0.0001 par value; 10,000,000 shares authorized | 0 | 0 |
Additional paid in capital | 12,261 | 6,148 |
Accumulated deficit | (1,028,229) | (198,708) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 131,354 | 81,357 |
Class A common stock, $0.0001 par value; 250,000,000 shares authorized, 14,929,982 and no shares issued and outstanding as of December 31, 2021 and 2020, respectively | ||
CURRENT LIABILITIES | ||
Common stock | 1 | 0 |
Class B common stock, $0.0001 par value; 75,000,000 shares authorized 61,136,800 and 61,136,800 shares issued and outstanding as of December 31, 2021 and 2020, respectively | ||
CURRENT LIABILITIES | ||
Common stock | $ 6 | $ 6 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Preferred stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized (shares) | 10,000,000 | 10,000,000 |
Class A Common Stock | ||
Common stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (shares) | 250,000,000 | 250,000,000 |
Common stock, issued (shares) | 14,929,982 | 0 |
Common stock, outstanding (shares) | 14,929,982 | 0 |
Class B Common Stock | ||
Common stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (shares) | 75,000,000 | 75,000,000 |
Common stock, issued (shares) | 61,136,800 | 61,136,800 |
Common stock, outstanding (shares) | 61,136,800 | 61,136,800 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Income Statement [Abstract] | ||||
Net sales | $ 267,948 | $ 260,586 | $ 243,290 | |
Cost of sales | 123,099 | 127,959 | 115,427 | |
Gross profit | 144,849 | 132,627 | 127,863 | |
Operating expenses: | ||||
General and administrative expenses | 45,990 | 48,488 | 40,624 | |
Selling expenses | 17,434 | 181 | 313 | |
Income from operations | 81,425 | 83,958 | 86,926 | |
Other income (expense): | ||||
Revaluation of warrant liability | 3,485 | 0 | 0 | |
Revaluation of earnout consideration liability | 9,575 | 0 | 0 | |
Interest expense, net of interest income of $0, $52 and $110 in 2021, 2020 and 2019, respectively | (10,235) | (5,266) | (4,753) | |
Amortization of deferred financing costs | (1,693) | (877) | (700) | |
Total other expenses, net | 1,132 | (6,143) | (5,453) | |
Income before income taxes | 82,557 | 77,815 | 81,473 | |
Income tax benefit | 857 | 0 | 0 | |
Net income | 83,414 | 77,815 | 81,473 | |
Net income attributable to redeemable non-controlling interests | 69,902 | 0 | 0 | |
Net income attributable to CompoSecure, Inc | [1] | $ 13,512 | $ 77,815 | $ 81,473 |
Net income per share attributable to Class A common stockholders - basic (usd per share) | [2] | $ 0.91 | ||
Net income per share attributable to Class A common stockholders - diluted (usd per share) | [2] | $ 0.14 | ||
Weighted average shares used to compute net income per share attributable to Class A common stockholders - basic (shares) | 14,930 | |||
Weighted average shares used to compute net income per share attributable to Class A common stockholders - diluted (shares) | 94,926 | |||
[1] | Net income attributable to CompoSecure, Inc. for the year ended December 31, 2021 is equal to net income for the period subsequent to business combination for the prorated period from December 27, 2021 through December 31, 2021. Net income attributable to non-controlling for the year ended December 31, 2021 is equal to net income for the period from January 1, 2021 through December 31, 2021. See Note 1. | |||
[2] | The amounts for the year ended December 31, 2021 represent basic and diluted net income per share of Class A common stock and weighted average shares of Class A common stock outstanding for the prorated period from December 27, 2021 through December 31, 2021, the period following the Business Combination described in Note 1. See Note 14. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | |||
Interest income | $ 0 | $ 52 | $ 110 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Class A Common StockPreviously ReportedCommon Stock | Class A Common StockRevision of Prior Period, AdjustmentCommon Stock | Class A Common StockCommon Stock | Class B Common StockPreviously ReportedCommon Stock | Class B Common StockRevision of Prior Period, AdjustmentCommon Stock | Class B Common StockCommon Stock | Previously ReportedAdditional Paid-in Capital | Previously ReportedAccumulated Deficit | Previously Reported | Revision of Prior Period, AdjustmentAdditional Paid-in Capital | Revision of Prior Period, AdjustmentAccumulated Deficit | Revision of Prior Period, Adjustment | Additional Paid-in Capital | Accumulated Deficit | Total | |
Beginning balance (shares) at Dec. 31, 2018 | 0 | 0 | 0 | 61,136,800 | 61,136,800 | |||||||||||
Beginning balance at Dec. 31, 2018 | $ 0 | $ 0 | $ 0 | $ 6 | $ 6 | $ 2,625 | $ (37,520) | $ (34,895) | $ (6) | $ 0 | $ 0 | $ 2,619 | $ (37,520) | $ (34,895) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Distributions | (103,808) | (103,808) | ||||||||||||||
Stock-based compensation | 1,681 | 1,681 | ||||||||||||||
Net income | 81,473 | 81,473 | [1] | |||||||||||||
Ending balance (shares) at Dec. 31, 2019 | 0 | 61,136,800 | ||||||||||||||
Ending balance at Dec. 31, 2019 | $ 0 | $ 6 | 4,300 | (59,855) | (55,549) | |||||||||||
Beginning balance at Dec. 31, 2018 | $ 0 | |||||||||||||||
Increase (Decrease) in Redeemable Non-Controlling Interest [Roll Forward] | ||||||||||||||||
Net income | 0 | |||||||||||||||
Ending balance at Dec. 31, 2019 | 0 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Distributions | (216,668) | (216,668) | ||||||||||||||
Stock-based compensation | 1,848 | 1,848 | ||||||||||||||
Net income | 77,815 | 77,815 | [1] | |||||||||||||
Ending balance (shares) at Dec. 31, 2020 | 0 | 61,136,800 | ||||||||||||||
Ending balance at Dec. 31, 2020 | $ 0 | $ 6 | 6,148 | (198,708) | (192,554) | |||||||||||
Increase (Decrease) in Redeemable Non-Controlling Interest [Roll Forward] | ||||||||||||||||
Net income | 0 | |||||||||||||||
Ending balance at Dec. 31, 2020 | 0 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Distributions | (226,643) | (226,643) | ||||||||||||||
Business combinations, PIPE financing and others (in shares) | 14,929,982 | |||||||||||||||
Business combination, PIPE financing and others | $ 1 | (77,981) | (77,980) | |||||||||||||
Stock-based compensation | 6,113 | 6,113 | ||||||||||||||
Net income | 13,512 | 13,512 | [1] | |||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | (538,409) | (538,409) | ||||||||||||||
Ending balance (shares) at Dec. 31, 2021 | 14,929,982 | 61,136,800 | ||||||||||||||
Ending balance at Dec. 31, 2021 | $ 1 | $ 6 | $ 12,261 | $ (1,028,229) | (1,015,962) | |||||||||||
Increase (Decrease) in Redeemable Non-Controlling Interest [Roll Forward] | ||||||||||||||||
Net income | 69,902 | |||||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | 538,409 | |||||||||||||||
Ending balance at Dec. 31, 2021 | $ 608,311 | |||||||||||||||
[1] | Net income attributable to CompoSecure, Inc. for the year ended December 31, 2021 is equal to net income for the period subsequent to business combination for the prorated period from December 27, 2021 through December 31, 2021. Net income attributable to non-controlling for the year ended December 31, 2021 is equal to net income for the period from January 1, 2021 through December 31, 2021. See Note 1. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 27, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Cash flows from operating activities | |||||
Net income | $ 83,414 | $ (70,352) | $ 77,815 | $ 81,473 | |
Adjustments to reconcile net income to net cash provided by operating activities | |||||
Depreciation | 10,428 | 9,916 | 8,606 | ||
Equity-based compensation expense | 6,113 | 1,848 | 1,681 | ||
Inventory reserve | 600 | 1,157 | (473) | ||
Amortization of deferred finance costs | 1,654 | 842 | 669 | ||
Change in fair value of earnout consideration liability | $ (9,575) | (9,575) | 0 | 0 | |
Revaluation of warrant liability | (3,485) | (3,485) | 0 | 0 | |
Deferred tax benefit | (857) | 0 | 0 | ||
Changes in assets and liabilities | |||||
Accounts receivable | (19,133) | 10,249 | 5,827 | ||
Inventories | 3,792 | (12,866) | (5,678) | ||
Prepaid expenses and other assets | (1,519) | (94) | 1,343 | ||
Accounts payable | 4,637 | (456) | (29) | ||
Accrued expenses | 1,665 | 332 | (12,725) | ||
Other liabilities | 46 | (1,681) | 492 | ||
Net cash provided by operating activities | 77,780 | 87,062 | 81,186 | ||
Cash flows from investing activities | |||||
Acquisition of property and equipment | (4,746) | (7,501) | (9,642) | ||
Net cash used in investing activities | (4,746) | (7,501) | (9,642) | ||
Cash flows from financing activities | |||||
Business combination and PIPE financing | 60,826 | 0 | 0 | ||
Proceeds from convertible notes | 127,400 | 0 | 0 | ||
Proceeds from line of credit | 0 | 20,000 | 0 | ||
Payment of line of credit | (5,000) | 0 | (18,000) | ||
Proceeds from term loan | 250,000 | 117,500 | 76,000 | ||
Payment of term loan | (240,000) | (10,500) | (11,000) | ||
Deferred finance costs related to debt origination | (1,860) | (3,199) | (1,032) | ||
Distributions pursuant to the business combination | (218,300) | 0 | 0 | ||
Distributions to Holdings' members | (22,334) | (216,668) | (103,808) | ||
Issuance cost related to business combination | (15,244) | 0 | 0 | ||
Net cash used in financing activities | (64,512) | (92,867) | (57,840) | ||
Net increase (decrease) in cash and cash equivalents | 8,522 | (13,306) | 13,704 | ||
Cash and cash equivalents, beginning of period | 13,422 | $ 13,422 | 26,728 | 13,024 | |
Cash and cash equivalents, end of period | $ 21,944 | 21,944 | 13,422 | 26,728 | |
Supplementary disclosure of cash flow information: | |||||
Cash paid for interest expense | 10,101 | 5,317 | 4,889 | ||
Supplemental disclosure of non-cash financing activities: | |||||
Issuance costs payable | $ 23,107 | $ 0 | $ 0 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS CompoSecure, Inc. (“CompoSecure” or the “Company”) is a manufacturer and designer of complex metal, plastic, composite ID and proprietary financial transaction cards. The Company started operations in 2000 and provides products and services primarily to global financial institutions, plastic card manufacturers, government agencies, system integrators, and security specialists. The Company is located in Somerset, New Jersey. The Company creates newly innovated, highly differentiated and customized quality financial payment products to support and increase its customer acquisition, customer retention and organic customer spend. The Company’s customers consist primarily of leading international and domestic banks and other payment card issuers primarily within the United States (“U.S.”), Europe, Asia, Latin America, Canada, and the Middle East. The Company is a platform for next generation payment technology, security, and Cryptocurrency solutions. The Company maintains trusted, highly-embedded and long-term customer relationships with an expanding set of global issuers. The Company entered the digital asset revolution through the launch of its Arculus platform, which commenced in the third quarter of 2021 with the Arculus Key card and companion Arculus Wallet mobile application. The Company has established a niche position in the financial payment card market through nearly over 20 years of innovation and experience and is focused primarily on this attractive subsector of the financial technology market. The Company serves a diverse set of over 20 direct customers and over 80 indirect customers, including some of the largest issuers of credit cards in the U.S. On December 27, 2021 (the "Closing Date"), Roman DBDR Tech Acquisition Corp ("Roman DBDR") consummated the merger pursuant to the Merger Agreement, dated April 19, 2021 (the "Merger Agreement"), by and among Roman DBDR, Roman Parent Merger Sub, LLC, a wholly-owned subsidiary of Roman DBDR incorporated in the State of Delaware ("Merger Sub"), and CompoSecure Holdings, L.L.C., a Delaware limited liability company ("Holdings"). Pursuant to the terms of the Merger Agreement, a business combination between the Company and Holdings was effected through the merger of Merger Sub with and into Holdings, with Holdings surviving as the surviving company and as a wholly-owned subsidiary of Roman DBDR (the "Business Combination"). Pursuant to the Business Combination, the merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. On the Closing Date, and in connection with the closing of the Business Combination, Roman DBDR changed its name to CompoSecure Inc. Holdings was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805 and was accounted for using the acquisition method of accounting. This determination was primarily based on Holdings’ members prior to the Business Combination having a majority of the voting interests in the combined company, Holdings’ operations comprising the ongoing operations of the combined company, Holdings’ members and officers comprising a majority of the board of directors of the combined company, and Holdings’ senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Holdings issuing stock for the net assets of Roman DBDR, accompanied by a recapitalization. The net assets of Roman DBDR are stated at historical cost, with no goodwill or other intangible assets recorded. While Roman DBDR was the legal acquirer in the Business Combination, because Holdings was deemed the accounting acquirer, the historical financial statements of Holdings became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Holdings prior to the Business Combination; (ii) the combined results of the Company and Holdings following the closing of the Business Combination; (iii) the assets and liabilities of Holdings at their historical cost; and (iv) the Company’s equity structure for all periods presented. In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock, $0.0001 par value per share issued to Holdings’ equity holders in connection with the recapitalization transaction. As such, the shares and corresponding capital amounts and earnings per share related to Holdings’ common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination Agreement. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The accompanying consolidated financial statements include the results of operations of the Company and its majority owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to conform to the current year presentation. All dollar amounts are in thousands, unless otherwise noted. Share and per share amounts are presented on a post-conversion basis for all periods presented, unless otherwise noted. The global outbreak of the COVID-19 pandemic continue to rapidly evolve. The Company has taken a number of measures to monitor and mitigate the effects of COVID-19, such as safety and health measures for the employees and securing the supply of materials that are essential to the Company’s production process. At this stage, the impact on the Company’s business and results has not been significant. However, the ultimate impact of the pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicated with confidence, including the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, required social distancing and any additional preventative and protective actions that governments, or the Company, may direct, which could result in an extended period of continued business disruption, reduced customer, collaborator, or supplier traffic and reduced operations. Use of Estimates The preparation of the consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The Company bases its estimates on historical experience, current business factors and various other assumptions believed to be reasonable under the circumstances, all of which are necessary in order to form a basis for determining the carrying values of assets and liabilities. Actual results may differ from those estimates and assumptions. The Company evaluates the adequacy of its reserves and the estimates used in calculations on an on-going basis. Significant areas requiring management to make estimates include the valuation of equity instruments, measurement of changes in the fair value of earnout consideration liability, estimates of derivative liability associated with the exchangeable notes due December 2026, which will be marked to market each quarter based on a Lattice model approach, changes in the fair value of warrant liabilities, valuation allowances on deferred tax assets which are based on an assessment of recoverability of the deferred tax assets against future taxable income and estimates of the inputs used to calculate the tax receivable agreement liability. See Note 7, 9 and 11 for further discussion of the nature of these assumptions and conditions. Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities from the purchase date of three months or less that can be readily convertible into known amounts of cash.Cash and cash equivalents are held at recognized U.S. financial institutions. Interest earned on the short-term investments is reported in the consolidated statements of operations. The carrying amount of cash and cash equivalents approximates its fair value due to its short and liquid nature. Accounts Receivable Accounts receivable are recognized net of allowances for doubtful accounts. In the normal course of business, the Company extends credit to customers that satisfy predefined credit criteria. The Company is required to estimate the collectability of its receivables. Reserves for estimated bad debts are established at the time of sale and are based on an evaluation of accounts receivable aging, and, where applicable, specific reserves on a customer-by-customer basis, creditworthiness of the Company’s customers and prior collection experience to estimate the ultimate collectability of these receivables. At the time the Company determines that a receivable balance, or any portion thereof, is deemed to be permanently uncollectible, the balance is then written off. The Company did not recognize any accounts receivable allowance for doubtful accounts at December 31, 2021 and 2020. Inventories Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out method. Inventories consist of raw material, work in process and finished goods. The Company establishes reserves as necessary for obsolescence and excess inventory. The Company records a reserve for excess and obsolete inventory based upon a calculation using the historical experience, expected future sales volumes, the projected expiration of inventory and specifically identified obsolete inventory. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which ranges from one ten years Revenue Recognition The Company recognizes revenue in accordance with accounting standard ASC 606 when the performance obligations under the terms of the Company’s contracts with its customers have been satisfied. This occurs at the point in time when control of the specific goods or services as specified by each purchase order are transferred to customers. The Company invoices its customers at the time at which control is transferred, with payment terms ranging between 15 and 60 days The majority of the Company’s contracts with its customers have the same performance obligation of manufacturing and transferring the specified number of cards to the customer. Each individual card included within an order constitutes a separate performance obligation, which is satisfied upon the transfer of goods to the customer. The contract term as defined by ASC 606 is the length of time it takes to deliver the goods or services promised under the purchase order or statement of work. As such, the Company’s contracts are generally short term in nature. Revenue is measured in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company accounts for shipping and handling as activities to fulfill its promise to transfer the associated products to its customers. Accordingly, the Company records amounts billed to customers for shipping and handling as revenue. Revenue is recognized net of variable consideration such as discounts, rebates, and returns. The Company’s products do not include an unmitigated right of return unless the product is non- conforming or defective. If the goods are non-conforming or defective, the defective goods are replaced or reworked or, in certain instances, a credit is issued for the portion of the order that was non- conforming or defective. A provision for sales returns and allowances is recorded based on experience with goods being returned. Most returned goods are re-worked and subsequently re-shipped to the customer and recognized as revenue. Historically, returns have not been material to the Company. Additionally, the Company has a rebate program with certain customers allowing for a rebate based on achieving a certain level of shipped sales during the calendar year. This rebate is estimated and updated throughout the year and recorded against revenues and the related accounts receivable. The Company did not have any contract assets or liabilities as of December 31, 2021 and 2020. Shipping and Handling Costs Amounts billed to customers for shipping and handling are classified as revenue. Costs incurred in shipping and handling are recognized in Cost of goods sold in the consolidated statements of operations. Total Shipping and handling costs were approximately $2,308, $1,596, and $1,752, for the years ended December 31, 2021, 2020, and 2019, respectively. Advertising The Company expenses the cost of advertising as incurred. Advertising expense of approximately $17,434, $181, and $313 for the years ended December 31, 2021, 2020, and 2019, respectively, were included in Selling, general and administrative expenses in the consolidated statements of operations. Income Taxes Income taxes are applied to the income attributable to the controlling interest (see Note 8 ) as the income attributable to the non-controlling interest is pass-through income. The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company will continue to evaluate the realizability of our deferred tax assets and liabilities on a quarterly basis, and will adjust such amounts in light of changing facts and circumstances, including but not limited to future projections of taxable income, tax legislation, rulings by relevant tax authorities and the progress of ongoing tax audits, if any. we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized in future periods. The Company was not subject to income taxes due to the then equity structure of the Company prior to Business Combination and was subject to pass through income taxes. Federal, state and local income tax returns for years prior to 2019 are no longer subject to examination by tax authorities. Equity-Based Compensation The Company has equity-based compensation plans and a profits interest which are described in more detail in Note 9. Compensation cost relating to equity-based awards as provided by the arrangements are recognized in the consolidated statements of operations over the requisite service period based on the grant date fair value of such awards. The Company determines the fair value of each option on the date of grant using the Black‑Scholes option pricing model, which is impacted by the fair value of common stock, expected price volatility of common stock, expected term, risk-free interest rates, forfeiture rate and expected dividend yield. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates, in order to derive the Company’s best estimate of awards ultimately expected to vest. Earnout Consideration As a result of the Business Combination, certain of Holdings’ equity holders have the right to receive an aggregate of up to 7,500,000 additional (i) shares of the Company’s class A common stock or (ii) Holdings’ Units (and a corresponding number of shares of the Company’s class B common stock), as applicable, in earnout consideration based on the achievement of certain stock price thresholds (collectively, the “Earnouts”). The valuation of the Earnouts was determined using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. The Company classifies the Earnouts as liabilities at their fair value on the consolidated balance sheet and adjusts the fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in revaluation of Earnout consideration liability in the Company's consolidated statements of operations. A portion of the liability was considered compensation and expensed. See Note 9. Warrant Liability The Company accounts for the warrants in accordance with the guidance contained in ASC 815 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value within warrant liability on the consolidated balance sheet and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in revaluation of warrant liability in the Company’s consolidated statements of operations. The Private Placement Warrants were valued using a Black-Scholes option pricing model. The Public Warrants were valued using the quoted market price as the fair value at the end of each balance sheet date. See Note 11 for more details. Tax Receivable Liability As a result of the Business Combination, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) with Holdings and holders of interests in Holdings. Pursuant to the Tax Receivable Agreement, the Company is required to pay to participating holders of membership units in Holdings 90% of the amount of savings, if any, in U.S. federal, state and local income tax that the Company actually realizes as a result of the utilization of certain tax attributes. The Company recorded $24,500 in tax receivable liability which is recognized in the Company's balance sheet as of December 31, 2021. Selling, General and Administrative Selling, general and administrative (“SG&A”) expenses primarily include expenses related to salaries and commissions, transaction costs, and professional fees. Included in SG&A during the years ended December 31, 2021, 2020, and 2019 were salaries and commissions of $16,103, $12,650, and $14,824, transaction costs of $2,784, $264, and $1,065 and professional fees of $8,350, $6,536, and $4,546, respectively. Net Income (Loss) Per Share The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. The weighted-average number of common shares outstanding during the period includes Class A common stock but is exclusive of Class B common stock as these shares have no economic or participating rights. The Company applies the lower of the treasury stock method or the two-class method in calculating net income (loss) per common share. Diluted net income per share is computed by dividing the net income by the basic weighted-average number of common shares outstanding during the period, adjusted for the potentially dilutive shares of common stock equivalents resulting from the assumed exercise of the warrants, Earnouts, equity awards, Class B units and exchangeable notes only if the effect is not anti-dilutive. Market and Credit Risk Financial instruments that potentially subject the Company to credit risk consist principally of investments in cash, cash equivalents, short-term investments and accounts receivable. The Company’s primary exposure is credit risk on receivables as the Company does not require any collateral for its accounts receivable. Credit risk is the loss that may result from a trade customer’s or counterparty’s nonperformance. The Company uses credit policies to control credit risk, including utilizing an established credit approval process, monitoring customer and counterparty limits, monitoring changes in a customer’s credit rating, employing credit mitigation measures such as analyzing customers’ financial statements, and accepting personal guarantees and various forms of collateral. The Company believes that its customers and counterparties will be able to satisfy their obligations under their contracts. The Company maintains cash, cash equivalents with approved federally insured financial institutions. Such deposit accounts at times may exceed federally insured limits. The Company is exposed to credit risks and liquidity in the event of default by the financial institutions or issuers of investments in excess of FDIC insured limits. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any institution if required. The Company has not experienced any losses on such accounts. Fair Value Measurements The Company determines fair value in accordance with ASC 820 which established a hierarchy for the inputs used to measure the fair value of financial assets and liabilities based on the source of the input, which generally range from quoted prices for identical instruments in a principal trading market i.e. Level 1 to estimates determined using significant unobservable inputs i.e. Level 3. The fair value hierarchy prioritizes the inputs, which refer to assumptions that market participants would use in pricing an asset or liability, based upon the highest and best use, into three levels as follows: The standard describes three levels of inputs that may be used to measure fair value:: ● Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. ● Level 2: Observable inputs other than unadjusted quoted prices in active markets for identical assets or liabilities such as: ● Quoted prices for similar assets or liabilities in active markets ● Quoted prices for identical or similar assets or liabilities in inactive markets ● Inputs other than quoted prices that are observable for the asset or liability ● Inputs that are derived principally from or corroborated by observable market data by correlation or other mean ● Level 3: Unobservable inputs in which there is little or no market data available, which are significant to the fair value measurement and require the Company to develop its own assumptions. The Company’s financial assets and liabilities measured at fair value consisted of cash and cash equivalents, accounts receivable and accounts payable, debt, warrants and earnout consideration. Cash and cash equivalents consisted of bank deposits and short-term investments, such as money market funds, the fair value of which is based on quoted market prices, a Level 1 fair value measure. As of December 31, 2021 and December 31, 2020, the carrying values of cash, accounts receivable and accounts payable approximate fair value because of the short-term maturity of these instruments. The fair value of the Company's debt approximates the carrying value for all periods presented. The Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period. See Note 11. Segments The Company is managed and operated as one business as the entire business is managed by a single management team that reports to the Chief Executive Officer and President. The Company’s chief operating decision-maker is its Chief Executive Officer and President, who makes resource allocation decisions and assesses performance based on financial information presented on an aggregate basis.The Company does not operate separate lines of business with respect to any of its products and does not prepare discrete financial information to allocate resources to separate products or by location. Accordingly, the Company views its business as one reportable operating segment. Recent Accounting Pronouncements — Adopted In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company's financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2021 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2021. The Company elected the package of practical expedients which permits to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. The Company did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change the Company’s previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. The adoption of the new guidance resulted in the recognition of ROU assets of $6,298 and lease liabilities of $6,875. The difference between the ROU assets and the lease liabilities is primarily due to unamortized lease incentive and deferred rent related to the Company’s operating leases at December 31, 2020. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilized its incremental borrowing rate (“IBR”), which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2021 adoption date. The Company utilized a synthetic credit rating model including fundamental analysis per S&P Global Market Intelligence. The Company then utilized the Bloomberg BVAL Pricing Source to determine the option-adjusted spread and added the United States Treasury Constant Maturity for the applicable terms to determine the term structure of the IBR. Based on these calculations, the Company determined applicable discount rates for various points along the yield curve as of January 1, 2021. As a reasonableness check for the yield curve, the Company considered its then revolving credit agreement amendment on November 5, 2020, which extended the term of the agreement through November 5, 2023. The base interest rate on the loan was calculated as LIBOR plus 300 bps which approximates 3.41%. This rate was generally consistent with the yield curve derived, thus the Company determined that the yield curve was appropriate for determining the discount rates for its leases. The Company then interpolated the discount rates in the yield curve to determine the discount rate for each of its existing leases at January 1, 2021. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred, if any. The Company’s lease terms may include options to extend the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of 1 year to 5 years, some of which include options to extend the lease term for up to 3 years. The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities. The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. The Company has elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, the Company will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight line basis over the term of the lease. Operating Leases The Company through its wholly-owned subsidiary Holdings leases certain office space and manufacturing space under arrangements currently classified as leases under ASC 842. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal options ranging from 1 to 5 years. The exercise of lease renewal options is at the Company’s sole discretion. Effective April 1, 2012, the Company entered into a 10-year Effective August 1, 2014, the Company entered into a 4-year lease for additional office and manufacturing space in Somerset, New Jersey terminating in July 31, 2018. The lease contains escalating rental payments. The Company has the option to extend the term for Effective June 16, 2016, the Company entered into a 10-year lease for a new facility. The lease contains escalating rental payments and terminates on September 30, 2026. The agreement also provides for a renewal option at a fixed rate. The base rent is currently approximately $ The Company’s leases have remaining lease terms of 1 The weighted-average remaining lease term for our operating leases was 4.8 year ROU assets and lease liabilities related to our operating leases are as follows: Balance Sheet Classification December 31, 2021 Right-of-use assets Right of use assets $ 5,246 Current lease liabilities Current portion of lease liabilities 1,119 Non-current lease liabilities Non-current portion of lease liabilities 4,709 The Company has lease agreements that contain both lease and non-lease components. The Company accounts for lease components together with non-lease components (e.g., common-area maintenance). Variable lease costs are based on day to day common-area maintenance costs related to the lease agreements and are recognized as incurred. The components of lease costs were as follows: Twelve-month period ended December 31, 2021 Operating lease cost $ 1,305 Variable lease cost 444 Total lease cost $ 1,749 Future minimum commitments under all non-cancelable operating leases are as follows: 2022 $ 1,294 2023 1,298 2024 1,263 2025 1,302 2026 1,096 Later years 97 Total lease payments 6,350 Less: Imputed interest 522 Present value of lease liabilities $ 5,828 Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Twelve-month period ended December 31, 2021 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 1,272 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ — Recent Accounting Pronouncements – Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform ("ASU 2020-04"). ASU 2020-04 provides optional guidance for a limited period of time to ease potential accounting impact associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. The amendments in ASU 2020-04 can be adopted as of March 12, 2020 and are effective through December 31, 2022. However, it cannot be applied to contract modifications that occur after December 31, 2022. LIBOR was expected to be phased out at the end 2021. We do not currently have any contracts that have been changed to a new reference rate, but we will continue to evaluate our contracts and the effects of this standard on our consolidated financial statements prior to adoption. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. This new standard amends the current guidance on the impairment of financial instruments and adds an impairment model known as current expected credit loss (CECL) model that is based on expected losses rather than incurred losses. Under the new guidance, an entity will recognize as an allowance its estimate of expected credit losses. The FASB subsequently issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, derivatives and Hedging, and Topic 825, Financial Instruments and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments — Credit Losses to clarify and address certain items related to the amendments in ASU 2016-13. ASC 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim reporting periods within those fiscal years with early adoption permitted. The Company does not anticipate a significant impact on its consolidated financial statements based on its historical trend of bad debt expense relating to trade accounts receivable. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Dec. 31, 2021 | |
Reverse Recapitalization [Abstract] | |
BUSINESS COMBINATION | 3. BUSINESS COMBINATION On December 27, 2021 (the “Closing Date”), Roman DBDR consummated its Business Combination, pursuant to that Merger Agreement dated April 19, 2021, by and among Roman DBDR, Merger Sub, Holdings and LLR Equity Partners IV, L.P. as subsequently amended by that certain Amendment No. 1 to the Merger Agreement dated as of May 25, 2021 (the “First Amendment” and the Original Merger Agreement as amended by the First Amendment, the “Merger Agreement”). Holdings is considered the Company’s accounting predecessor. On the Closing Date, the Merger Sub of Roman DBDR merged with and into Holdings, with Holdings surviving as a wholly owned subsidiary of Roman DBDR. Upon consummation of the Business Combination, Holdings amended and restated its limited liability company agreement (the “Second Amended and Restated LLC Agreement”) and the holders of issued and outstanding equity of Holdings received a combination of cash consideration, certain newly-issued membership units of Holdings (each, a “Holdings Unit”) and shares of newly-issued Class B Common Stock of the Company, which have no economic value, but entitle the holder to one vote per issued share and were issued on a one-for-one basis for each Holdings Unit retained by the holder following the Merger; the holders of outstanding options to purchase Holdings equity received a combination of cash consideration and options to purchase shares of Class A Common Stock of the Company and the Company received all of the voting units in Holdings. The Holdings’ Second Amended and Restated LLC Agreement, together with an Exchange Agreement entered into at the closing of the transactions contemplated by the Merger Agreement, provides the holders of Holdings Units the right to exchange the Holdings Units, together with the cancellation of an equal number of shares of Class B Common Stock, for Class A Common Stock, subject to certain restrictions set forth therein. Following the Closing, the Company is organized in an “Up-C” structure with a Board of Managers appointed by the Board of Directors of the Company controlling Holdings in accordance with the terms of the Holdings’ Second Amended and Restated LLC Agreement. In addition to the consideration paid at Closing as described above, Holdings’ equity holders have the right to receive an aggregate of up to 7,500,000 additional (i) shares of Class A Common Stock or (ii) Holdings Units (and a corresponding number of shares of Class B Common Stock), as applicable, in earn-out consideration based on the achievement of certain stock price thresholds (collectively, the “Earnouts”). Concurrent with Closing, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) with Holdings and holders of interests in Holdings. Pursuant to the Tax Receivable Agreement, the Company is required to pay to participating holders of membership units in Holdings 90% of the amount of savings, if any, in U.S. federal, state and local income tax that the Company actually realizes as a result of the utilization of certain tax attributes. In addition, concurrent with the Closing, the Company entered into a stockholders agreement (the “Stockholders Agreement”) with certain equity holders of the Company relating to the voting for directors of the Company and containing certain lock-up restrictions, as well as a registration rights agreement that provides customary registration rights to certain equity holders of the Company. In connection with the execution of the Business Combination, the Company entered into separate subscription agreements (each, a "Subscription Agreement") with a number of investors ("Note Holders"), pursuant to which the Note Holders agreed to purchase, and the Company agreed to sell to the Note Holders, an aggregate of 4,500,000 shares of the Company’s class A common stock (the "PIPE Shares"), for a purchase price of $10.00 per share and an aggregate purchase price of $45,000, in a private placement pursuant to the subscription agreements (the "PIPE"). The PIPE investment closed simultaneously with the consummation of the Business Combination. The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Roman DBDR was treated as the "acquired" company for financial reporting purposes. See Note 1, Description of Organization and Business Operations, for further details. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Holdings issuing stock for the net assets of Roman DBDR, accompanied by a recapitalization. The net assets of Roman DBDR are stated at historical cost, with no goodwill or other intangible assets recorded. The following summarizes the net contributions received from the Business Combination and PIPE financing: Recapitalization Cash - Roman DBDR’s trust and cash (net of redemptions) $ 47,359 Cash - PIPE (Common) 45,000 Cash - PIPE (Exchangeable Notes) 130,000 Less: transaction costs and advisory fees paid (34,132) Net Business Combination and PIPE financing $ 188,226 The following table describes the number of shares of common stock issued immediately following the consummation of the Business Combination: Number of Shares Common stock, outstanding prior to Business Combination 23,156,000 Less: redemption of Roman DBDR shares (18,515,018) Common stock of Roman DBDR 4,640,982 Roman DBDR Founder Shares 5,789,000 Shares issued in PIPE 4,500,000 Business Combination and PIPE financing shares - Class A common stock 14,929,982 Class B common stock held by Holdings 61,136,800 Total shares of common stock - Class A and Class B immediately after Business Combination 76,066,782 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | 4. REVENUE RECOGNITION The Company recognizes revenue when the performance obligations under the terms of the Company’s contracts with its customers have been satisfied. This occurs at the point in time when control of the specific goods as specified by each purchase order are transferred to customers. Specific goods refers to the products offered by the Company, including metal cards, high-security documents, and pre-lam materials. Transfer of control passes to customers upon shipment or upon receipt, depending on the agreement with the individual customers. The Company invoices its customers at the time at which control is transferred, with payment terms ranging between 15 and 60 days Disaggregation of Revenue The percentages present the Company’s revenue disaggregated by customer. The majority of the Company’s revenue is earned within these major contracts, with aggregate revenue from the three top customers comprising approximately 79.1%, 74.9% and 82.5% of total revenue in 2021, 2020 and 2019, respectively. Significant Judgments in Application of the Guidance The Company uses the following methods, inputs, and assumptions in determining amounts of revenue to recognize: Determination of Transaction Price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products to the customer. The Company includes any fixed charges within its contracts as part of the total transaction price. In addition, several contracts include variable consideration such as specific sales prices based on certain volume thresholds, discounts, penalties, rebates, refunds, and the customer’s right to return. The Company has concluded that its estimation of variable consideration results in an adjustment to the transaction price such that it is probable that a significant reversal of cumulative revenue would not occur in the future. The accrual for variable consideration is netted against the sale price in determining the transaction price. Assessment of Estimates of Variable Consideration Many of the Company’s contracts with customers contain some component of variable consideration. The Company estimates variable consideration, such as discounts, rebates such as volume based rebate, penalties, and credits, using the expected value method, and adjusts transaction price for its estimate of variable consideration. Throughout the year, we record an accrual that nets down our revenue based on our best estimate of the impact of variable consideration based on cards shipped in each month of the year. We regularly revisit this accrual throughout the year to ensure we are tracking to the correct offset. This effectively factors the volume based rebate into the transaction price. Therefore, management applies the constraint in its estimation of variable consideration for inclusion in the transaction price such that it is probable that a significant reversal of cumulative revenue would not occur in the future. Allocation of Transaction Price The transaction price (including any discounts) is allocated between goods in a multi-element arrangement based on their relative standalone selling prices. The standalone selling prices are determined based on the prices at which the Company separately sells each good. For items that are not sold separately, the Company estimates the standalone selling prices using available information such as market conditions and internally approved pricing guidelines. Significant judgment may be required to determine standalone selling prices for each performance obligation and whether it depicts the amount the Company expects to receive in exchange for the related goods. Practical Expedients and Exemptions As permitted by ASC 606, the Company elected to use certain practical expedients in connection with the implementation of ASC 606. The Company treats shipping and handling activities as fulfillment activities. The Company treats costs associated with obtaining new contracts as expenses when incurred if the amortization period of the asset we would recognize is one year or less. The Company does not adjust the transaction price for significant financing components, as the Company’s contracts typically do not contain provisions for significant advance or deferred payments, nor do they span more than a one year period. The Company applies the optional exemption to not disclose information regarding the allocation of transaction price to remaining performance obligations with an original expected duration of less than one year. The Company applies the practical expedient to not separately evaluate the effects of each contract modification before January 1, 2019. The election of these practical expedients results in accounting treatments that the Company believes are consistent with historical accounting policies and, therefore, these elections of practical expedients do not have a material impact on the comparability of the consolidated financial statements. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 5. INVENTORIES The major classes of inventories were as follows: December 31, 2021 2020 Raw materials $ 27,474 $ 27,157 Work in process 582 1,055 Finished goods 363 3,998 Inventory reserve (2,613) (2,013) $ 25,806 $ 30,197 The Company reviews inventory for slow moving or obsolete amounts based on expected product sales volume and provides reserves against the carrying amount of inventory as appropriate. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: December 31, Useful Life 2021 2020 Machinery and equipment 5 – 10 years $ 59,437 $ 57,360 Furniture and fixtures 3 – 5 years 955 955 Computer equipment 3 – 5 years 925 908 Leasehold improvements Shorter of lease term 11,358 10,875 Vehicles 5 years 264 264 Software 1 – 3 years 2,889 1,186 Construction in progress 985 519 Total 76,813 72,067 Less: Accumulated depreciation and amortization (54,636) (44,208) Property and equipment, net $ 22,177 $ 27,859 Depreciation and amortization expense for the years ended December 31, 2021, 2020, and 2019, was $10,428, $9,916, and $8,606, respectively. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | 7. DEBT Exchangeable Senior Notes On April 19, 2021, concurrently with the execution of the Merger Agreement, the Company and its wholly owned subsidiary, Holdings entered into subscription agreements (the “Note Subscription Agreements”) with certain investors ("Notes Investors") pursuant to which such Notes investors, severally and not jointly, purchased on the Closing Date of the Business Combination, senior notes (the “Exchangeable Notes”) issued by the Company and guaranteed by the Company’s wholly owned subsidiary, Holdings in an aggregate principal amount of up to $130,000,000 that are exchangeable into shares of Class A common stock at a conversion price of $11.50 per share, subject to the terms and conditions of an Indenture entered by the Company and its wholly owned subsidiary, Holdings and the trustee under the Indenture. The Exchangeable Notes will bear interest at a rate of 7% per annum, payable semiannually in arrears. The Exchangeable Notes will mature in five years on December 27, 2026. The Company will settle any exchange of the Exchangeable Notes in shares of Class A common stock, with cash payable in lieu of any fractional shares. In connection with the issuance of the Exchangeable Notes, the Company entered into a Registration Rights Agreement, pursuant to which the Notes Investors received certain registration rights with respect to the Class A Common Stock. Exchangeable Note shall bear interest at the rate of 7.00% per year from December 27, 2021, or from the most recent date to which interest has been paid or provided for to, but excluding, the next scheduled interest payment date until December 15, 2026, unless earlier repurchased or converted pursuant to and in accordance with the provisions of the Indenture. Interest is payable semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2022, to holders of record at the close of business on the preceding June 1 and December 1 (whether or not such day is a Business Day), respectively. Additional interest may be payable as set forth in the Indenture. After the three-year anniversary of the Closing Date, the Exchangeable Senior Notes will be redeemable at any time and from time to time by the Company, in whole or in part, (i) if the Last Reported Sale Price of the Class A common stock exceeds 130% of the exchange price as defined in Indenture then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (ii) so long as a registration statement registering the resale of all Exchange Shares is effective and available for use by holders of Exchangeable Notes during the entirety of the period from and including the date notice of redemption is given to and including the date of redemption. The notice period for any redemption will be no less than 30 scheduled trading days. The redemption price in any such redemption shall be equal to (a) 100% of the principal amount of the Exchangeable Notes to be redeemed, plus (b) accrued and unpaid interest to, but excluding, the redemption date. The redemption price is payable in cash. Per the terms of the Indenture, holders of Exchangeable Notes in connection with any such redemption will receive a make-whole payment equal to the aggregate dollar value of all interest payable from the date the Company delivers notice of such redemption through the maturity of the Exchangeable Notes. The redemption Make-Whole Amount is payable, at the Company’s option, in cash or through an increase in the exchange rate then applicable to the Exchangeable Notes by an amount equal to (i) the redemption Make-Whole Amount divided by (ii) the five day VWAP with regard to the Class A common stock during the five trading period beginning on the trading day immediately following the notice of redemption. Holders of Exchangeable Notes may exchange their notes in whole or in part, at any time or from time to time, for shares of the Company’s Class A common stock, par value $0.0001 per share up to a maximum exchange rate of 99.9999 shares per $1,000 principal amount after adjustments as defined in the indenture. Exchangeable Notes contains customary anti-dilution adjustments, taking into account the agreed terms in Indenture. To avoid doubt, among other customary adjustments, this will include anti-dilution protections for dividends and distributions of the Company’s capital stock, assets and indebtedness. Per terms of the Indenture, the following are the anti-dilution adjustments of the Exchange Rate: a. If the Company exclusively issues shares of common stock as a dividend or distribution on shares of the common stock, or if the Company effects a share split or share combination; b. If the Company issues to all or substantially all holders of the common stock any rights, options or warrants (other than pursuant to a stockholders rights plan) entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of the common stock at a price per share that is less than the average of the last reported sale prices of the common stock for the 10 consecutive trading day period ending on, and including, the trading day immediately preceding the date of announcement of such issuance; c. If the Company distributes shares of its capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its capital Stock or other securities of the Company, to all or substantially all holders of the common stock; d. If any cash dividend or distribution is made to all or substantially all holders of the common stock e. If the Company or any of its Subsidiaries make a payment in respect of a tender or exchange offer for the common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the common stock exceeds the average of the last reported sale prices of the common stock over the 10 consecutive trading day period commencing on, and including, the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer. The exchange rate will in no event be adjusted down pursuant to the provisions described above, except to the extent a tender or exchange offer is announced but not consummated. If the Company undergoes a “fundamental change” (as defined in the Indenture), subject to certain conditions, the exchange rate will be adjusted per the adjustment table included in the Indenture. If a fundamental change occurs at any time prior to the maturity date, each holder shall have the right, at such holder’s option, to require the Company to repurchase for cash all of such holder’s Exchangeable Notes at a repurchase price equal to 100% of the principal amount of the Exchangeable Notes to be repurchased, plus accrued and unpaid interest thereon. There is no make-whole payment associated with a fundamental change redemption. Holders of Exchangeable Notes will be entitled to the resale registration rights under the resale Registration Rights Agreement. If a Registration default occurs, additional interest will accrue, equal to 0.25% in the first 90 days and 0.50% after the 91 st The Indenture contains customary terms and covenants and events of default. Upon an event of default as defined in the Indenture, the trustee or the holders of at least 25% in aggregate principal amount of the Exchangeable Notes may declare 100% of the principal of, and accrued and unpaid interest on, all the Notes to be due and payable immediately, and upon any such declaration, the same shall become and shall automatically be immediately due and payable. Upon an event of default in the payment of interest, the Company may elect the sole remedy to be the payment of additional interest of 0.25% for the first 90 days after the occurrence of such an event of default and 0.50% for day s 91-180 after the occurrence of such an event of default. The Company assessed all terms and features of the Exchangeable notes in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the Exchangeable notes, including the conversion, put and call features. In consideration of these provisions, the Company determined that the optional redemption with a make-whole provision feature required bifurcation. The fair value of the optional redemption with a make-whole provision feature derivative was determined based on the difference between the fair value of the notes with the redemption with a make-whole provision feature and the fair value of the notes without the redemption with a make-whole provision feature. The Company employed a Lattice model and determined that the fair value of the derivative upon issuance of the notes was $552 and recorded this amount as derivative liability with an offsetting amount as a debt discount as a reduction to the carrying value of the notes on the closing date, or December 27, 2021. The optional redemption with a make-whole provision feature will be measured at fair value on a quarterly basis and the change in the fair value for the period will be recorded on the consolidated statements of operations. The Company determined that the change in fair value from December 27, 2021 to December 31, 2021 was not material. The Company determined that the expected life of the Exchangeable Notes was equal to the period through December 27, 2026 as this represents the point at which the Exchangeable Notes will mature unless earlier converted in accordance with their terms prior to such date. For the year ended December 31, 2021, the Company recognized $0.2 million of interest expense related to the Exchangeable Notes at the effective interest rate of 7.4%. The fair value of the Company’s Exchangeable Notes approximate the carrying value of the debt. In connection with the issuance of the Exchangeable Notes, the Company incurred approximately $2,600 of debt issuance costs, which primarily consisted of underwriting fees, and allocated these costs to the liability component and recorded as a reduction in the carrying amount of the debt liability on the balance sheet. The portion allocated to the Exchangeable Notes is amortized to interest expense over the expected life of the Exchangeable Notes using the effective interest method. Term Loan On July 26, 2016, the Company obtained a $120 million credit facility with JP Morgan Chase (“JPMC”) acting as the lending agent (“2016 Credit Facility”). The 2016 Credit Facility provided a revolving loan (“Revolver”) with a maximum aggregate amount of $40 million, and a $80 million term loan (“Term Loan”). In July of 2019, the Company amended its 2016 Credit Facility with JPMC, increasing the maximum aggregate amount available under the revolver to $60,000 and the amount of the term loan to $140,000. In addition, the maturity date of both the revolver and term loan was amended to July 2, 2022. This amendment was accounted for as a modification and approximately $1,065 of additional costs incurred in connection with the modification were capitalized as debt issuance costs. In connection with the amendment, the prior outstanding balance of $64,000 along with $100 of interest was paid-off. Further, two of the lenders in the original agreement did not participate in the amended debt agreement. As such, the balances related to these two lenders were written off by the Company. In November of 2020, the Company entered into a new agreement with JPMC to refinance its existing July 2019 credit facility, increasing the maximum aggregate amount available under the term loan to $240,000 bringing total credit facility to $300,000. In addition, the maturity date of both the revolver and term loan was amended to November 5, 2023. This amendment was accounted for as a modification and approximately $3,200 of additional costs incurred in connection with the modification capitalized as debt issuance costs. In connection with the amendment, the prior outstanding balance were paid-off. Further, one of the lenders in the original agreement did not participate in the amended debt agreement. As such, the balance related to that lender was written off by the Company. In December of 2021, the Company entered into a new agreement with JPMC to refinance its then existing November 2020 credit facility, increasing the maximum aggregate amount available under the term loan to $250,000 bringing total credit facility to $310,000. In addition, the maturity date of both the revolver and term loan was amended to December 16, 2025. This amendment was accounted for as a modification and approximately $1,800 of additional costs incurred in connection with the modification capitalized as debt issuance costs. Interest on the Revolver and Term Loan are based the outstanding principal amount during the interest period multiplied by the fluctuating bank prime rate plus the applicable margin of 2.00% or for portions of the debt converted to Euro Loans the quoted LIBOR rate plus the applicable margin of 3.00%. At December 31, 2021 and 2020, the effective interest rate on the Revolver and Term Loan was 3.65% and 4.36% per annum, respectively. Interest is payable monthly in arrears or upon maturity of the Euro loans that can run 30, 90, 120, 180 day time periods. The Company must pay quarterly an annual commitment fee of 0.40% on the unused portion of the $60 million Revolver commitment. The credit facility is secured by substantially all of the assets of the Company. The terms of the credit facilities impose financial covenants including a minimum interest coverage ratio, a maximum total debt to EBITDA ratio and a minimum fixed charge coverage ratio. At December 31, 2021, the Company was in compliance with all financial covenants. The Company recognized $11,928, $6,142 and $5,453, of interest expense related to the Exchangeable Notes, Revolver and Term Loan for the years ended December 31, 2021, 2020, and 2019, respectively. The balances payable under all borrowing facilities are as follows: December 31, December 31, 2021 2020 Total debt $ 380,000 $ 240,000 Less: current portion of term loan (scheduled payments) 12,500 24,000 Less: debt discount and debt issuance costs, net 7,471 4,113 Total long-term debt $ 360,029 $ 211,887 Derivative liability - redemption with a make-whole provision $ 552 $ — The maturity of the all the borrowings facilities is as follows: Years 2022 $ 12,500 2023 18,750 2024 18,750 2025 200,000 2026 130,000 Total debt $ 380,000 The Company is exposed to interest rate risk on variable interest rate debt obligations. On November 5, 2020, to manage interest rate risk, the Company entered into an interest rate swap agreement ("November 2020 swap agreement") to hedge forecasted interest rate payments on its variable rate debt. At December 31, 2021, the Company’s interest rate swap contract outstanding had a notional amount of $100,000 maturing in November 2023. The Company has designated the interest rate swap as a cash flow hedge for accounting purposes utilizing the hypothetical derivative method. The Company has determined the fair value of the interest rate swap to be zero at the inception of the agreement. The Company has determined the fair value of the interest rate swap to be immaterial at each reporting period and therefore, in the consolidated statements of operations, the Company reflects only the realized gains and losses of the actual monthly settlement activity of the interest rate swap. The Company does not reflect the unrealized changes in fair value of the interest rate swap at each reporting period, and similarly a derivative asset or liability is not recognized at each reporting period in the Company’s financial statements. In January 2022, the Company cancelled the November 2020 swap agreement and entered into a new interest rate swap agreement with a notional amount of $125,000 maturing in December 2025. The terms and conditions of the new contracts were similar to the November 2020 swap agreement. |
EQUITY STRUCTURE
EQUITY STRUCTURE | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
EQUITY STRUCTURE | 8. EQUITY STRUCTURE Shares Authorized As of December 31, 2021, the Company had authorized a total of 250,000,000 shares for issuance designated as Class A common stock, 75,000,000 designated as Class B common stock and 10,000,000 shares designated as preferred stock. As of December 31, 2021, there were 14,929,982 shares of Class A Common Stock issued and outstanding , 61,136,800 shares of Class B Common Stock issued and outstanding and no shares of Preferred Stock issued and outstanding . Warrants As of December 31, 2021, the Company had 10,837,400 shares private warrants outstanding. Each private warrant entitles the registered holder to purchase share of Class A common stock at a price of $11.50 per share, subject to adjustment, at any time commencing 30 days after the completion of the Business Combination. The exercise price and number of common shares issuable upon exercise of the private warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the private warrants will not be adjusted for issuance of common stock at a price below its exercise price. As of December 31, 2021, the Company had 11,578,000 shares public warrants outstanding. Each public warrant entitles the registered holder to purchase one share of the Company’s Class A Common Stock at a price of $11.50 per share, subject to adjustment, at any time commencing 30 days after the completion of the Business Combination. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares. Non-Controlling Interest Non-controlling interests represent direct interests held in Holdings other than by the Company immediately after the Business Combination. The non-controlling interests in the Company are represented by Class B Units, or such other equity securities in the Company as the Board may establish in accordance with the terms hereof. Since the non-controlling interests are redeemable for cash at the option of the Company subject to the terms and conditions, they have been classified as temporary equity on the consolidated balance sheet in accordance with ASC 480. Income tax benefit or provision is applied to the income attributable to the controlling interest as the income attributable to the non-controlling interest is pass-through income. The Company may only issue Class A Units to the parent CompoSecure Inc.The non-controlling interest has been adjusted to redemption value as of December 31, 2021 in accordance with ASC 480-10-S99-3A. This measurement adjustment results in a corresponding adjustment to shareholders’ deficit through adjustments to additional paid-in capital and retained earnings. The redemption value of the Class B Units was $608,311 on December 31, 2021. The redemption value is calculated by multiplying the 61,136,800 Class B Units by the $9.95 trading price of our Class A common stock on December 27, 2021. |
EQUITY COMPENSATION
EQUITY COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
EQUITY COMPENSATION | 9. EQUITY COMPENSATION Equity Incentive Plan In connection with the business combination consummated on December 27, 2021, the Company established CompoSecure, Inc. 2021 Incentive Equity Plan (the “2021 Plan”) effective as of December 27, 2021. The purpose of the 2021 Plan is to provide eligible employees of the Company and its subsidiaries, certain consultants and advisors who perform services for the Company or its subsidiaries, and non-employee members of the Board of directors of the Company, with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units, and other stock-based awards. The aggregate authorized number of shares of Class A common stock that may be issued or transferred as of December 31, 2021 under the Plan is 8,987,609 shares of Class A common stock plus the number of shares of Class A stock underlying grants issued under the Company’s existing amended and restated equity compensation Plan that expire, terminate or are otherwise forfeited without being exercised. Commencing with the first business day of each calendar year beginning in 2022, the aggregate number of shares of Class A Stock that may be issued or transferred under the Plan shall be increased by an amount of shares of Class A Stock equal to 4% of the aggregate number of shares of Class A stock and Class B stock outstanding as of the last day of the immediately preceding calendar year, or such lesser number of shares of Class A Stock as may be determined by the Board. There were no awards granted or outstanding under the 2021 Plan as of December 31, 2021. Employee Stock Purchase Plan Effective December 27, 2021, the Board approved the Employee Stock Purchase Plan (the “ESPP”). The Company authorized 1,650,785 aggregate number of shares of Class A Common Stock reserved for sale pursuant to the ESPP Plan as of December 31, 2021. The number of shares of Class A Common Stock reserved for sale under the ESPP will automatically increase on the first trading day in January each calendar year during the term of the ESPP, beginning with the 2022 calendar year, by 1% of the total number of shares of class A common stock and class B common stock outstanding on the last trading day in the immediately preceding calendar month, but in no event shall any such annual increase exceed 1,686,531 shares or a lesser number of shares as determined by the administrator of the ESPP. The ESPP permits participating eligible employees to purchase class A common stock, with after-tax payroll deductions, on a quarterly basis at a 15% discount at the closing price of the Common Stock on the Nasdaq on the first day of the offering period. The Board may suspend or terminate the ESPP at any time to become effective immediately following the close of any offering period. As of December 31, 2021, there were 1,650,785 shares of common stock remaining authorized for issuance under the ESPP. The Company will recognize the discount on the Common Stock issued under the ESPP as stock-based compensation expense in the period in which the employees will begin participating in the ESPP. Holdings’ 2015 Incentive Plan Holdings’ May 2015 equity incentive Plan (the “2015 Plan”) provided for the grant of options, Class C unit appreciation rights, restricted Class C units, unrestricted Class C unit awards and other equity awards to certain employees and officers. The exercise price of unit options granted under the 2015 Plan was equal to the fair market value of the Holdings’ members’ equity at the date of grant. Options vest and become exercisable incrementally over a 5-year 4-year Upon consummation of the Business Combination on December 27, 2021 (see Note 3), Holdings amended and restated its 2015 Plan and the holders of issued and outstanding equity of 2015 Plan received a combination of cash consideration, certain newly-issued membership units of Holdings and shares of newly-issued class B common stock of the Company, which have no economic value, but entitle the holder to one vote per issued share and were issued on a one-for-one basis for each Holdings Unit retained by the holder following the Merger. All incentive units available for grants under the 2015 Plan at the time of the consummation will be made available for new award grants under the 2021 Plan and no further awards will be granted under the 2015 Plan. As a result, all of the options, whether vested or unvested, outstanding immediately prior to the merger that were not settled as part of the transaction were assumed by the Company and converted into an option to purchase shares of class A common stock. Each converted options continue to have and be subject to substantially the same material terms and conditions as were applicable to such options under the 2015 Plan except that each converted option shall be exercisable for, and represent the right to acquire, that number of shares of Class A common stock equal to the product (rounded down to the nearest whole number) of (A) the number of Units subject to the converted option immediately before the merger effective time multiplied by (B) the equity award exchange Ratio at an exercise price per share equal to the quotient of (i) the exercise price per unit of such converted option immediately before the consummation of the Business Combination divided by (ii) the Equity Award Exchange Ratio (rounding the resulting exercise price up to the nearest whole cent). Except as specifically provided in the Business Combination Agreement, following the Business Combination, each exchanged option will continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Holdings 2015 Plan immediately prior to the consummation of the Business Combination. As a result of the modification, all of 9,778 options outstanding right before the Business Combination were recapitalized into 6,823,006 options of which 1,413,235 were settled and 5,409,771 remain outstanding at December 31, 2021. There was no incremental expense recognized since the options were recapitalized with terms consistent with prior awards and there were no incremental changes to fair value. There were a total of twelve Earnout Consideration As a result of the Business Combination, certain of Holdings’ equity holders have the right to receive an aggregate of up to 7,500,000 additional (i) shares of the Company’s class A common stock or (ii) Holdings’ Units (and a corresponding number of shares of the Company's class B common stock), as applicable, in earnout consideration based on the achievement of certain stock price thresholds (collectively, the “Earnouts”). There were a total of 657,160 shares subject to ASC 718, or 328,580 shares for each Phase since they were issued to the Company’s employees. Upon the transaction date, a valuation was performed which took into consideration all the key terms and conditions of the award, including the fact that, under Topic 718, there is no requisite service period due to the fact that there is no service condition prospectively, and as of the grant date there is no service inception date preceding the grant date on which to base historical valuation or expense amortization. As such, the award is considered to be immediately vested from a service perspective, and is solely contingent on meeting the hurdles required for the award to be settled. Since there is no future substantive risk of forfeiture, all expenses associated with the awards were accelerated and recognized on December 27, 2021. There were a total of 657,160 shares subject to Topic 718 or 328,580 shares per Phase with an intrinsic value of $5,395 as of December 31, 2021. The Company recognized a total expense of $4,610 related to Earnouts in its consolidated statements of operations for the year ended December 31, 2021. The valuation of the Earnouts was determined using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. The following assumptions were used to determine the grant date fair value for these Earnouts: Year Ended 12/27/2021 Valuation date share price $ 9.95 Risk-free interest rate 0.98% - 1.12 % Expected volatility 57.92% - 58.88 % Expected dividends 0 % Expected forfeiture rate 0 % Expected term 3 - 4 years Holdings' Options Valuation In the year ended 2021, Holdings granted no stock options, restricted stock units, or profits interests, and no awards were forfeited. Prior to the completion of the Business Combination the fair value of Holdings options was determined by using the Black-Scholes option valuation model based upon information available at the time of grant. The calculated value of each option award was estimated at the date of grant using the Black-Scholes option valuation model. The expected term assumption reflected the period for which the Holdings believed the option will remain outstanding. This assumption was based upon the historical and expected behavior of the Holdings’ employees. Holdings had elected to use the calculated value method to account for the options it had issued. A nonpublic entity that is unable to estimate the expected volatility of the price of its underlying share may measure awards based on a “calculated value,” which substitutes the volatility of an appropriate index for the volatility of the entity’s own share price. To determine volatility, the Holdings had used the historical closing values of comparable publicly held entities to estimate volatility. The risk-free rate reflected the U.S. Treasury yield curve for a similar expected life instrument in effect at the time of the grant. The assumptions utilized to calculate the value of the options granted for the year ended December 31, 2020 and 2019, respectively, were as below: 2020 2019 Expected term 1 year 1.25 years Volatility 44.00 % 30.00 % Risk-free rate 1.07 % 2.36 % Expected dividends 0 % 0 % Expected forfeiture rate 0 % 0 % Stock Options activity Upon consummation of the Business Combination, Holdings options were assumed by the Company and recapitalized. Because of the nature of the recapitalization in a Business Combination, the Company recalculated new fair values for the affected stock options and profits interest to preserve the total grant date fair value originally issued. All stock option activity was retroactively restated to reflect the exchanged options. The following table sets forth the options activity under the Holdings’ equity plan which was assumed by the Company and recapitalized for the year ended December 31, 2021: Weighted Weighted Average Aggregate Average Remaining Intrinsic Number Exercise Price Contractual Value of Shares Per Shares Term (years) (in thousands) Outstanding at January 1, 2021 6,823,006 $ 1.15 5.4 $ 72,489 Granted — — — — Exercised 1,413,235 $ 0.71 13,133 Outstanding at December 31, 2021 5,409,771 $ 1.27 4.1 37,542 Vested and expected to vest at December 31, 2021 5,409,771 $ 1.27 4.1 37,542 Exercisable at December 31, 2021 4,947,921 $ 0.91 3.9 36,104 The weighted average calculated grant date fair value per time-vested option granted during the years ended December 31, 2020 and 2019 were $6.36 and $4.31, respectively. The Company recognized approximately $1,310, $1,143, and $1,211 of compensation expense for the options in Selling, general and administrative expenses in the accompanying consolidated statements of operations in 2021, 2020, and 2019, respectively. The number of options exercisable and vested as of December 31, 2021, 2020, and 2019 were 4,947,921, 5,894,922 and 5,128,908 respectively. The weighted average exercise price of options exercisable and vested is $1.26, $406.63, and $265.62 for years ended December 31, 2021, 2020, and 2019, respectively. The weighted average remaining contractual years term (years) per options exercisable as of December 31, 2021, 2020, and 2019 is 3.9, 4.9, and 5.7, respectively. Unrecognized compensation expense for the options of approximately $1,425 is expected to be recognized during the next three years. Profits Interest On May 11, 2017, the members of the Holdings executed a Limited Liability Company Agreement for an entity formed in 2016 titled CompoSecure Employee LLC. The purpose of the entity was to hold Operating Incentive units. In May 2017, the Company granted 1,320,765 incentive units with a profits interest hurdle of $232,232. No interests were granted during the period ended December 31, 2021. Upon consummation of the Business Combination on December 27, 2021, all of the incentive units, whether vested or unvested, outstanding immediately prior to the merger that were not settled as part of the transaction, were assumed by the Company and converted into class B common stock. The total class B common stock outstanding were 1,236,027 as of December 31, 2021 with an aggregate intrinsic value of $10,843. The Company recognized approximately $193, $433, and $470 of compensation expense for the incentive units in Selling, general and administrative expenses in the accompanying consolidated statements of operations in 2021, 2020, and 2019, respectively. Unrecognized compensation expense for the incentive units of approximately $39 is expected to be recognized during the next one year. |
RETIREMENT PLAN
RETIREMENT PLAN | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
RETIREMENT PLAN | 10. RETIREMENT PLAN Defined Contribution Plan The Company has a 401(k) profit sharing plan for all full-time employees who have attained the age of 21 and completed 90 Deferred Compensation Plan The Company has a self-administered deferred compensation plan that accrues a liability for the benefit of certain employees equal to 0.25% year-over-year change in Earnings Before Interest Depreciation “EBITDA” that began in 2014. The Company made an initial contribution of $150 with an additional contribution of $0, $0, and $501 for years ended December 31, 2021, 2020, and 2019, respectively. The total liability was $242 and $1,534 at December 31, 2021 and 2020, respectively, and is recorded in other liabilities on the balance sheet. The Plan vests over a seven year period according to the following vesting schedule: Year 1 — 0.0%, Year 2 — 5.0%, Year 3 — 15.0%, Year 4 — 20.0%, Year 5 — 30.0%, Year 6 — 50.0%, Year 7 — 100%. Since plan inception $1,223 has vested of the recorded liability. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 11 . FAIR VALUE MEASUREMENTS In accordance with ASC 820-10, the Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. This determination requires significant judgments to be made by the Company. The Company’s financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as of the following dates: Level 1 Level 2 Level 3 Total December 31, 2021 Liabilities Carried at Fair Value: Public warrants $ — $ 17,714 $ — $ 17,714 Private warrants — — 17,557 17,557 Earnout consideration — — 38,427 38,427 Derivative liability - redemption with make-whole provision — — 552 552 Warrant Liability As a result of the Business Combination, the Company assumed warrant liability related to previously issued warrants in connection with Roman’s initial public offering. The warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on our balance sheet. The warrant liabilities were remeasured at fair value upon business combination and subsequently at December 31, 2021, with changes in fair value presented within revaluation of warrant liabilities in the statement of operations. Initial Measurement The Company established the initial fair value of the warrants upon the business combination date using the Black Scholes Option Pricing Model. The following table provides a reconciliation of the ending balances for the warrant liabilities remeasured at fair value: Warrant Liabilities Assumed warrant liability upon business combination at December 27, 2021 38,756 Change in estimated fair value (3,485) Estimated fair value at December 31, 2021 35,271 The Public Warrants were valued using the quoted market price as the fair value at the end of each balance sheet date. The Private Placement Warrants were valued using the Black Scholes Option Pricing Model. The following assumptions were used to determine the fair value of the private warrants as of December 31, 2021: 12/31/2021 Exercise Price $ 11.50 Risk-free interest rate 1.26 % Expected volatility 33 % Expected dividends 0 % Expected term (years) 4.9 years Common Stock market value $ 8.21 The fair value of warrants has been classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently readily observable in the market. If different assumptions were used for the various inputs to the valuation approach, the estimated fair value could be significantly higher or lower than the fair value determined. Earnout Consideration Holdings' equity holders have the right to receive an aggregate of up to 7,500,000 additional (i) shares of the Company’s class A common stock or (ii) Holdings Units (and a corresponding number of shares of the Company’s class B common stock), as applicable, in Earnout consideration based on the achievement of certain stock price thresholds. See also Note 9. Earnout Considerations held by Holdings’ holders (not including the holders under ASC 718) were determined to be derivative instruments in accordance with ASC 815 and were accounted as derivative liabilities, initially valued at fair value in accordance with ASC 815-40-30-1. Subsequently, the liability for Earnouts will be remeasured at each reporting period at fair value, with changes in fair value recorded in earnings in accordance with ASC 815-40-35-4. The Company established the initial fair value for the earnouts at the closing date on December 27, 2021 using a Monte Carlo simulation model. Subsequently, the Company remeasured the fair value of the earnouts at December 31, 2021. The following table provides a reconciliation of the ending balances for the earnout consideration liabilities remeasured at fair value: Earnout Consideration Liability Fair value recognized upon business combination (48,002) Change in estimated fair value 9,575 Estimated fair value at December 31, 2021 $ (38,427) The following assumptions were used to determine the fair value of the Earnout considerations as of December 31, 2021: 12/31/2021 Valuation date share price $ 8.21 Risk-free interest rate 0.97% - 1.12 % Expected volatility 67.5 % Expected dividends 0 % Expected term (years) 3 - 4 years The fair value of Earnouts has been classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently readily observable in the market. If different assumptions were used for the various inputs to the valuation approach, the estimated fair value could be significantly higher or lower than the fair value determined. |
GEOGRAPHIC INFORMATION AND CONC
GEOGRAPHIC INFORMATION AND CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
GEOGRAPHIC INFORMATION AND CONCENTRATIONS | 12. GEOGRAPHIC INFORMATION AND CONCENTRATIONS The Company headquarters and substantially all of its operations, including its long-lived assets, are located in the United States. Geographical revenue information based on the location of the customer follows: Year Ended December 31, 2021 2020 2019 Net sales by country Domestic $ 218,441 $ 213,982 $ 191,502 International 49,507 46,604 51,788 Total $ 267,948 $ 260,586 $ 243,290 The Company’s principal direct customers as of December 31, 2021 consist primarily of leading international and domestic banks and other credit card issuers primarily within the U.S., Europe, Asia, Latin America, Canada, and the Middle East. The Company periodically assesses the financial strength of these customers and establishes allowances for anticipated losses, if necessary. Two customers individually accounted for more than 10% of the Company’s revenue or 71.9% of total revenue for the year ended December 31, 2021. Two customers individually accounted for more than 10% of the Company’s revenue or 72.1% of total revenue for the year ended December 31, 2020. Three customers individually accounted for more than 10% of the Company’s revenue or 74.9% of total revenue for the year ended December 31, 2019. Two customers individually accounted for more than 10% of the Company’s accounts receivable or approximately 66% as of December 31, 2021 and two customers individually accounted for 10% of total accounts receivable or 61% as of December 31, 2020, respectively. The Company primarily relied on two vendors that individually accounted for more than 10% of purchases of supplies for the year ended December 31, 2021. The Company primarily relied on four vendors that individually accounted for more than 9% of purchases of supplies for the year ended December 31, 2020. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 13. INCOME TAXES The Company recorded $857 for the tax benefit for the period from December 27, 2021 to December 31, 2021. No provisions/benefits were made for federal or state income taxes for the years ended December 31, 2020, and 2019 as prior to the Business Combination, the Company was not subject to income taxes due to the then equity structure of the Company and was subject to pass through income taxes. Federal, state and local income tax returns for years prior to 2019 are no longer subject to examination by tax authorities. Income before the benefit for income taxes as shown in the accompanying consolidated statements of operations is as follows: Years Ended December 31, 2021 2020 2019 Income before income taxes $ 82,557 $ 77,815 $ 81,473 Income before income taxes attributable to period subsequent to business combination for the year ended December 31, 2021 $ 12,206 — — The Company calculated income taxes on prorated income only for the days remaining subsequent to the Business Combination for the year ended December 31, 2021. The components of the benefit for income taxes for the year ended December 31, 2021 consisted of the following: Year Ended December 31, 2021 Current: Federal $ — State — — Deferred: Federal (856) State (1) (857) Total benefit from income taxes $ (857) The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the year ended December 31, 2021 was as follows: Year Ended December 31, 2021 U.S. federal statutory tax rate 21.00 % State taxes 0.03 % Valuation allowances — NCI adjustment (18.53) % Permanent differences (3.35) % Effective income tax rate (0.85) % The Company’s overall effective tax rate is affected primarily by the non-controlling interest adjustment as the income attributable to the non-controlling interest is pass-through income. Provisions have been made for deferred taxes based on the differences between the basis of the assets and liabilities for financial statement purposes and the basis of the assets and liabilities for tax purposes using currently enacted tax rates and regulations that will be in effect when the differences are expected to be recovered or settled. The components of the deferred tax assets were as follows: December 31, 2021 Deferred Tax Assets: Investment in Holdings $ 29,102 Imputed Interest 623 Earnout consideration liability 970 Federal R&D Credit — Net operating loss carryforward 819 Total deferred tax assets $ 31,514 valuation allowance (5,864) Total deferred tax assets net of valuation allowance $ 25,650 The deferred taxes primarily result from the Business Combination where the Company recorded a carryover basis on all assets for financial accounting purposes and a fair value step-up on a portion of the assets for income tax purposes. The Company’s deferred tax asset was reviewed for expected utilization using a “more likely than not” approach by assessing the available positive and negative evidence surrounding its recoverability. Accordingly, a valuation allowance has been recorded against the Company’s deferred tax asset, as it was determined that it was “more likely than not” that the Company’s deferred tax assets would not be fully realized. As of December 31, 2021, the Company determined that considering all of these factors, a $5,864 valuation allowance would be established. The Company will continue to assess and evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and will reduce the valuation allowance appropriately at such time when it is determined that the “more likely than not” criteria is satisfied. The Company has net operating losses (“NOL”) of approximately $3,892 for federal purposes which do not expire; however, they are limited to 80% of taxable income. State NOL’s of approximately $8 which expire beginning in 2042. Realization of the NOL carryforwards and other deferred tax temporary differences is contingent on future taxable earnings. There were no significant uncertain tax positions taken, or expected to be taken, in a tax return that would be determined to be an unrecognized tax benefit taken or expected to be taken in a tax return that should have been recorded on the Company’s financial statements for the year ended December 31, 2021. Additionally, there were no interest or penalties outstanding as of the fiscal year ended December 31, 2021. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 14. EARNINGS PER SHARE Basic net income per share has been computed by dividing net income attributable to class A common shareholders for the period subsequent to the business combination by the weighted average number of shares of common stock outstanding for the same period. Diluted earnings per share of Class A common stock were computed by dividing net income available to CompoSecure, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. No earnings per share are presented for periods preceding the business combination as only the Class B common stock would have been outstanding in historical periods pursuant to the reverse recapitalization and the Class B common stock do not participate in the Company’s income or loss and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. The following table sets forth the computation of net income used to compute basic net income per share of Class A common stock for the year ended December 31, 2021. The basic and diluted earnings per share period for the year ended December 31, 2021, represents only the period from December 27, 2021 to December 31, 2021, which represents the period wherein we had outstanding Class A common stock. Year Ended December 31, 2021 Basic and diluted: Net income $ 83,414 Less: Net income attributable to Holdings L.L.C. prior to business combination (70,352) Less: Net income attributable to non-controlling interest subsequent to business combination 450 Net income attributable to CompoSecure, Inc for period subsequent to business combination $ 13,512 Plus: adjustment due to net effect of dilutive class B units, stock options and exchangeable notes to net income (331) Net income attributable to CompoSecure, Inc for period subsequent to business combination after adjustment $ 13,181 Weighted average common shares outstanding used in computing net income per share—basic 14,930 Weighted average common shares outstanding used in computing net income per share—diluted 94,926 Net income per share – basic $ 0.91 Net income per share – diluted $ 0.14 The difference between basic and diluted shares is that diluted shares include the dilutive effect of the assumed exercise of outstanding securities. The Company’s stock options, warrants, earnouts and exchangeable notes could have the most significant impact on diluted shares. Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the average closing price of the Company’s common stock during the period, because their inclusion would result in an antidilutive effect on per share amounts. The Company applied if-converted method for the convertible debt to calculate diluted earnings per share in accordance of ASU 2020-06. The following amounts were not included in the calculation of net income per diluted share because their effects were anti-dilutive: Year Ended December 31, 2021 Denominator: Warrants 22,415 Earnout Shares 7,500 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases certain office space and manufacturing space under arrangements currently classified as leases under ASC 842. See Note 2 for future minimum commitments under all non-cancelable operating leases. Litigation The Company may be, from time to time, party to various disputes and claims arising from normal business activities. The Company accrues for amounts related to legal matters if it is probable that a liability has been incurred and the amount is reasonably estimable. while the outcome of existing disputes and claims is uncertain, the Company does not expect that the resolution of existing disputes and claims would have a material adverse effect on its consolidated financial position or liquidity or the Company’s consolidated results of operations. Litigation expenses are expensed as incurred. During first quarter of 2021, the Company received from a third party a notice of dispute with respect to whether commissions are due and owing on product sales to certain of the Company’s customers which, if successful, could require payments ranging from $4,000 to $11,000, plus costs and expenses, together with additional commission payments on future sales, if any, to such customers. The Company does not believe these commissions are owed, and intends to vigorously oppose this claim, which may include legal proceedings. The Company has not accrued any amount as a component of accrued expense related to the notice of dispute as of December 31, 2021. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS In November 2015, the Company entered into a sales representation agreement with a third party, partially owned by an individual who is a Class B member of Holdings and who was then a member of Holdings’ Board of Managers. In 2016, the Company commenced litigation against such third party seeking a judicial determination that the sales representation agreement was void and unenforceable, among other claims. In February 2018, the trial court ruled against Holdings in the litigation, concluding that the sales representation agreement was valid and enforceable. Holdings appealed the ruling, however, the ruling was upheld. As a result of the ruling, Holdings was instructed to pay the commissions in accordance with the terms of the sales representation agreement, interest related to the commissions, and legal fees on behalf of the third party. Expenses relating to this agreement for the years ended December 31, 2021, 2020, and 2019 amounted to $9,508, $6,724, and $9,232, respectively and were recorded as a component of selling, general and administrative expenses. In October 2019, Holdings terminated the sales representation agreement. Customers in place prior to the termination of the agreement are subject to the arrangement and are eligible for future commissions, which are payable and are being accrued and paid in accordance with the terms of the sales representation agreement. Amounts accrued as a component of accrued expenses as of December 31, 2021, and December 31, 2020 related to this agreement amounted to $3,402 and $2,786. In March 2021, the Company received from such third party a notice of dispute with respect to whether commissions are due and owing on product sales to certain of the Company’s customers which, if successful, could require payments ranging from $4,000 to $11,000, plus costs and expenses, together with additional commission payments on future sales, if any, to such customers. The Company does not believe these commissions are owed, and intends to vigorously oppose this claim, which may include legal proceedings. The Company has not accrued any amount as a component of accrued expense related to the notice of dispute as of December 31, 2021. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The Company bases its estimates on historical experience, current business factors and various other assumptions believed to be reasonable under the circumstances, all of which are necessary in order to form a basis for determining the carrying values of assets and liabilities. Actual results may differ from those estimates and assumptions. The Company evaluates the adequacy of its reserves and the estimates used in calculations on an on-going basis. Significant areas requiring management to make estimates include the valuation of equity instruments, measurement of changes in the fair value of earnout consideration liability, estimates of derivative liability associated with the exchangeable notes due December 2026, which will be marked to market each quarter based on a Lattice model approach, changes in the fair value of warrant liabilities, valuation allowances on deferred tax assets which are based on an assessment of recoverability of the deferred tax assets against future taxable income and estimates of the inputs used to calculate the tax receivable agreement liability. See Note 7, 9 and 11 for further discussion of the nature of these assumptions and conditions. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments with original maturities from the purchase date of three months or less that can be readily convertible into known amounts of cash.Cash and cash equivalents are held at recognized U.S. financial institutions. Interest earned on the short-term investments is reported in the consolidated statements of operations. The carrying amount of cash and cash equivalents approximates its fair value due to its short and liquid nature. |
Consolidation | The accompanying consolidated financial statements include the results of operations of the Company and its majority owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. |
Reclassifications | Certain reclassifications have been made to conform to the current year presentation. |
Accounts Receivable | Accounts Receivable Accounts receivable are recognized net of allowances for doubtful accounts. In the normal course of business, the Company extends credit to customers that satisfy predefined credit criteria. The Company is required to estimate the collectability of its receivables. Reserves for estimated bad debts are established at the time of sale and are based on an evaluation of accounts receivable aging, and, where applicable, specific reserves on a customer-by-customer basis, creditworthiness of the Company’s customers and prior collection experience to estimate the ultimate collectability of these receivables. At the time the Company determines that a receivable balance, or any portion thereof, is deemed to be permanently uncollectible, the balance is then written off. The Company did not recognize any accounts receivable allowance for doubtful accounts at December 31, 2021 and 2020. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out method. Inventories consist of raw material, work in process and finished goods. The Company establishes reserves as necessary for obsolescence and excess inventory. The Company records a reserve for excess and obsolete inventory based upon a calculation using the historical experience, expected future sales volumes, the projected expiration of inventory and specifically identified obsolete inventory. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which ranges from one ten years |
Revenue Recognition and Shipping and Handling Costs | The Company recognizes revenue in accordance with accounting standard ASC 606 when the performance obligations under the terms of the Company’s contracts with its customers have been satisfied. This occurs at the point in time when control of the specific goods or services as specified by each purchase order are transferred to customers. The Company invoices its customers at the time at which control is transferred, with payment terms ranging between 15 and 60 days The majority of the Company’s contracts with its customers have the same performance obligation of manufacturing and transferring the specified number of cards to the customer. Each individual card included within an order constitutes a separate performance obligation, which is satisfied upon the transfer of goods to the customer. The contract term as defined by ASC 606 is the length of time it takes to deliver the goods or services promised under the purchase order or statement of work. As such, the Company’s contracts are generally short term in nature. Revenue is measured in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company accounts for shipping and handling as activities to fulfill its promise to transfer the associated products to its customers. Accordingly, the Company records amounts billed to customers for shipping and handling as revenue. Revenue is recognized net of variable consideration such as discounts, rebates, and returns. The Company’s products do not include an unmitigated right of return unless the product is non- conforming or defective. If the goods are non-conforming or defective, the defective goods are replaced or reworked or, in certain instances, a credit is issued for the portion of the order that was non- conforming or defective. A provision for sales returns and allowances is recorded based on experience with goods being returned. Most returned goods are re-worked and subsequently re-shipped to the customer and recognized as revenue. Historically, returns have not been material to the Company. Additionally, the Company has a rebate program with certain customers allowing for a rebate based on achieving a certain level of shipped sales during the calendar year. This rebate is estimated and updated throughout the year and recorded against revenues and the related accounts receivable. The Company did not have any contract assets or liabilities as of December 31, 2021 and 2020. |
Advertising | Advertising The Company expenses the cost of advertising as incurred. Advertising expense of approximately $17,434, $181, and $313 for the years ended December 31, 2021, 2020, and 2019, respectively, were included in Selling, general and administrative expenses in the consolidated statements of operations. |
Income Taxes | Income Taxes Income taxes are applied to the income attributable to the controlling interest (see Note 8 ) as the income attributable to the non-controlling interest is pass-through income. The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company will continue to evaluate the realizability of our deferred tax assets and liabilities on a quarterly basis, and will adjust such amounts in light of changing facts and circumstances, including but not limited to future projections of taxable income, tax legislation, rulings by relevant tax authorities and the progress of ongoing tax audits, if any. we consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized in future periods. The Company was not subject to income taxes due to the then equity structure of the Company prior to Business Combination and was subject to pass through income taxes. Federal, state and local income tax returns for years prior to 2019 are no longer subject to examination by tax authorities. |
Equity-Based Compensation | Equity-Based Compensation The Company has equity-based compensation plans and a profits interest which are described in more detail in Note 9. Compensation cost relating to equity-based awards as provided by the arrangements are recognized in the consolidated statements of operations over the requisite service period based on the grant date fair value of such awards. The Company determines the fair value of each option on the date of grant using the Black‑Scholes option pricing model, which is impacted by the fair value of common stock, expected price volatility of common stock, expected term, risk-free interest rates, forfeiture rate and expected dividend yield. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates, in order to derive the Company’s best estimate of awards ultimately expected to vest. |
Earnout Consideration | Earnout Consideration As a result of the Business Combination, certain of Holdings’ equity holders have the right to receive an aggregate of up to 7,500,000 additional (i) shares of the Company’s class A common stock or (ii) Holdings’ Units (and a corresponding number of shares of the Company’s class B common stock), as applicable, in earnout consideration based on the achievement of certain stock price thresholds (collectively, the “Earnouts”). The valuation of the Earnouts was determined using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. The Company classifies the Earnouts as liabilities at their fair value on the consolidated balance sheet and adjusts the fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in revaluation of Earnout consideration liability in the Company's consolidated statements of operations. A portion of the liability was considered compensation and expensed. See Note 9. |
Warrant Liability | Warrant Liability The Company accounts for the warrants in accordance with the guidance contained in ASC 815 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value within warrant liability on the consolidated balance sheet and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in revaluation of warrant liability in the Company’s consolidated statements of operations. The Private Placement Warrants were valued using a Black-Scholes option pricing model. The Public Warrants were valued using the quoted market price as the fair value at the end of each balance sheet date. See Note 11 for more details. |
Tax Receivable Liability | Tax Receivable Liability As a result of the Business Combination, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) with Holdings and holders of interests in Holdings. Pursuant to the Tax Receivable Agreement, the Company is required to pay to participating holders of membership units in Holdings 90% of the amount of savings, if any, in U.S. federal, state and local income tax that the Company actually realizes as a result of the utilization of certain tax attributes. The Company recorded $24,500 in tax receivable liability which is recognized in the Company's balance sheet as of December 31, 2021. |
Selling, General and Administrative | Selling, General and Administrative Selling, general and administrative (“SG&A”) expenses primarily include expenses related to salaries and commissions, transaction costs, and professional fees. Included in SG&A during the years ended December 31, 2021, 2020, and 2019 were salaries and commissions of $16,103, $12,650, and $14,824, transaction costs of $2,784, $264, and $1,065 and professional fees of $8,350, $6,536, and $4,546, respectively. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. The weighted-average number of common shares outstanding during the period includes Class A common stock but is exclusive of Class B common stock as these shares have no economic or participating rights. The Company applies the lower of the treasury stock method or the two-class method in calculating net income (loss) per common share. Diluted net income per share is computed by dividing the net income by the basic weighted-average number of common shares outstanding during the period, adjusted for the potentially dilutive shares of common stock equivalents resulting from the assumed exercise of the warrants, Earnouts, equity awards, Class B units and exchangeable notes only if the effect is not anti-dilutive. |
Market and Credit Risk | Market and Credit Risk Financial instruments that potentially subject the Company to credit risk consist principally of investments in cash, cash equivalents, short-term investments and accounts receivable. The Company’s primary exposure is credit risk on receivables as the Company does not require any collateral for its accounts receivable. Credit risk is the loss that may result from a trade customer’s or counterparty’s nonperformance. The Company uses credit policies to control credit risk, including utilizing an established credit approval process, monitoring customer and counterparty limits, monitoring changes in a customer’s credit rating, employing credit mitigation measures such as analyzing customers’ financial statements, and accepting personal guarantees and various forms of collateral. The Company believes that its customers and counterparties will be able to satisfy their obligations under their contracts. The Company maintains cash, cash equivalents with approved federally insured financial institutions. Such deposit accounts at times may exceed federally insured limits. The Company is exposed to credit risks and liquidity in the event of default by the financial institutions or issuers of investments in excess of FDIC insured limits. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any institution if required. The Company has not experienced any losses on such accounts. |
Fair Value Measurements | Fair Value Measurements The Company determines fair value in accordance with ASC 820 which established a hierarchy for the inputs used to measure the fair value of financial assets and liabilities based on the source of the input, which generally range from quoted prices for identical instruments in a principal trading market i.e. Level 1 to estimates determined using significant unobservable inputs i.e. Level 3. The fair value hierarchy prioritizes the inputs, which refer to assumptions that market participants would use in pricing an asset or liability, based upon the highest and best use, into three levels as follows: The standard describes three levels of inputs that may be used to measure fair value:: ● Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. ● Level 2: Observable inputs other than unadjusted quoted prices in active markets for identical assets or liabilities such as: ● Quoted prices for similar assets or liabilities in active markets ● Quoted prices for identical or similar assets or liabilities in inactive markets ● Inputs other than quoted prices that are observable for the asset or liability ● Inputs that are derived principally from or corroborated by observable market data by correlation or other mean ● Level 3: Unobservable inputs in which there is little or no market data available, which are significant to the fair value measurement and require the Company to develop its own assumptions. The Company’s financial assets and liabilities measured at fair value consisted of cash and cash equivalents, accounts receivable and accounts payable, debt, warrants and earnout consideration. Cash and cash equivalents consisted of bank deposits and short-term investments, such as money market funds, the fair value of which is based on quoted market prices, a Level 1 fair value measure. As of December 31, 2021 and December 31, 2020, the carrying values of cash, accounts receivable and accounts payable approximate fair value because of the short-term maturity of these instruments. The fair value of the Company's debt approximates the carrying value for all periods presented. The Company follows the guidance in ASC Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period. See Note 11. |
Segments | Segments The Company is managed and operated as one business as the entire business is managed by a single management team that reports to the Chief Executive Officer and President. The Company’s chief operating decision-maker is its Chief Executive Officer and President, who makes resource allocation decisions and assesses performance based on financial information presented on an aggregate basis.The Company does not operate separate lines of business with respect to any of its products and does not prepare discrete financial information to allocate resources to separate products or by location. Accordingly, the Company views its business as one reportable operating segment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements — Adopted In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company's financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2021 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2021. The Company elected the package of practical expedients which permits to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. The Company did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change the Company’s previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. The adoption of the new guidance resulted in the recognition of ROU assets of $6,298 and lease liabilities of $6,875. The difference between the ROU assets and the lease liabilities is primarily due to unamortized lease incentive and deferred rent related to the Company’s operating leases at December 31, 2020. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilized its incremental borrowing rate (“IBR”), which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2021 adoption date. The Company utilized a synthetic credit rating model including fundamental analysis per S&P Global Market Intelligence. The Company then utilized the Bloomberg BVAL Pricing Source to determine the option-adjusted spread and added the United States Treasury Constant Maturity for the applicable terms to determine the term structure of the IBR. Based on these calculations, the Company determined applicable discount rates for various points along the yield curve as of January 1, 2021. As a reasonableness check for the yield curve, the Company considered its then revolving credit agreement amendment on November 5, 2020, which extended the term of the agreement through November 5, 2023. The base interest rate on the loan was calculated as LIBOR plus 300 bps which approximates 3.41%. This rate was generally consistent with the yield curve derived, thus the Company determined that the yield curve was appropriate for determining the discount rates for its leases. The Company then interpolated the discount rates in the yield curve to determine the discount rate for each of its existing leases at January 1, 2021. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives incurred, if any. The Company’s lease terms may include options to extend the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of 1 year to 5 years, some of which include options to extend the lease term for up to 3 years. The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities. The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. The Company has elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, the Company will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight line basis over the term of the lease. Recent Accounting Pronouncements – Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform ("ASU 2020-04"). ASU 2020-04 provides optional guidance for a limited period of time to ease potential accounting impact associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. The amendments in ASU 2020-04 can be adopted as of March 12, 2020 and are effective through December 31, 2022. However, it cannot be applied to contract modifications that occur after December 31, 2022. LIBOR was expected to be phased out at the end 2021. We do not currently have any contracts that have been changed to a new reference rate, but we will continue to evaluate our contracts and the effects of this standard on our consolidated financial statements prior to adoption. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. This new standard amends the current guidance on the impairment of financial instruments and adds an impairment model known as current expected credit loss (CECL) model that is based on expected losses rather than incurred losses. Under the new guidance, an entity will recognize as an allowance its estimate of expected credit losses. The FASB subsequently issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, derivatives and Hedging, and Topic 825, Financial Instruments and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments — Credit Losses to clarify and address certain items related to the amendments in ASU 2016-13. ASC 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim reporting periods within those fiscal years with early adoption permitted. The Company does not anticipate a significant impact on its consolidated financial statements based on its historical trend of bad debt expense relating to trade accounts receivable. |
Operating Leases | Operating Leases The Company through its wholly-owned subsidiary Holdings leases certain office space and manufacturing space under arrangements currently classified as leases under ASC 842. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal options ranging from 1 to 5 years. The exercise of lease renewal options is at the Company’s sole discretion. Effective April 1, 2012, the Company entered into a 10-year Effective August 1, 2014, the Company entered into a 4-year lease for additional office and manufacturing space in Somerset, New Jersey terminating in July 31, 2018. The lease contains escalating rental payments. The Company has the option to extend the term for Effective June 16, 2016, the Company entered into a 10-year lease for a new facility. The lease contains escalating rental payments and terminates on September 30, 2026. The agreement also provides for a renewal option at a fixed rate. The base rent is currently approximately $ The Company’s leases have remaining lease terms of 1 The weighted-average remaining lease term for our operating leases was 4.8 year ROU assets and lease liabilities related to our operating leases are as follows: Balance Sheet Classification December 31, 2021 Right-of-use assets Right of use assets $ 5,246 Current lease liabilities Current portion of lease liabilities 1,119 Non-current lease liabilities Non-current portion of lease liabilities 4,709 The Company has lease agreements that contain both lease and non-lease components. The Company accounts for lease components together with non-lease components (e.g., common-area maintenance). Variable lease costs are based on day to day common-area maintenance costs related to the lease agreements and are recognized as incurred. The components of lease costs were as follows: Twelve-month period ended December 31, 2021 Operating lease cost $ 1,305 Variable lease cost 444 Total lease cost $ 1,749 Future minimum commitments under all non-cancelable operating leases are as follows: 2022 $ 1,294 2023 1,298 2024 1,263 2025 1,302 2026 1,096 Later years 97 Total lease payments 6,350 Less: Imputed interest 522 Present value of lease liabilities $ 5,828 Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Twelve-month period ended December 31, 2021 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 1,272 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ — |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
ROU assets and lease liabilities | ROU assets and lease liabilities related to our operating leases are as follows: Balance Sheet Classification December 31, 2021 Right-of-use assets Right of use assets $ 5,246 Current lease liabilities Current portion of lease liabilities 1,119 Non-current lease liabilities Non-current portion of lease liabilities 4,709 |
Components of lease costs, and supplemental cash flow information and non-cash activity | Twelve-month period ended December 31, 2021 Operating lease cost $ 1,305 Variable lease cost 444 Total lease cost $ 1,749 Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Twelve-month period ended December 31, 2021 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 1,272 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ — |
Future minimum commitments | Future minimum commitments under all non-cancelable operating leases are as follows: 2022 $ 1,294 2023 1,298 2024 1,263 2025 1,302 2026 1,096 Later years 97 Total lease payments 6,350 Less: Imputed interest 522 Present value of lease liabilities $ 5,828 |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Reverse Recapitalization [Abstract] | |
Recapitalization | The following summarizes the net contributions received from the Business Combination and PIPE financing: Recapitalization Cash - Roman DBDR’s trust and cash (net of redemptions) $ 47,359 Cash - PIPE (Common) 45,000 Cash - PIPE (Exchangeable Notes) 130,000 Less: transaction costs and advisory fees paid (34,132) Net Business Combination and PIPE financing $ 188,226 The following table describes the number of shares of common stock issued immediately following the consummation of the Business Combination: Number of Shares Common stock, outstanding prior to Business Combination 23,156,000 Less: redemption of Roman DBDR shares (18,515,018) Common stock of Roman DBDR 4,640,982 Roman DBDR Founder Shares 5,789,000 Shares issued in PIPE 4,500,000 Business Combination and PIPE financing shares - Class A common stock 14,929,982 Class B common stock held by Holdings 61,136,800 Total shares of common stock - Class A and Class B immediately after Business Combination 76,066,782 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Major classes of inventories | December 31, 2021 2020 Raw materials $ 27,474 $ 27,157 Work in process 582 1,055 Finished goods 363 3,998 Inventory reserve (2,613) (2,013) $ 25,806 $ 30,197 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | December 31, Useful Life 2021 2020 Machinery and equipment 5 – 10 years $ 59,437 $ 57,360 Furniture and fixtures 3 – 5 years 955 955 Computer equipment 3 – 5 years 925 908 Leasehold improvements Shorter of lease term 11,358 10,875 Vehicles 5 years 264 264 Software 1 – 3 years 2,889 1,186 Construction in progress 985 519 Total 76,813 72,067 Less: Accumulated depreciation and amortization (54,636) (44,208) Property and equipment, net $ 22,177 $ 27,859 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Balances payable under all borrowing facilities | December 31, December 31, 2021 2020 Total debt $ 380,000 $ 240,000 Less: current portion of term loan (scheduled payments) 12,500 24,000 Less: debt discount and debt issuance costs, net 7,471 4,113 Total long-term debt $ 360,029 $ 211,887 Derivative liability - redemption with a make-whole provision $ 552 $ — |
Maturity of borrowings | Years 2022 $ 12,500 2023 18,750 2024 18,750 2025 200,000 2026 130,000 Total debt $ 380,000 |
EQUITY COMPENSATION (Tables)
EQUITY COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Assumptions used to determine fair value | Year Ended 12/27/2021 Valuation date share price $ 9.95 Risk-free interest rate 0.98% - 1.12 % Expected volatility 57.92% - 58.88 % Expected dividends 0 % Expected forfeiture rate 0 % Expected term 3 - 4 years The following assumptions were used to determine the fair value of the private warrants as of December 31, 2021: 12/31/2021 Exercise Price $ 11.50 Risk-free interest rate 1.26 % Expected volatility 33 % Expected dividends 0 % Expected term (years) 4.9 years Common Stock market value $ 8.21 The following assumptions were used to determine the fair value of the Earnout considerations as of December 31, 2021: 12/31/2021 Valuation date share price $ 8.21 Risk-free interest rate 0.97% - 1.12 % Expected volatility 67.5 % Expected dividends 0 % Expected term (years) 3 - 4 years |
Assumptions utilized to calculate value of options granted | The assumptions utilized to calculate the value of the options granted for the year ended December 31, 2020 and 2019, respectively, were as below: 2020 2019 Expected term 1 year 1.25 years Volatility 44.00 % 30.00 % Risk-free rate 1.07 % 2.36 % Expected dividends 0 % 0 % Expected forfeiture rate 0 % 0 % |
Options activity | The following table sets forth the options activity under the Holdings’ equity plan which was assumed by the Company and recapitalized for the year ended December 31, 2021: Weighted Weighted Average Aggregate Average Remaining Intrinsic Number Exercise Price Contractual Value of Shares Per Shares Term (years) (in thousands) Outstanding at January 1, 2021 6,823,006 $ 1.15 5.4 $ 72,489 Granted — — — — Exercised 1,413,235 $ 0.71 13,133 Outstanding at December 31, 2021 5,409,771 $ 1.27 4.1 37,542 Vested and expected to vest at December 31, 2021 5,409,771 $ 1.27 4.1 37,542 Exercisable at December 31, 2021 4,947,921 $ 0.91 3.9 36,104 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Financial assets measured at fair value on a recurring basis | Level 1 Level 2 Level 3 Total December 31, 2021 Liabilities Carried at Fair Value: Public warrants $ — $ 17,714 $ — $ 17,714 Private warrants — — 17,557 17,557 Earnout consideration — — 38,427 38,427 Derivative liability - redemption with make-whole provision — — 552 552 |
Financial liabilities measured at fair value on a recurring basis | The Company’s financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as of the following dates: Level 1 Level 2 Level 3 Total December 31, 2021 Liabilities Carried at Fair Value: Public warrants $ — $ 17,714 $ — $ 17,714 Private warrants — — 17,557 17,557 Earnout consideration — — 38,427 38,427 Derivative liability - redemption with make-whole provision — — 552 552 |
Reconciliation of warrant liabilities measured at fair value | Warrant Liabilities Assumed warrant liability upon business combination at December 27, 2021 38,756 Change in estimated fair value (3,485) Estimated fair value at December 31, 2021 35,271 |
Assumptions used to determine fair value | Year Ended 12/27/2021 Valuation date share price $ 9.95 Risk-free interest rate 0.98% - 1.12 % Expected volatility 57.92% - 58.88 % Expected dividends 0 % Expected forfeiture rate 0 % Expected term 3 - 4 years The following assumptions were used to determine the fair value of the private warrants as of December 31, 2021: 12/31/2021 Exercise Price $ 11.50 Risk-free interest rate 1.26 % Expected volatility 33 % Expected dividends 0 % Expected term (years) 4.9 years Common Stock market value $ 8.21 The following assumptions were used to determine the fair value of the Earnout considerations as of December 31, 2021: 12/31/2021 Valuation date share price $ 8.21 Risk-free interest rate 0.97% - 1.12 % Expected volatility 67.5 % Expected dividends 0 % Expected term (years) 3 - 4 years |
Earnout consideration | Earnout Consideration Liability Fair value recognized upon business combination (48,002) Change in estimated fair value 9,575 Estimated fair value at December 31, 2021 $ (38,427) |
GEOGRAPHIC INFORMATION AND CO_2
GEOGRAPHIC INFORMATION AND CONCENTRATIONS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Geographical revenue information | Year Ended December 31, 2021 2020 2019 Net sales by country Domestic $ 218,441 $ 213,982 $ 191,502 International 49,507 46,604 51,788 Total $ 267,948 $ 260,586 $ 243,290 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income before benefit for income taxes | Years Ended December 31, 2021 2020 2019 Income before income taxes $ 82,557 $ 77,815 $ 81,473 Income before income taxes attributable to period subsequent to business combination for the year ended December 31, 2021 $ 12,206 — — |
Components of benefit for income taxes | Year Ended December 31, 2021 Current: Federal $ — State — — Deferred: Federal (856) State (1) (857) Total benefit from income taxes $ (857) |
Reconciliation of taxes at the federal statutory rate | Year Ended December 31, 2021 U.S. federal statutory tax rate 21.00 % State taxes 0.03 % Valuation allowances — NCI adjustment (18.53) % Permanent differences (3.35) % Effective income tax rate (0.85) % |
Components of deferred tax assets | December 31, 2021 Deferred Tax Assets: Investment in Holdings $ 29,102 Imputed Interest 623 Earnout consideration liability 970 Federal R&D Credit — Net operating loss carryforward 819 Total deferred tax assets $ 31,514 valuation allowance (5,864) Total deferred tax assets net of valuation allowance $ 25,650 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted earnings per share | Year Ended December 31, 2021 Basic and diluted: Net income $ 83,414 Less: Net income attributable to Holdings L.L.C. prior to business combination (70,352) Less: Net income attributable to non-controlling interest subsequent to business combination 450 Net income attributable to CompoSecure, Inc for period subsequent to business combination $ 13,512 Plus: adjustment due to net effect of dilutive class B units, stock options and exchangeable notes to net income (331) Net income attributable to CompoSecure, Inc for period subsequent to business combination after adjustment $ 13,181 Weighted average common shares outstanding used in computing net income per share—basic 14,930 Weighted average common shares outstanding used in computing net income per share—diluted 94,926 Net income per share – basic $ 0.91 Net income per share – diluted $ 0.14 |
Antidilutive shares excluded from calculation | Year Ended December 31, 2021 Denominator: Warrants 22,415 Earnout Shares 7,500 |
DESCRIPTION OF ORGANIZATION A_2
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) | Dec. 31, 2021customer | Dec. 27, 2021$ / shares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of direct customers | 20 | |
Number of indirect customers | 80 | |
Common stock, par value (usd per share) | $ / shares | $ 0.0001 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Accounts receivable allowance for doubtful accounts | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 1 year |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue and Shipping and Handling Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Revenue, payment terms, minimum | 15 days | ||
Revenue, payment terms, maximum | 60 days | ||
Revenue, payment due | 90 days | ||
Contract assets | $ 0 | $ 0 | |
Contract liabilities | 0 | 0 | |
Shipping and handling costs | $ 2,308 | $ 1,596 | $ 1,752 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising, Tax Receivable Liability, and Selling, General and Administrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Selling expenses | $ 17,434 | $ 181 | $ 313 |
Income tax benefit | $ 857 | 0 | 0 |
Tax Receivable Agreement, percentage | 90.00% | ||
Tax receivable agreement liability | $ 24,500 | 0 | |
Salaries and commissions | 16,103 | 12,650 | 14,824 |
Transaction costs | 2,784 | 264 | 1,065 |
Professional fees | $ 8,350 | $ 6,536 | $ 4,546 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnout Consideration (Details) | Dec. 27, 2021shares |
Accounting Policies [Abstract] | |
Earnout shares (in shares) | 7,500,000 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segments (Details) | 12 Months Ended |
Dec. 31, 2021segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Operating Leases Narrative (Details) $ in Thousands | Aug. 01, 2014 | Dec. 31, 2021USD ($) | Jan. 01, 2021USD ($) | Dec. 31, 2020USD ($) | Jun. 16, 2016 | Apr. 01, 2012 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Right of use asset, net | $ 5,246 | $ 0 | ||||
Lease liabilities | $ 5,828 | |||||
Effective interest rate | 3.41% | |||||
Renewal term | 3 years | |||||
Weighted-average remaining lease term | 4 years 9 months 18 days | |||||
Weighted-average discount rate | 3.73% | |||||
Office space and manufacturing space location 1 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Renewal term | 5 years | |||||
Lease term | 10 years | |||||
Base rent | $ 324 | |||||
Lease escalation factor | 3.00% | |||||
Office space and manufacturing space location 2 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Renewal term | 2 years | |||||
Lease term | 4 years | |||||
Base rent | $ 106 | |||||
Lease escalation factor | 3.00% | |||||
Number of renewal options | 2 | |||||
Office space and manufacturing space location 3 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Lease term | 10 years | |||||
Base rent | $ 825 | |||||
Lease escalation factor | 3.00% | |||||
2016 Credit Facility | LIBOR | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Basis spread on variable interest rate | 3.00% | |||||
Minimum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Remaining lease terms | 1 year | |||||
Renewal term | 1 year | |||||
Maximum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Remaining lease terms | 5 years | |||||
Renewal term | 5 years | |||||
Accounting Standards Update 2016-02 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Right of use asset, net | $ 6,298 | |||||
Lease liabilities | $ 6,875 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Operating Leases Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Right-of-use assets | $ 5,246 | $ 0 |
Current lease liabilities | 1,119 | 0 |
Non-current lease liabilities | $ 4,709 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Operating Leases Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Accounting Policies [Abstract] | |
Operating lease cost | $ 1,305 |
Variable lease cost | 444 |
Total lease cost | $ 1,749 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Operating Leases Maturity (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Accounting Policies [Abstract] | |
2022 | $ 1,294 |
2023 | 1,298 |
2024 | 1,263 |
2025 | 1,302 |
2026 | 1,096 |
Later years | 97 |
Total lease payments | 6,350 |
Less: Imputed interest | 522 |
Present value of lease liabilities | $ 5,828 |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Operating Leases Cash Flow (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Accounting Policies [Abstract] | |
Cash paid for amounts included in the measurement of lease liabilities | $ 1,272 |
Right-of-use assets obtained in exchange for lease obligations | $ 0 |
BUSINESS COMBINATION - Narrativ
BUSINESS COMBINATION - Narrative (Details) $ / shares in Units, $ in Thousands | Dec. 27, 2021USD ($)Vote$ / sharesshares | Dec. 31, 2021 |
Reverse Recapitalization [Line Items] | ||
Earnout shares (in shares) | 7,500,000 | |
Tax Receivable Agreement, percentage | 90.00% | |
Stock issued (in shares) | 4,500,000 | |
Stock issued, price per share (in usd per share) | $ / shares | $ 10 | |
Stock issued, aggregate purchase price | $ | $ 45,000 | |
Class B Common Stock | ||
Reverse Recapitalization [Line Items] | ||
Number of votes per share | Vote | 1 | |
Recapitalization exchange ratio | 1 |
BUSINESS COMBINATION - Recapita
BUSINESS COMBINATION - Recapitalization (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reverse Recapitalization [Line Items] | |||
Cash - Roman DBDR's trust and cash (net of redemptions) | $ 47,359 | ||
Cash - PIPE | 60,826 | $ 0 | $ 0 |
Less: transaction costs and advisory fees paid | (34,132) | ||
Net Business Combination and PIPE financing | 188,226 | ||
Common Stock | |||
Reverse Recapitalization [Line Items] | |||
Cash - PIPE | 45,000 | ||
Exchangeable Notes | |||
Reverse Recapitalization [Line Items] | |||
Cash - PIPE | $ 130,000 |
BUSINESS COMBINATION - Common S
BUSINESS COMBINATION - Common Stock (Details) - shares | Dec. 27, 2021 | Dec. 26, 2021 |
Reverse Recapitalization [Line Items] | ||
Common stock, outstanding (shares) | 76,066,782 | |
Stock issued in private placement (shares) | 4,500,000 | |
Business Combination and PIPE Financing shares - Class A common stock (in shares) | 14,929,982 | |
Class B common stock held by Holdings (in shares) | 61,136,800 | |
Common Shareholders | ||
Reverse Recapitalization [Line Items] | ||
Stock issued (in shares) | 4,640,982 | |
Roman DBDR Founders | ||
Reverse Recapitalization [Line Items] | ||
Stock issued (in shares) | 5,789,000 | |
Roman DBDR | ||
Reverse Recapitalization [Line Items] | ||
Common stock, outstanding (shares) | 23,156,000 | |
Less: redemption of Roman DBDR shares (in shares) | (18,515,018) |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | |||
Revenue, payment terms, minimum | 15 days | ||
Revenue, payment terms, maximum | 60 days | ||
Revenue, payment due | 90 days | ||
Revenues | Customer concentration risk | Three top customers | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 79.10% | 74.90% | 82.50% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 27,474 | $ 27,157 |
Work in process | 582 | 1,055 |
Finished goods | 363 | 3,998 |
Inventory reserve | (2,613) | (2,013) |
Inventory, Net, Total | $ 25,806 | $ 30,197 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Total | $ 76,813 | $ 72,067 |
Less: Accumulated depreciation and amortization | (54,636) | (44,208) |
Property and equipment, net | $ 22,177 | 27,859 |
Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 1 year | |
Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 10 years | |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 59,437 | 57,360 |
Machinery and equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Machinery and equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 10 years | |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 955 | 955 |
Furniture and fixtures | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Furniture and fixtures | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 925 | 908 |
Computer equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Computer equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 11,358 | 10,875 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 5 years | |
Total | $ 264 | 264 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 985 | 519 |
Software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 1 year | |
Software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life | 3 years | |
Software Development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 2,889 | $ 1,186 |
PROPERTY AND EQUIPMENT - Narrat
PROPERTY AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense | $ 10,428 | $ 9,916 | $ 8,606 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | Apr. 19, 2021USD ($)D$ / shares | Jul. 31, 2019USD ($) | Dec. 31, 2021USD ($)$ / shares | Dec. 31, 2020USD ($)$ / shares | Dec. 31, 2019USD ($) | Jan. 31, 2022USD ($) | Dec. 27, 2021$ / shares | Nov. 30, 2020USD ($) | Jul. 26, 2016USD ($) |
Debt Instrument [Line Items] | |||||||||
Common stock, par value (usd per share) | $ / shares | $ 0.0001 | ||||||||
Fair value of derivative liability | $ 552,000 | $ 0 | |||||||
Interest expense | 11,928,000 | $ 6,142,000 | $ 5,453,000 | ||||||
Derivative notional amount | 100,000,000 | ||||||||
Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Derivative notional amount | $ 125,000,000 | ||||||||
2016 Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs | $ 1,065,000 | 1,800,000 | $ 3,200,000 | ||||||
Maximum borrowing capacity | $ 310,000,000 | 300,000,000 | $ 120,000,000 | ||||||
Repayment of debt | 64,000,000 | ||||||||
Repayment of interest | 100,000 | ||||||||
2016 Credit Facility | Prime rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable interest rate | 2.00% | ||||||||
2016 Credit Facility | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable interest rate | 3.00% | ||||||||
Class A Common Stock | |||||||||
Debt Instrument [Line Items] | |||||||||
Common stock, par value (usd per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||||
Exchangeable Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount | $ 130,000,000 | ||||||||
Conversion price (usd per share) | $ / shares | $ 11.50 | ||||||||
Interest rate | 7.00% | ||||||||
Term | 5 years | ||||||||
Redemption, period from Closing Date | 3 years | ||||||||
Redemption, stock price percentage threshold | 130.00% | ||||||||
Redemption, threshold trading days | D | 20 | ||||||||
Redemption, threshold consecutive trading days | 30 days | ||||||||
Redemption, notice period | 30 days | ||||||||
Redemption price percentage | 100.00% | ||||||||
Redemption, VWAP, threshold trading days | 5 days | ||||||||
Maximum conversion rate | 99.9999 | ||||||||
Anti-dilution, period after common stock issuance | 45 days | ||||||||
Anti-dilution, threshold consecutive trading days | 10 days | ||||||||
Fundamental change, repurchase price percentage | 100.00% | ||||||||
Registration default, interest rate for first 90 days | 0.25% | ||||||||
Registration default, interest rate after 90 days | 0.50% | ||||||||
Event of default, threshold percentage of note holders that may declare notes payable immediately | 25.00% | ||||||||
Event of default, percentage of notes payable immediately | 100.00% | ||||||||
Event of default, interest rate for first 90 days | 0.25% | ||||||||
Event of default, interest rate for days 91-180 | 0.50% | ||||||||
Fair value of derivative liability | $ 552,000 | ||||||||
Interest expense | $ 200,000 | ||||||||
Effective interest rate | 7.40% | ||||||||
Debt issuance costs | $ 2,600,000 | ||||||||
Line of credit and term loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Effective interest rate | 3.65% | 4.36% | |||||||
Line of credit | 2016 Credit Facility | Revolver | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 60,000,000 | 40,000,000 | |||||||
Annual commitment fee percentage | 0.40% | ||||||||
Term loan | 2016 Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Face amount | $ 140,000,000 | $ 250,000,000 | $ 240,000,000 | $ 80,000,000 |
DEBT - Balances Payable (Detail
DEBT - Balances Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Total debt | $ 380,000 | $ 240,000 |
Less: current portion of term loan (scheduled payments) | 12,500 | 24,000 |
Less: debt discount and debt issuance costs, net | 7,471 | 4,113 |
Total long-term debt | 360,029 | 211,887 |
Fair value of derivative liability | $ 552 | $ 0 |
DEBT - Maturity (Details)
DEBT - Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
2022 | $ 12,500 | |
2023 | 18,750 | |
2024 | 18,750 | |
2025 | 200,000 | |
2026 | 130,000 | |
Total debt | $ 380,000 | $ 240,000 |
EQUITY STRUCTURE (Details)
EQUITY STRUCTURE (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 27, 2021 | Dec. 31, 2020 | |
Class of Stock [Line Items] | |||
Preferred stock, authorized (shares) | 10,000,000 | 10,000,000 | |
Common stock, outstanding (shares) | 76,066,782 | ||
Preferred stock, issued (shares) | 0 | ||
Preferred stock, outstanding (shares) | 0 | ||
Share price (usd per share) | $ 8.21 | ||
Private warrants | |||
Class of Stock [Line Items] | |||
Warrants outstanding (shares) | 10,837,400 | ||
Warrants, exercise price (usd per share) | $ 11.50 | ||
Warrants, commencement, period from Business Combination | 30 days | ||
Public warrants | |||
Class of Stock [Line Items] | |||
Warrants outstanding (shares) | 11,578,000 | ||
Warrants, exercise price (usd per share) | $ 11.50 | ||
Warrants, commencement, period from Business Combination | 30 days | ||
Class A Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, authorized (shares) | 250,000,000 | 250,000,000 | |
Common stock, issued (shares) | 14,929,982 | 0 | |
Common stock, outstanding (shares) | 14,929,982 | 0 | |
Share price (usd per share) | $ 9.95 | ||
Class B Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, authorized (shares) | 75,000,000 | 75,000,000 | |
Common stock, issued (shares) | 61,136,800 | 61,136,800 | |
Common stock, outstanding (shares) | 61,136,800 | 61,136,800 | |
Common stock redemption value | $ 608,311 |
EQUITY COMPENSATION - Narrative
EQUITY COMPENSATION - Narrative (Details) $ / shares in Units, $ in Thousands | Dec. 27, 2021Voteindividualshares | May 31, 2017USD ($)shares | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Jan. 01, 2022shares | Dec. 26, 2021shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding (in shares) | 6,823,006 | 5,409,771 | 6,823,006 | 9,778 | |||
Options exercised (in shares) | 1,413,235 | ||||||
Number of grantees affected by recapitalization | individual | 12 | ||||||
Earnout shares (in shares) | 7,500,000 | ||||||
Shares subject to ASC 718 (in shares) | 657,160 | ||||||
Shares subject to ASC 718, for each phase (in shares) | 328,580 | ||||||
Earnout shares, intrinsic value | $ | $ 5,395 | ||||||
Grant date fair value (usd per share) | $ / shares | $ 6.36 | $ 4.31 | |||||
Options exercisable and vested (in shares) | 4,947,921 | 5,894,922 | 5,128,908 | ||||
Weighted average exercise price (usd per share) | $ / shares | $ 1.26 | $ 406.63 | $ 265.62 | ||||
Weighted average remaining contractual term for options exercisable | 3 years 10 months 24 days | 4 years 10 months 24 days | 5 years 8 months 12 days | ||||
Unrecognized compensation expense for options | $ | $ 1,425 | ||||||
Class B Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of votes per share | Vote | 1 | ||||||
Recapitalization exchange ratio | 1 | ||||||
Awards outstanding (shares) | 1,236,027 | ||||||
Intrinsic value | $ | $ 10,843 | ||||||
ESPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Authorized number of shares (shares) | 1,650,785 | ||||||
Purchase price discount | 15.00% | ||||||
Remaining shares authorized for issuance (shares) | 1,650,785 | ||||||
Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expiration period | 10 years | ||||||
Expense | $ | $ 1,310 | $ 1,143 | $ 1,211 | ||||
Unrecognized compensation expense, period of recognition | 3 years | ||||||
Earnout Shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expense | $ | $ 4,610 | ||||||
Profits interest incentive units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expense | $ | $ 193 | $ 433 | $ 470 | ||||
Unrecognized compensation expense, period of recognition | 1 year | ||||||
Incentive units granted (in shares) | 1,320,765 | 0 | |||||
Profits interest hurdle | $ | $ 232,232 | ||||||
Unrecognized compensation cost | $ | $ 39 | ||||||
Subsequent Event | ESPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Increase in authorized number of shares, percentage | 1.00% | ||||||
Number of additional shares authorized, maximum (shares) | 1,686,531 | ||||||
Maximum | Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 5 years | ||||||
Minimum | Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
2021 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Authorized number of shares (shares) | 8,987,609 | ||||||
Increase in authorized number of shares, percentage | 4.00% |
EQUITY COMPENSATION - Assumptio
EQUITY COMPENSATION - Assumptions for Earnout Consideration (Details) | Dec. 31, 2021 |
Valuation date share price | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 9.95 |
Risk-free interest rate | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 0.98 |
Risk-free interest rate | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 1.12 |
Expected volatility | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 57.92 |
Expected volatility | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 58.88 |
Expected dividends | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 0 |
Expected forfeiture rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 0 |
Expected term | Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 3 |
Expected term | Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Earnout consideration, measurement input | 4 |
EQUITY COMPENSATION - Assumpt_2
EQUITY COMPENSATION - Assumptions for Options Granted (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Expected term | 1 year | 1 year 3 months |
Volatility | 44.00% | 30.00% |
Risk-free rate | 1.07% | 2.36% |
Expected dividends | 0.00% | 0.00% |
Expected forfeiture rate | 0.00% | 0.00% |
EQUITY COMPENSATION - Options A
EQUITY COMPENSATION - Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Shares | |||
Outstanding (in shares) | 6,823,006 | ||
Granted (in shares) | 0 | ||
Exercised (in shares) | 1,413,235 | ||
Outstanding (in shares) | 5,409,771 | 6,823,006 | |
Vested and expected to vest (in shares) | 5,409,771 | ||
Exercisable (in shares) | 4,947,921 | 5,894,922 | 5,128,908 |
Weighted Average Exercise Price Per Shares | |||
Outstanding (in usd per share) | $ 1.15 | ||
Granted (in usd per share) | 0 | ||
Exercised (in usd per share) | 0.71 | ||
Outstanding (in usd per share) | 1.27 | $ 1.15 | |
Vested and expected to vest (in usd per share) | 1.27 | ||
Exercisable (in usd per share) | $ 0.91 | ||
Weighted Average Remaining Contractual Term | |||
Outstanding, weighted average remaining contractual term | 4 years 1 month 6 days | 5 years 4 months 24 days | |
Vested and expected to vest, weighted average remaining contractual term | 4 years 1 month 6 days | ||
Exercisable, weighted average remaining contractual term | 3 years 10 months 24 days | 4 years 10 months 24 days | 5 years 8 months 12 days |
Aggregate Intrinsic Value | |||
Outstanding, aggregate intrinsic value | $ 37,542 | $ 72,489 | |
Vested and expected to vest, aggregate intrinsic value | 37,542 | ||
Exercised | 13,133 | ||
Exercisable, aggregate intrinsic value | $ 36,104 |
RETIREMENT PLAN - Defined Contr
RETIREMENT PLAN - Defined Contribution Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Required period of service to participate in plan | 90 days | ||
Retirement plan expense | $ 1,102 | $ 1,030 | $ 943 |
Matching scenario one | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer match | 100.00% | ||
Employee contributions | 1.00% | ||
Matching scenario two | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employer match | 50.00% | ||
Employee contributions | 5.00% |
RETIREMENT PLAN - Deferred Comp
RETIREMENT PLAN - Deferred Compensation Plan (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Retirement Benefits [Abstract] | ||||
Percent of EBITDA contributed | 0.25% | |||
Contributions | $ 150 | $ 0 | $ 0 | $ 501 |
Liability | $ 242 | $ 1,534 | ||
Vesting period | 7 years | |||
Vesting percentage, year one | 0.00% | |||
Vesting percentage, year two | 5.00% | |||
Vesting percentage, year three | 15.00% | |||
Vesting percentage, year four | 20.00% | |||
Vesting percentage, year five | 30.00% | |||
Vesting percentage, year six | 50.00% | |||
Vesting percentage, year seven | 100.00% | |||
Amount vested | $ 1,223 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 27, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | $ 35,271 | $ 38,756 | $ 0 |
Earnout consideration | 38,427 | $ 48,002 | $ 0 |
Derivative liability - redemption with make-whole provision | 552 | ||
Public warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | 17,714 | ||
Private warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | 17,557 | ||
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Earnout consideration | 0 | ||
Derivative liability - redemption with make-whole provision | 0 | ||
Level 1 | Public warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | 0 | ||
Level 1 | Private warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | 0 | ||
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Earnout consideration | 0 | ||
Derivative liability - redemption with make-whole provision | 0 | ||
Level 2 | Public warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | 17,714 | ||
Level 2 | Private warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | 0 | ||
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Earnout consideration | 38,427 | ||
Derivative liability - redemption with make-whole provision | 552 | ||
Level 3 | Public warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | 0 | ||
Level 3 | Private warrants | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Warrant liability | $ 17,557 |
FAIR VALUE MEASUREMENTS - Recon
FAIR VALUE MEASUREMENTS - Reconciliation of Warrant Liability (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Class of Warrant or Right [Roll Forward] | ||||
Estimated fair value, beginning | $ 38,756 | $ 0 | ||
Change in estimated fair value | (3,485) | (3,485) | $ 0 | $ 0 |
Estimated fair value, ending | $ 35,271 | $ 35,271 | $ 0 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value Assumptions (Details) - Dec. 31, 2021 | $ / shares | Total | Y |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Share price (usd per share) | $ 8.21 | ||
Exercise Price | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants, measurement input | 11.50 | ||
Risk-free interest rate | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants, measurement input | 1.26 | ||
Risk-free interest rate | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Reverse Recapitalization, Contingent Consideration, Measurement Input | 0.97 | ||
Risk-free interest rate | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Reverse Recapitalization, Contingent Consideration, Measurement Input | 1.12 | ||
Expected volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants, measurement input | 33 | ||
Reverse Recapitalization, Contingent Consideration, Measurement Input | 67.5 | ||
Expected dividends | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants, measurement input | 0 | 4.9 | |
Reverse Recapitalization, Contingent Consideration, Measurement Input | 0 | ||
Expected term | Minimum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Reverse Recapitalization, Contingent Consideration, Measurement Input | 3 | ||
Expected term | Maximum | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Reverse Recapitalization, Contingent Consideration, Measurement Input | 4 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) | Dec. 27, 2021shares |
Fair Value Disclosures [Abstract] | |
Earnout shares (in shares) | 7,500,000 |
FAIR VALUE MEASUREMENTS - Earno
FAIR VALUE MEASUREMENTS - Earnout Consideration (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Derivative Instrument, Contingent Consideration, Liability [Roll Forward] | ||||
Beginning balance | $ (48,002) | $ 0 | ||
Change in estimated fair value | 9,575 | 9,575 | $ 0 | $ 0 |
Ending balance | $ (38,427) | $ (38,427) | $ 0 |
GEOGRAPHIC INFORMATION AND CO_3
GEOGRAPHIC INFORMATION AND CONCENTRATIONS - Geographical Revenue Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | $ 267,948 | $ 260,586 | $ 243,290 |
Domestic | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | 218,441 | 213,982 | 191,502 |
International | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | $ 49,507 | $ 46,604 | $ 51,788 |
GEOGRAPHIC INFORMATION AND CO_4
GEOGRAPHIC INFORMATION AND CONCENTRATIONS - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | Customer concentration risk | Two customers | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 71.90% | 72.10% | |
Revenues | Customer concentration risk | Three customers | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 74.90% | ||
Accounts receivable | Customer concentration risk | Two customers | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 66.00% | 61.00% | |
Purchases | Vendor concentration risk | Two vendors | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | ||
Purchases | Vendor concentration risk | Four vendors | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 9.00% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Income tax benefit | $ 857 | $ 0 | $ 0 |
valuation allowance | 5,864 | ||
Operating Loss Carryforwards [Line Items] | |||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 0 | ||
Unrecognized Tax Benefits | 0 | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating losses | 3,892 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating losses | $ 8 |
INCOME TAXES - Income Before In
INCOME TAXES - Income Before Income Tax Benefit (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||||
Income before income taxes | $ 12,206 | $ 82,557 | $ 77,815 | $ 81,473 |
INCOME TAXES - Components of Be
INCOME TAXES - Components of Benefit for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | |||
Federal | $ 0 | ||
State | 0 | ||
Current | 0 | ||
Deferred: | |||
Federal | (856) | ||
State | (1) | ||
Deferred | (857) | $ 0 | $ 0 |
Total benefit from income taxes | $ (857) | $ 0 | $ 0 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Taxes at the Federal Statutory Rate (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
U.S. federal statutory tax rate | 21.00% |
State taxes | 0.03% |
Valuation allowances | 0.00% |
NCI adjustment | (18.53%) |
Permanent differences | (3.35%) |
Effective income tax rate | (0.85%) |
INCOME TAXES - Components of De
INCOME TAXES - Components of Deferred Tax Assets (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Deferred Tax Assets: | |
Investment in Holdings | $ 29,102 |
Imputed Interest | 623 |
Earnout consideration liability | 970 |
Federal R&D Credit | 0 |
Net operating loss carryforward | 819 |
Total deferred tax assets | 31,514 |
valuation allowance | (5,864) |
Total deferred tax assets net of valuation allowance | $ 25,650 |
EARNINGS PER SHARE - Basic and
EARNINGS PER SHARE - Basic and Diluted Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 27, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Earnings Per Share [Abstract] | |||||
Net income | $ 83,414 | $ (70,352) | $ 77,815 | $ 81,473 | |
Less: Net income attributable to non-controlling interest subsequent to business combination | 450 | ||||
Net income attributable to CompoSecure, Inc for period subsequent to business combination | 13,512 | ||||
Plus: adjustment due to net effect of dilutive class B units, stock options and exchangeable notes to net income | (331) | ||||
Net income attributable to CompoSecure, Inc for period subsequent to business combination after adjustment | $ 13,181 | ||||
Weighted average shares used in computing net income per share - basic (shares) | 14,930 | ||||
Weighted average shares used in computing net income per share - diluted (shares) | 94,926 | ||||
Net income per share - basic (in usd per share) | [1] | $ 0.91 | |||
Net income per share - diluted (in usd per share) | [1] | $ 0.14 | |||
[1] | The amounts for the year ended December 31, 2021 represent basic and diluted net income per share of Class A common stock and weighted average shares of Class A common stock outstanding for the prorated period from December 27, 2021 through December 31, 2021, the period following the Business Combination described in Note 1. See Note 14. |
EARNINGS PER SHARE - Antidiluti
EARNINGS PER SHARE - Antidilutive Shares (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2021shares | |
Warrants | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive shares (shares) | 22,415 |
Earnout Shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive shares (shares) | 7,500 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Minimum | |
Loss Contingencies [Line Items] | |
Estimate of possible commission payments due | $ 4,000 |
Maximum | |
Loss Contingencies [Line Items] | |
Estimate of possible commission payments due | $ 11,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2021 | |
Related Party Transaction [Line Items] | ||||
Expenses, related parties | $ 9,508 | $ 6,724 | $ 9,232 | |
Amounts accrued, related parties | 3,402 | $ 2,786 | ||
Minimum | ||||
Related Party Transaction [Line Items] | ||||
Estimate of possible commission payments due | 4,000 | |||
Maximum | ||||
Related Party Transaction [Line Items] | ||||
Estimate of possible commission payments due | $ 11,000 | |||
Related Party, Potential Commissions Due [Member] | Minimum | ||||
Related Party Transaction [Line Items] | ||||
Estimate of possible commission payments due | $ 4,000 | |||
Related Party, Potential Commissions Due [Member] | Maximum | ||||
Related Party Transaction [Line Items] | ||||
Estimate of possible commission payments due | $ 11,000 |