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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/18/21 Karat Packaging Inc. S-1 25:37M Toppan Merrill/FA |
Document/Exhibit Description Pages Size 1: S-1 Registration Statement (General Form) HTML 1.43M 2: EX-3.1 Articles of Incorporation/Organization or Bylaws HTML 19K 3: EX-3.2 Articles of Incorporation/Organization or Bylaws HTML 66K 4: EX-4.1 Instrument Defining the Rights of Security Holders HTML 8K 5: EX-10.1 Material Contract HTML 86K 14: EX-10.10 Material Contract HTML 58K 15: EX-10.11 Material Contract HTML 77K 16: EX-10.12 Material Contract HTML 93K 17: EX-10.13 Material Contract HTML 251K 18: EX-10.14 Material Contract HTML 45K 19: EX-10.15 Material Contract HTML 294K 20: EX-10.16 Material Contract HTML 47K 21: EX-10.17 Material Contract HTML 47K 22: EX-10.18 Material Contract HTML 46K 23: EX-10.19 Material Contract HTML 47K 6: EX-10.2 Material Contract HTML 31K 7: EX-10.3 Material Contract HTML 22K 8: EX-10.4 Material Contract HTML 99K 9: EX-10.5 Material Contract HTML 209K 10: EX-10.6 Material Contract HTML 35K 11: EX-10.7 Material Contract HTML 124K 12: EX-10.8 Material Contract HTML 26K 13: EX-10.9 Material Contract HTML 20K 24: EX-21.1 Subsidiaries List HTML 8K 25: EX-23.1 Consent of Expert or Counsel HTML 8K
tm2029131-8_s1 - none - 22.6718857s |
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Delaware
(State or other jurisdiction of
incorporation or organization) |
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3089
(Primary Standard Industrial
Classification Code Number) |
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83-2237832
(I.R.S. Employer
Identification Number) |
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Copies to:
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Large accelerated filer
☐
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Accelerated filer
☐
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Non-accelerated filer
☒
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Smaller reporting company
☒
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Emerging growth company
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Title of Each Class of
Securities to be Registered |
| | |
Proposed
Maximum Aggregate Offering Price(1)(2) |
| | |
Amount of
Registration Fee(3) |
| ||||||
Common stock, par value $0.001 per share
|
| | | | $ | 75,000,000 | | | | | | $ | 8,182.50 | | |
Total
|
| | | | $ | 75,000,000 | | | | | | $ | 8,182.50 | | |
| | |
Per Share
|
| |
Total
|
|
Initial public offering price | | | $ | | | $ | |
Underwriting discounts and commissions(1) | | | $ | | | $ | |
Proceeds to us, before expenses | | | $ | | | $ | |
| Stifel | | |
William Blair
|
| |
Truist Securities
|
|
| National Securities Corporation | | |
D.A. Davidson & Co.
|
|
| | | | | 1 | | | |
| | | | | 12 | | | |
| | | | | 13 | | | |
| | | | | 15 | | | |
| | | | | 33 | | | |
| | | | | 34 | | | |
| | | | | 35 | | | |
| | | | | 35 | | | |
| | | | | 37 | | | |
| | | | | 39 | | | |
| | | | | 44 | | | |
| | | | | 60 | | | |
| | | | | 71 | | | |
| | | | | 77 | | | |
| | | | | 80 | | | |
| | | | | 81 | | | |
| | | | | 83 | | | |
| | | | | 86 | | | |
| | | | | 88 | | | |
| | | | | 92 | | | |
| | | | | 98 | | | |
| | | | | 98 | | | |
| | | | | 99 | | | |
| | | | | F-1 | | |
|
|
| |
|
|
| | |
(unaudited)
Nine Months Ended September 30, |
| |
Year Ended December 31,
|
| ||||||||||||||||||
| | | | |
2019
|
| |
2019
|
| |
2018
|
| |||||||||||||
| | |
(in thousands, except share and per share amounts)
|
| |||||||||||||||||||||
Net sales
|
| | | $ | 225,137 | | | | | $ | 168,646 | | | | | $ | 224,910 | | | | | $ | 175,434 | | |
Cost of goods sold
|
| | | | 155,308 | | | | | | 122,501 | | | | | | 163,891 | | | | | | 131,979 | | |
Gross profit
|
| | | | 69,829 | | | | | | 46,145 | | | | | | 61,019 | | | | | | 43,455 | | |
Operating expenses
|
| | | | 44,189 | | | | | | 41,274 | | | | | | 55,183 | | | | | | 41,323 | | |
Operating income
|
| | | | 25,640 | | | | | | 4,871 | | | | | | 5,836 | | | | | | 2,132 | | |
Other income (expense)
|
| | | | (5,083) | | | | | | (2,375) | | | | | | (2,891) | | | | | | (585) | | |
Provision for income tax expense
|
| | | | 5,483 | | | | | | 247 | | | | | | 781 | | | | | | 1,671 | | |
Net Income (loss)
|
| | | | 15,074 | | | | | | 2,249 | | | | | | 2,164 | | | | | | (124) | | |
Basic and diluted earnings per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | 1.09 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
Diluted
|
| | | $ | 1.07 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
Basic and diluted earnings per share – proforma (unaudited)(1)
|
| | | | | | | | | | | | | | | ||||||||||
Basic – proforma
|
| | | | | | | | | | | | | | | ||||||||||
Diluted – proforma
|
| | | | | | | | | | | | | | | ||||||||||
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | 15,180,000 | | | | | | 15,190,000 | | | | | | 15,190,000 | | | | | | 14,830,312 | | |
Diluted
|
| | | | 15,451,000 | | | | | | 15,472,000 | | | | | | 15,190,000 | | | | | | 14,830,312 | | |
Weighted average common shares outstanding –
proforma (unaudited)(1) |
| | | | | ||||||||||||||||||||
Basic – proforma
|
| | | | | | | | | | | | | | | ||||||||||
Diluted – proforma
|
| | | | | | | | | | | | | | |
| | | | | | ||||||||
| | |
(in thousands)
|
| |||||||||
Balance sheet data: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 2,067 | | | | | $ | 802 | | |
Total current assets
|
| | | | 79,603 | | | | | | 61,027 | | |
Total assets
|
| | | | 180,735 | | | | | | 133,353 | | |
Total current liabilities
|
| | | | 46,734 | | | | | | 35,928 | | |
Total liabilities
|
| | | | 142,462 | | | | | | 109,299 | | |
Total Karat Packaging Inc. stockholders’ equity
|
| | | | 31,481 | | | | | | 15,741 | | |
Total noncontrolling interest equity
|
| | | | 6,792 | | | | | | 8,313 | | |
Total stockholders’ equity . .
|
| | | | 38,273 | | | | | | 24,054 | | |
Total liabilities and stockholders’ equity
|
| | | | 180,735 | | | | | | 133,353 | | |
| | |
Nine Months Ended September 30,
|
| |
Year Ended December 31,
|
| ||||||||||||||||||
| | | | |
2019
|
| |
2019
|
| |
2018
|
| |||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Other non-GAAP financial data (unaudited): | | | | | | ||||||||||||||||||||
Adjusted EBITDA(2)
|
| | | $ | 31,518 | | | | | $ | 8,531 | | | | | $ | 11,281 | | | | | $ | 6,962 | | |
| | |
Nine Months Ended September 30
|
| |
Year Ended December 31,
|
| ||||||||||||||||||
Reconciliation of non-GAAP financial data (unaudited):
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Net Income (loss)
|
| | | $ | 15,074 | | | | | $ | 2,249 | | | | | $ | 2,164 | | | | | $ | (124) | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | 4,858 | | | | | | 4,490 | | | | | | 4,752 | | | | | | 1,455 | | |
Income tax expense
|
| | | | 5,483 | | | | | | 247 | | | | | | 781 | | | | | | 1,671(1) | | |
Depreciation and amortization
|
| | | | 6,103 | | | | | | 3,914 | | | | | | 5,953 | | | | | | 3,960 | | |
Gain on sale of asset(2)
|
| | | | — | | | | | | (2,369) | | | | | | (2,369) | | | | | | — | | |
Adjusted EBITDA
|
| | | $ | 31,518 | | | | | $ | 8,531 | | | | | $ | 11,281 | | | | | $ | 6,962 | | |
|
Assumed initial public offering price per share
|
| | | | | | | | | $ | | | |
|
Net tangible book per share as of September 30, 2020
|
| | | $ | 2.32 | | | | | | | | |
|
Increase pro forma net tangible book value per share attributable to new investors in this offering
|
| | | $ | | | | | | | | | |
|
Pro forma as adjusted net tangible book value per share after giving effect to this
offering |
| | | $ | | | | | | | | | |
|
Dilution in pro forma as adjusted net tangible book value per share to new investors in this offering
|
| | | | | | | | | $ | | |
| | |
Shares Purchased
|
| |
Total Consideration
|
| |
Weighted
Average Price Per Share |
| ||||||||||||||||||
| | |
#
|
| |
%
|
| |
$
|
| |
%
|
| | ||||||||||||||
Existing stockholders
|
| |
|
| | | | % | | | | | $ | | | | | | % | | | | | $ | | | ||
New investors purchasing common stock
|
| |
|
| | | | % | | | | | $ | | | | | | % | | | | | $ | | | ||
Total
|
| |
|
| | | | % | | | | | $ | | | | | | % | | | | | $ | | |
As of September 30, 2020
|
| |
Actual
|
| |
As adjusted(1)
|
| |||
| | |
(in thousands)
|
| |
(in thousands)
|
| |||
Cash and cash equivalents
|
| | | $ | 2,067 | | | | ||
Long-term debt, current portion
|
| | | | 10,828 | | | |
|
|
Long-term debt, net of current portion
|
| | | | 55,812 | | | | | |
Line of credit
|
| | | | 31,869 | | | | ||
Total long-term debt and line of credit
|
| | | | 98,509 | | | | ||
Stockholders’ equity: | | | | |||||||
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 15,190,000 shares issued and 15,167,000 outstanding, actual; shares issued and outstanding, as adjusted(2)
|
| | | | 15 | | | |
|
|
Additional paid-in capital
|
| | | | 13,981 | | | | ||
Treasury stock
|
| | | | (248) | | | |
|
|
Retained earnings
|
| | | | 17,733 | | | |
|
|
Non-controlling interest
|
| | | | 6,792 | | | |
|
|
Total stockholders’ equity
|
| | | | 38,273 | | | |
|
|
Total capitalization
|
| | | | 136,782 | | | |
|
|
| | |
(unaudited)
Nine Months Ended September 30, |
| |
Year Ended December 31,
|
| ||||||||||||||||||
| | | | |
2019
|
| |
2019
|
| |
2018
|
| |||||||||||||
| | |
(in thousands, except share and per share amounts)
|
| |||||||||||||||||||||
Net sales
|
| | | $ | 225,137 | | | | | $ | 168,646 | | | | | $ | 224,910 | | | | | $ | 175,434 | | |
Cost of goods sold
|
| | | | 155,308 | | | | | | 122,501 | | | | | | 163,891 | | | | | | 131,979 | | |
Gross profit
|
| | | | 69,829 | | | | | | 46,145 | | | | | | 61,019 | | | | | | 43,455 | | |
Operating expenses
|
| | | | 44,189 | | | | | | 41,274 | | | | | | 55,183 | | | | | | 41,323 | | |
Operating income
|
| | | | 25,640 | | | | | | 4,871 | | | | | | 5,836 | | | | | | 2,132 | | |
Other expense
|
| | | | 5,083 | | | | | | 2,375 | | | | | | 2,891 | | | | | | 585 | | |
Provision for income tax expense
|
| | | | 5,483 | | | | | | 247 | | | | | | 781 | | | | | | 1,671 | | |
Net Income (loss)
|
| | | | 15,074 | | | | | | 2,249 | | | | | | 2,164 | | | | | | (124) | | |
Basic and diluted earnings per share | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | $ | 1.09 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
Diluted
|
| | | $ | 1.07 | | | | | $ | 0.12 | | | | | $ | 0.11 | | | | | $ | 0.00 | | |
Basic and diluted earnings per share – proforma (unaudited)(1)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic – proforma
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted – proforma
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | 15,180,000 | | | | | | 15,190,000 | | | | | | 15,190,000 | | | | | | 14,830,312 | | |
Diluted
|
| | | | 15,451,000 | | | | | | 15,472,000 | | | | | | 15,190,000 | | | | | | 14,830,312 | | |
Weighted average common shares outstanding –
proforma (unaudited)(1) |
| | | | | ||||||||||||||||||||
Basic – proforma
|
| | | | | | | | | | | | | | | ||||||||||
Diluted – proforma
|
| | | | | | | | | | | | | | |
Balance sheet data:
|
| | | | | ||||||||
| | |
(in thousands)
|
| |||||||||
Cash and cash equivalents
|
| | | $ | 2,067 | | | | | $ | 802 | | |
Total current assets
|
| | | | 79,603 | | | | | | 61,027 | | |
Total assets
|
| | | | 180,735 | | | | | | 133,353 | | |
Total current liabilities
|
| | | | 46,734 | | | | | | 35,928 | | |
Total liabilities
|
| | | | 142,462 | | | | | | 109,299 | | |
Total Karat Packaging Inc. stockholders’ equity .
|
| | | | 31,481 | | | | | | 15,741 | | |
Total noncontrolling interest equity
|
| | | | 6,792 | | | | | | 8,313 | | |
Total stockholders’ equity . .
|
| | | | 38,273 | | | | | | 24,054 | | |
Total liabilities and stockholders’ equity
|
| | | | 180,735 | | | | | | 133,353 | | |
| | |
Nine Months Ended 9/30
|
| |
Year Ended December 31,
|
| ||||||||||||||||||
Other non-GAAP financial data:
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Adjusted EBITDA (unaudited)(2)
|
| | | $ | 31,518 | | | | | $ | 8,531 | | | | | $ | 11,281 | | | | | $ | 6,962 | | |
| | |
Nine Months Ended September 30
|
| |
Year Ended December 31,
|
| ||||||||||||||||||
Reconciliation of non-GAAP financial data (unaudited):
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Net income (loss):
|
| | | $ | 15,074 | | | | | $ | 2,249 | | | | | $ | 2,164 | | | | | $ | (124) | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | 4,858 | | | | | | 4,490 | | | | | | 4,752 | | | | | | 1,455 | | |
Income tax expense
|
| | | | 5,483 | | | | | | 247 | | | | | | 781 | | | | | | 1,671(1) | | |
Depreciation and amortization
|
| | | | 6,103 | | | | | | 3,914 | | | | | | 5,953 | | | | | | 3,960 | | |
Gain on sale of asset(2)
|
| | | | — | | | | | | (2,369) | | | | | | (2,369) | | | | | | — | | |
Adjusted EBITDA
|
| | | $ | 31,518 | | | | | $ | 8,531 | | | | | $ | 11,281 | | | | | $ | 6,962 | | |
| | |
Karat
Packaging, Inc. |
| |
Global Wells
Investment Group |
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Net sales
|
| | | | 225,137 | | | | | | — | | | | | | — | | | | | | 225,137 | | |
Cost of goods sold
|
| | | | 155,308 | | | | | | — | | | | | | — | | | | | | 155,308 | | |
Gross profit
|
| | | | 69,829 | | | | | | — | | | | | | — | | | | | | 69,829 | | |
Operating expenses
|
| | | | 45,256 | | | | | | 1,418 | | | | | | (2,485) | | | | | | 44,189 | | |
Operating income
|
| | | | 24,573 | | | | | | (1,418) | | | | | | 2,485 | | | | | | 25,640 | | |
Rental income
|
| | | | — | | | | | | 2,533 | | | | | | (2,467) | | | | | | 66 | | |
Other income (expense)
|
| | | | (2,495) | | | | | | (2,873) | | | | | | 219 | | | | | | (5,149) | | |
Income (loss) before provision for income taxes
|
| | | | 22,078 | | | | | | (1,758) | | | | | | 237 | | | | | | 20,557 | | |
Provision for income tax expense
|
| | | | 5,483 | | | | | | — | | | | | | — | | | | | | 5,483 | | |
Net income (loss)
|
| | | | 16,595 | | | | | | (1,758) | | | | | | 237 | | | | | | 15,074 | | |
Net income (loss) attributable to noncontrolling interest
|
| | | | — | | | | | | (1,521) | | | | | | — | | | | | | (1,521) | | |
Net income (loss) attributable to controlling
interest . |
| | | | 16,595 | | | | | | (237) | | | | | | 237 | | | | | | 16,595 | | |
Other non-GAAP financial data (unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA(1)
|
| | | | 29,607 | | | | | | 1,674 | | | | | | 237 | | | | | | 31,518 | | |
| | |
Karat
Packaging, Inc. |
| |
Global Wells
Investment Group |
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Net sales
|
| | | | 224,910 | | | | | | — | | | | | | — | | | | | | 224,910 | | |
Cost of goods sold
|
| | | | 163,891 | | | | | | — | | | | | | — | | | | | | 163,891 | | |
Gross profit
|
| | | | 61,019 | | | | | | — | | | | | | — | | | | | | 61,019 | | |
Operating expenses
|
| | | | 55,248 | | | | | | 1,565 | | | | | | (1,630) | | | | | | 55,183 | | |
Operating income
|
| | | | 5,771 | | | | | | (1,565) | | | | | | 1,630 | | | | | | 5,836 | | |
Rental income
|
| | | | — | | | | | | 1,588 | | | | | | (1,588) | | | | | | — | | |
Other income (expense)
|
| | | | (3,266) | | | | | | 486 | | | | | | (111) | | | | | | (2,891) | | |
Income (loss) before provision for income taxes
|
| | | | 2,505 | | | | | | 509 | | | | | | (69) | | | | | | 2,945 | | |
Provision for income tax expense
|
| | | | 781 | | | | | | — | | | | | | — | | | | | | 781 | | |
Net income (loss)
|
| | | | 1,724 | | | | | | 509 | | | | | | (69) | | | | | | 2,164 | | |
Net income (loss) attributable to noncontrolling interest
|
| | | | — | | | | | | 440 | | | | | | — | | | | | | 440 | | |
Net income (loss) attributable to controlling interest .
|
| | | | 1,724 | | | | | | 69 | | | | | | (69) | | | | | | 1,724 | | |
Other non-GAAP financial data (unaudited): | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA(1)
|
| | | | 10,574 | | | | | | 776 | | | | | | (69) | | | | | | 11,281 | | |
| | |
Karat
Packaging, Inc. |
| |
Global Wells
Investment Group |
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Net income (loss)
|
| | | | 16,596 | | | | | | (1,759) | | | | | | 237 | | | | | | 15,074 | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest
|
| | | | 1,984 | | | | | | 2,874 | | | | | | — | | | | | | 4,858 | | |
Income tax expense
|
| | | | 5,483 | | | | | | — | | | | | | — | | | | | | 5,483 | | |
Depreciation and amortization
|
| | | | 5,544 | | | | | | 559 | | | | | | — | | | | | | 6,103 | | |
Adjusted EBITDA
|
| | | | 29,607 | | | | | | 1,674 | | | | | | 237 | | | | | | 31,518 | | |
| | |
Karat
Packaging, Inc. |
| |
Global Wells
Investment Group |
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Net income (loss)
|
| | | | 1,724 | | | | | | 509 | | | | | | (69) | | | | | | 2,164 | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | |
Gain on sale of asset
|
| | | | — | | | | | | (2,369) | | | | | | — | | | | | | (2,369) | | |
Interest
|
| | | | 2,868 | | | | | | 1,884 | | | | | | — | | | | | | 4,752 | | |
Income tax expense
|
| | | | 781 | | | | | | — | | | | | | — | | | | | | 781 | | |
Depreciation and amortization
|
| | | | 5,201 | | | | | | 752 | | | | | | — | | | | | | 5,953 | | |
Adjusted EBITDA
|
| | | | 10,574 | | | | | | 776 | | | | | | (69) | | | | | | 11,281 | | |
| | |
Karat
Packaging, Inc. |
| |
Global Wells
Investment Group |
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Total assets
|
| | | | 136,898 | | | | | | 50,351 | | | | | | (6,514) | | | | | | 180,735 | | |
Long term debt, current portion
|
| | | | 10,144 | | | | | | 684 | | | | | | — | | | | | | 10,828 | | |
Long term debt, net of current portion.
|
| | | | 18,941 | | | | | | 36,871 | | | | | | — | | | | | | 55,812 | | |
Line of credit
|
| | | | 31,869 | | | | | | — | | | | | | — | | | | | | 31,869 | | |
Other liabilities
|
| | | | 44,463 | | | | | | 4,943 | | | | | | (5,453) | | | | | | 43,953 | | |
Total liabilities
|
| | | | 105,417 | | | | | | 42,498 | | | | | | (5,453) | | | | | | 142,462 | | |
Total stockholders’ equity
|
| | | | 31,481 | | | | | | 7,853 | | | | | | (1,061) | | | | | | 38,273 | | |
Total noncontrolling interest equity
|
| | | | — | | | | | | 7,873 | | | | | | (1,081) | | | | | | 6,792 | | |
Total liabilities and stockholders’ equity
|
| | | | 136,898 | | | | | | 50,351 | | | | | | (6,514) | | | | | | 180,735 | | |
| | |
Karat
Packaging, Inc. |
| |
Global Wells
Investment Group |
| |
Eliminations
|
| |
Consolidated
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||
Total assets
|
| | | | 102,104 | | | | | | 33,938 | | | | | | (2,689) | | | | | | 133,353 | | |
Long term debt, current portion
|
| | | | 6,587 | | | | | | 304 | | | | | | — | | | | | | 6,891 | | |
Long term debt, net of current portion.
|
| | | | 19,678 | | | | | | 21,017 | | | | | | — | | | | | | 40,695 | | |
Line of credit
|
| | | | 26,679 | | | | | | — | | | | | | — | | | | | | 26,679 | | |
Other liabilities
|
| | | | 33,419 | | | | | | 3,007 | | | | | | (1,392) | | | | | | 35,034 | | |
Total liabilities
|
| | | | 86,363 | | | | | | 24,328 | | | | | | (1,392) | | | | | | 109,299 | | |
Total stockholders’ equity
|
| | | | 15,741 | | | | | | 1,737 | | | | | | (1,737) | | | | | | 15,741 | | |
Total noncontrolling interest equity
|
| | | | — | | | | | | 7,873 | | | | | | 440 | | | | | | 8,313 | | |
Total liabilities and stockholders’ equity
|
| | | | 102,104 | | | | | | 33,938 | | | | | | (2,689) | | | | | | 133,353 | | |
| | |
Nine Months Ended
September 30, |
| |||||||||
| | | | |
2019
|
| |||||||
| | |
(in thousands)
|
| |||||||||
Net sales
|
| | | $ | 225,137 | | | | | $ | 168,646 | | |
Cost of goods sold
|
| | | | 155,308 | | | | | | 122,501 | | |
Gross profit
|
| | | | 69,829 | | | | | | 46,145 | | |
Operating expenses
|
| | | | 44,189 | | | | | | 41,274 | | |
Operating income
|
| | | | 25,640 | | | | | | 4,871 | | |
Other expense
|
| | | | (5,083) | | | | | | (2,375) | | |
Provision for income tax expense
|
| | | | 5,483 | | | | | | 247 | | |
Net income
|
| | | | 15,074 | | | | | | 2,249 | | |
Other non-GAAP financial data (unaudited): | | | | | | | | | | | | | |
Adjusted EBITDA
|
| | | $ | 31,518 | | | | | $ | 8,531 | | |
| | |
Nine Months Ended
September 30, |
| |||||||||
Reconciliation of Adjusted EBITDA (unaudited):
|
| |
2020
|
| |
2019
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Net income:
|
| | | $ | 15,074 | | | | | $ | 2,249 | | |
Add (deduct): | | | | | | | | | | | | | |
Interest expense
|
| | | | 4,858 | | | | | | 4,490 | | |
Income tax expense
|
| | | | 5,483 | | | | | | 247 | | |
Depreciation and amortization
|
| | | | 6,103 | | | | | | 3,914 | | |
Gain on sale of asset
|
| | | | — | | | | | | (2,369) | | |
Other non-GAAP financial data: | | | | | | | | | | | | | |
Adjusted EBITDA
|
| | | $ | 31,518 | | | | | $ | 8,531 | | |
| | |
Twelve Months Ended December 31,
|
| |||||||||
| | | | |
2018
|
| |||||||
| | |
(in thousands)
|
| |||||||||
Net sales
|
| | | $ | 224,910 | | | | | $ | 175,434 | | |
Cost of goods sold
|
| | | | 163,891 | | | | | | 131,979 | | |
Gross profit
|
| | | | 61,019 | | | | | | 43,455 | | |
Operating expenses
|
| | | | 55,183 | | | | | | 41,323 | | |
Operating income
|
| | | | 5,836 | | | | | | 2,132 | | |
Other expense
|
| | | | (2,891) | | | | | | (585) | | |
Provision for income tax expense
|
| | | | 781 | | | | | | 1,671 | | |
Net income (loss)
|
| | | | 2,164 | | | | | | (124) | | |
Other non-GAAP financial data (unaudited): | | | | | | | | | | | | | |
Adjusted EBITDA
|
| | | $ | 11,281 | | | | | $ | 6,962 | | |
| | |
Twelve Months Ended December 31
|
| |||||||||
Reconciliation of Adjusted EBITDA (unaudited):
|
| |
2019
|
| |
2018
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Net income (loss):
|
| | | $ | 2,164 | | | | | $ | (124) | | |
Add (deduct): | | | | | | | | | | | | | |
Interest expense
|
| | | | 4,752 | | | | | | 1,455 | | |
Income tax expense
|
| | | | 781 | | | | | | 1,671 | | |
Depreciation
|
| | | | 5,953 | | | | | | 3,960 | | |
Gain on sale of asset
|
| | | | (2,369) | | | | | | — | | |
Other non-GAAP financial Data | | | | | | | | | | | | | |
Adjusted EBITDA
|
| | | $ | 11,281 | | | | | $ | 6,962 | | |
| | | | | | |
Increase
|
| |||||||||||
| | |
(in thousands)
|
| |||||||||||||||
Current assets
|
| | | $ | 79,603 | | | | | $ | 61,027 | | | | | $ | 18,576 | | |
Current liabilities
|
| | | | 46,734 | | | | | | 35,928 | | | | | | 10,806 | | |
Working capital
|
| | | $ | 32,869 | | | | | $ | 25,099 | | | | | $ | 7,770 | | |
| | |
Nine Months Ended September 30,
|
| |||||||||
Cash flows data:
|
| |
2020
|
| |
2019
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Net cash provided by (used in) operating activities
|
| | | $ | 12,300 | | | | | $ | (3,292) | | |
Net cash used in investing activities
|
| | | | (34,130) | | | | | | (22,078) | | |
Net cash provided by financing activities
|
| | | | 23,095 | | | | | | 27,676 | | |
Net change in cash and cash equivalents
|
| | | | 1,265 | | | | | | 2,306 | | |
| | |
Year Ended December 31,
|
| |||||||||
Cash flows data:
|
| |
2019
|
| |
2018
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Net cash (used in) provided by operating activities
|
| | | $ | (32) | | | | | $ | 2,717 | | |
Net cash used in investing activities
|
| | | | (24,756) | | | | | | (24,306) | | |
Net cash provided by financing activities
|
| | | | 24,625 | | | | | | 21,763 | | |
Net change in cash
|
| | | | (163) | | | | | | 174 | | |
| | |
Payments Due by Period
|
| |||||||||||||||||||||||||||
| | |
Total
|
| |
Less than
1 year |
| |
1 – 3 years
|
| |
3 – 5 years
|
| |
More than
5 years |
| |||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||
Long-term debt(1).
|
| | | $ | 66,640 | | | | | $ | 10,828 | | | | | $ | 15,127 | | | | | $ | 21,351 | | | | | $ | 19,334 | | |
Line of credit
|
| | | | 31,869 | | | | | | — | | | | | | 31,869 | | | | | | — | | | | | | — | | |
Interest on long-term debt and line of credit(1)
|
| | | | 16,177 | | | | | | 4,119 | | | | | | 5,182 | | | | | | 3,368 | | | | | | 3,508 | | |
Operating leases(2).
|
| | | | 36,793 | | | | | | 5,939 | | | | | | 12,262 | | | | | | 9,222 | | | | | | 9,370 | | |
Capital lease obligations including interest
|
| | | | 747 | | | | | | 346 | | | | | | 346 | | | | | | 55 | | | | | | — | | |
Capital expenditures(3)
|
| | | | 54,660 | | | | | | 5,735 | | | | | | 14,620 | | | | | | 17,870 | | | | | | 16,435 | | |
Total
|
| | | $ | 206,886 | | | | | $ | 26,967 | | | | | $ | 79,406 | | | | | $ | 51,866 | | | | | $ | 48,647 | | |
Name
|
| |
Age
|
| |
Position
|
|
Executive Officers | | | | | | ||
Alan Yu | | |
50
|
| | Chief Executive Officer and Chairman of the Board of Directors | |
Ann T. Sabahat | | |
49
|
| | Chief Financial Officer | |
Marvin Cheng | | |
51
|
| | Vice President – Manufacturing, Secretary and Director | |
Joanne Wang | | |
48
|
| | Chief Operating Officer | |
Independent Directors
|
| | | | | ||
Paul Y. Chen | | |
55
|
| | Director | |
Eric Chen | | |
51
|
| | Director | |
Eve Yen | | |
64
|
| | Director | |
Name and Principal Position
|
| |
Year
|
| |
Salary ($)
|
| |
All Other
Compensation(1)($) |
| |
Total ($)
|
| ||||||||||||
Alan Yu
Chief Executive Officer |
| | | | 2020 | | | | | $ | 182,500 | | | | | $ | 35,963 | | | | | $ | 218,463 | | |
| | | 2019 | | | | | $ | 180,000 | | | | | $ | 33,311 | | | | | $ | 213,311 | | | ||
Ann T. Sabahat
Chief Financial Officer(2) |
| | | | 2020 | | | | | $ | 56,477 | | | | | $ | — | | | | | $ | 56,477 | | |
| | | 2019 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | ||
Marvin Cheng
Vice President – Manufacturing and Secretary |
| | | | 2020 | | | | | $ | 204,000 | | | | | $ | 19,469 | | | | | $ | 223,469 | | |
| | | 2019 | | | | | $ | 204,000 | | | | | $ | 24,906 | | | | | $ | 228,906 | | | ||
Joanne Wang
Chief Operating Officer(3) |
| | | | 2020 | | | | | $ | 200,000 | | | | | $ | 13,735 | | | | | $ | 213,735 | | |
| | | 2019 | | | | | $ | 203,396 | | | | | $ | 13,735 | | | | | $ | 217,131 | | |
| | |
Common Stock Beneficially
Owned Before This Offering(1) |
| |
Common Stock Beneficially
Owned After This Offering(2) |
| ||||||||||||||||||
Name of Beneficial Owner
|
| |
Number of
Shares |
| |
Percentage of
Class |
| |
Number of
Shares |
| |
Percentage of
Class |
| ||||||||||||
Directors and Named Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | |
Alan Yu
Chief Executive Officer and Chairman |
| | | | 7,362,498 | | | | | | 48.54% | | | | | | 7,362,498 | | | | | | % | | |
Ann T. Sabahat
Chief Financial Officer |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Marvin Cheng
Vice President – Manufacturing, Secretary and Director |
| | | | 7,327,498 | | | | | | 48.31% | | | | | | 7,327,498 | | | | | | % | | |
Joanne Wang
Chief Operating Officer |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Eve Yen
Director |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Paul Y. Chen
Director |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Eric Chen
Director |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
All executive officers and directors as a group (7 persons)
|
| | | | 14,689,996 | | | | | | 96.85% | | | | | | 14,689,996 | | | | | | % | | |
| | |
Number of Shares
|
| |||
Stifel, Nicolaus & Company, Incorporated
|
| | | | | | |
William Blair & Company, L.L.C.
|
| | | | | | |
Truist Securities, Inc.
|
| | | | | | |
National Securities Corporation
|
| | | | | | |
D.A. Davidson & Co.
|
| | | | | | |
Total
|
| | | | | |
| | |
Total
|
| ||||||
| | |
Per Share
|
| |
Without Option
to Purchase Additional Shares |
| |
With Option
to Purchase Additional Shares |
|
Initial public offering price
|
| | | | | | | | | |
Underwriting discounts and commissions
|
| | | | | | | | | |
Proceeds, before estimated expenses, to us
|
| | | | | | | | | |
| Audited Consolidated Financial Statements | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| Unaudited Condensed Consolidated Financial Statements | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | |
| | |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents (including $0.2 million and $37,000 associated with variable interest entity at December 31, 2019 and 2018, respectively)
|
| | | $ | 802,000 | | | | | $ | 965,000 | | |
Accounts receivable, net of allowance for doubtful accounts of $101,000 and $64,000, respectively
|
| | | | 21,020,000 | | | | | | 14,714,000 | | |
Inventories
|
| | | | 35,428,000 | | | | | | 29,518,000 | | |
Prepaid expenses and other current assets
|
| | | | 3,085,000 | | | | | | 2,041,000 | | |
Due from affiliated companies
|
| | | | 692,000 | | | | | | 381,000 | | |
Total current assets
|
| | | | 61,027,000 | | | | | | 47,619,000 | | |
Property and equipment, net (including $27.1 million and $19.2 million associated with variable interest entity
at December 31, 2019 and 2018, respectively) |
| | | | 59,020,000 | | | | | | 38,115,000 | | |
Deposits (including $1.7 million and $0 associated with variable interest entity at December 31, 2019 and 2018,
respectively) |
| | | | 13,217,000 | | | | | | 9,252,000 | | |
Other assets (including $1.3 million and $1.0 million associated with variable interest entity at December 31, 2019 and 2018, respectively)
|
| | | | 89,000 | | | | | | 1,027,000 | | |
Total assets
|
| | | $ | 133,353,000 | | | | | $ | 96,013,000 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable (including $0.5 million and $36,000 associated with variable interest entity at December 31, 2019 and 2018, respectively)
|
| | | $ | 19,025,000 | | | | | $ | 15,110,000 | | |
Accrued expenses (including $70,000 and $0 associated with variable interest entity at December 31, 2019 and 2018, respectively)
|
| | | | 2,836,000 | | | | | | 1,660,000 | | |
Related party payable
|
| | | | 5,110,000 | | | | | | 3,393,000 | | |
Credit cards payable
|
| | | | 1,074,000 | | | | | | 611,000 | | |
Line of credit
|
| | | | — | | | | | | 22,783,000 | | |
Customer deposits (including $0 and $1.5 million associated with variable interest entity at December 31, 2019 and 2018, respectively)
|
| | | | 676,000 | | | | | | 2,097,000 | | |
Capital leases, current portion
|
| | | | 316,000 | | | | | | 38,000 | | |
Long-term debt, current portion (including $0.3 million and $10.7 million associated with variable interest entity at December 31, 2019 and 2018 respectively)
|
| | | | 6,891,000 | | | | | | 14,818,000 | | |
Total current liabilities
|
| | | | 35,928,000 | | | | | | 60,510,000 | | |
Deferred tax liability
|
| | | | 2,179,000 | | | | | | 1,658,000 | | |
Line of credit
|
| | | | 26,679,000 | | | | | | — | | |
Long-term debt, net of current portion (including $21.0 million and $0 million associated with variable interest entity at December 31, 2019 and 2018, respectively) and debt discount of $113,000 and
$0 associated with variable interest entity at December 31, 2019 and 2018, respectively |
| | | | 40,695,000 | | | | | | 11,832,000 | | |
Capital leases, net of current portion
|
| | | | 635,000 | | | | | | 123,000 | | |
Other liabilities (including $2.5 million and $0 associated with variable interest entity at December 31, 2019 and 2018, respectively)
|
| | | | 3,183,000 | | | | | | — | | |
Total liabilities
|
| | | | 109,299,000 | | | | | | 74,123,000 | | |
Commitments and Contingencies (Note 12) | | | | | | | | | | | | | |
Karat Packaging Inc. stockholders’ equity | | | | | | | | | | | | | |
Common stock, $0.001 par value, 100,000,000 shares authorized, 15,190,000 shares issued and outstanding
at December 31, 2019 and 2018, respectively |
| | | | 15,000 | | | | | | 15,000 | | |
Additional paid in capital
|
| | | | 13,981,000 | | | | | | 13,981,000 | | |
Retained earnings
|
| | | | 1,745,000 | | | | | | 21,000 | | |
Total Karat Packaging Inc. stockholders’ equity
|
| | | | 15,741,000 | | | | | | 14,017,000 | | |
Noncontrolling interest
|
| | | | 8,313,000 | | | | | | 7,873,000 | | |
Total stockholders’ equity
|
| | | | 24,054,000 | | | | | | 21,890,000 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 133,353,000 | | | | | $ | 96,013,000 | | |
| | |
2019
|
| |
2018
|
| ||||||
Net sales
|
| | | $ | 224,910,000 | | | | | $ | 175,434,000 | | |
Cost of goods sold
|
| | | | 163,891,000 | | | | | | 131,979,000 | | |
Gross profit
|
| | | | 61,019,000 | | | | | | 43,455,000 | | |
Operating expenses: | | | | | | | | | | | | | |
Selling expense
|
| | | | 16,473,000 | | | | | | 9,324,000 | | |
General and administrative expense (including $1.6 million and $0.2 million associated with variable interest entity for the years ended December 31, 2019 and 2018, respectively)
|
| | | | 38,710,000 | | | | | | 31,999,000 | | |
Total operating expenses
|
| | | | 55,183,000 | | | | | | 41,323,000 | | |
Operating income
|
| | | | 5,836,000 | | | | | | 2,132,000 | | |
Other income (expense) | | | | | | | | | | | | | |
Other income (expense)
|
| | | | (219,000) | | | | | | 464,000 | | |
Gain (loss) on foreign currency transactions
|
| | | | (289,000) | | | | | | 406,000 | | |
Gain on sale of asset (including $2.4 million and $0 associated with variable interest entity for
the years ended December 31, 2019 and 2018, respectively) |
| | | | 2,369,000 | | | | | | — | | |
Interest expense (including $1.9 million of interest expense and $48,000 of interest income associated with variable interest entity for the years ended December 31, 2019 and 2018, respectively)
|
| | | | (4,752,000) | | | | | | (1,455,000) | | |
Total other expense
|
| | | | (2,891,000) | | | | | | (585,000) | | |
Income before provision for income tax
|
| | | | 2,945,000 | | | | | | 1,547,000 | | |
Provision for income tax
|
| | | | 781,000 | | | | | | 1,671,000 | | |
Net income (loss)
|
| | | | 2,164,000 | | | | | | (124,000) | | |
Net income (loss) attributable to noncontrolling interest
|
| | | | 440,000 | | | | | | (145,000) | | |
Net income attributable to Karat Packaging Inc.
|
| | | $ | 1,724,000 | | | | | $ | 21,000 | | |
Basic and diluted earnings per share: | | | | | | | | | | | | | |
Basic
|
| | | $ | 0.11 | | | | | $ | 0.00 | | |
Diluted
|
| | | $ | 0.11 | | | | | $ | 0.00 | | |
Weighted average common shares outstanding, basic
|
| | | | 15,190,000 | | | | | | 14,830,312 | | |
Weighted average common shares outstanding, diluted
|
| | | | 15,190,000 | | | | | | 14,830,312 | | |
Pro Forma Information (unaudited): | | | | | | | | | | | | | |
Pro forma provision from income tax
|
| | | | — | | | | | | 518,000 | | |
Pro forma net income
|
| | | | — | | | | | | 1,029,000 | | |
Pro forma net loss attributable to noncontrolling interest
|
| | | | — | | | | | | (145,000) | | |
Pro forma net income attributable to Karat Packaging inc.
|
| | | $ | — | | | | | $ | 1,174,000 | | |
Pro forma earnings per share, basic and diluted: | | | | | | | | | | | | | |
Basic
|
| | | $ | — | | | | | $ | 0.08 | | |
Diluted
|
| | | $ | — | | | | | $ | 0.08 | | |
Weighted average common shares outstanding used in computing pro forma net earnings per share:
|
| | | | | | | | | | | | |
Basic
|
| | | | — | | | | | | 14,830,312 | | |
Diluted
|
| | | | — | | | | | | 14,830,312 | | |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Retained
Earnings |
| |
Receivable
from Stockholders |
| |
Total
Stockholder’s Equity attributable to Karat Packaging Inc. |
| |
Noncontrolling
Interest |
| |
Total
Stockholder’s Equity |
| |||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2018
|
| | | | 14,724,996 | | | | | $ | 15,000 | | | | | $ | 3,533,000 | | | | | | 7,934,000 | | | | | | (784,000) | | | | | $ | 10,698,000 | | | | | $ | — | | | | | $ | 10,698,000 | | |
Effect of change in tax status from S-Corporation to C-Corporation
|
| | | | — | | | | | | — | | | | | | 7,934,000 | | | | | | (7,934,000) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Effect on initial consolidation of Global Wells Investment Group
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,508,000 | | | | | | 6,508,000 | | |
Contribution from noncontrolling interest
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,510,000 | | | | | | 1,510,000 | | |
Conversion of convertible note
|
| | | | 275,004 | | | | | | — | | | | | | 2,750,000 | | | | | | — | | | | | | | | | | | | 2,750,000 | | | | | | — | | | | | | 2,750,000 | | |
Issuance of common stock
|
| | | | 190,000 | | | | | | — | | | | | | 1,900,000 | | | | | | — | | | | | | — | | | | | | 1,900,000 | | | | | | — | | | | | | 1,900,000 | | |
Deemed distribution to stockholders
|
| | | | — | | | | | | — | | | | | | (784,000) | | | | | | — | | | | | | 784,000 | | | | | | — | | | | | | — | | | | | | — | | |
Dividends declared to stockholders at $0.0814 per share
|
| | | | — | | | | | | — | | | | | | (1,352,000) | | | | | | — | | | | | | — | | | | | | (1,352,000) | | | | | | — | | | | | | (1,352,000) | | |
Net income (loss)
|
| | | | — | | | | | | — | | | | | | — | | | | | | 21,000 | | | | | | — | | | | | | 21,000 | | | | | | (145,000) | | | | | | (124,000) | | |
Balance, December 31, 2018
|
| | | | 15,190,000 | | | | | | 15,000 | | | | | | 13,981,000 | | | | | | 21,000 | | | | | | — | | | | | | 14,017,000 | | | | | | 7,873,000 | | | | | | 21,890,000 | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,724,000 | | | | | | — | | | | | | 1,724,000 | | | | | | 440,000 | | | | | | 2,164,000 | | |
Balance, December 31, 2019
|
| | | | 15,190,000 | | | | | $ | 15,000 | | | | | $ | 13,981,000 | | | | | $ | 1,745,000 | | | | | $ | — | | | | | $ | 15,741,000 | | | | | $ | 8,313,000 | | | | | $ | 24,054,000 | | |
| | |
2019
|
| |
2018
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | 2,164,000 | | | | | $ | (124,000) | | |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 5,953,000 | | | | | | 3,960,000 | | |
(Gain) loss on sale of property and equipment
|
| | | | (2,369,000) | | | | | | 182,000 | | |
Provision for bad debt
|
| | | | 37,000 | | | | | | 25,000 | | |
Reserve for inventory obsolescence
|
| | | | 35,000 | | | | | | (16,000) | | |
Change in fair value of interest rate swap
|
| | | | 1,281,000 | | | | | | — | | |
Amortization of loan fees
|
| | | | 6,000 | | | | | | — | | |
Deferred income taxes
|
| | | | 521,000 | | | | | | 1,658,000 | | |
(Increase) decrease in operating assets
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (6,343,000) | | | | | | (3,513,000) | | |
Inventories
|
| | | | (5,945,000) | | | | | | (985,000) | | |
Prepaid expenses and other current assets
|
| | | | (1,044,000) | | | | | | (673,000) | | |
Due from affiliated companies
|
| | | | (311,000) | | | | | | (264,000) | | |
Deposits
|
| | | | (1,705,000) | | | | | | 444,000 | | |
Other assets
|
| | | | (64,000) | | | | | | (9,000) | | |
Increase (decrease) in operating liabilities
|
| | | | | | | | | | | | |
Accounts payable
|
| | | | 3,915,000 | | | | | | 3,283,000 | | |
Accrued expenses
|
| | | | 1,176,000 | | | | | | (916,000) | | |
Related party payable
|
| | | | 1,717,000 | | | | | | (2,451,000) | | |
Credit cards payable
|
| | | | 463,000 | | | | | | 206,000 | | |
Customer deposits
|
| | | | (1,421,000) | | | | | | 1,910,000 | | |
Other liabilities
|
| | | | 1,902,000 | | | | | | — | | |
Net cash (used in) provided by operating activities
|
| | | $ | (32,000) | | | | | $ | 2,717,000 | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | | | (32,551,000) | | | | | | (22,149,000) | | |
Proceeds on disposal of property and equipment
|
| | | | 10,055,000 | | | | | | — | | |
Deposits paid for property and equipment
|
| | | | (2,260,000) | | | | | | (9,759,000) | | |
Proceeds from sale of property and equipment
|
| | | | — | | | | | | 90,000 | | |
Impact to cash resulting from initial consolidation of Global Wells Investment Group LLC
|
| | | | — | | | | | | 7,512,000 | | |
Net cash used in investing activities
|
| | | $ | (24,756,000) | | | | | $ | (24,306,000) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Net proceeds from line of credit
|
| | | | 3,896,000 | | | | | | 3,385,000 | | |
Proceeds from long-term debt, net of issuance cost
|
| | | | 46,960,000 | | | | | | 24,949,000 | | |
Payments on long-term debt
|
| | | | (25,911,000) | | | | | | (8,989,000) | | |
Receivable from shareholders
|
| | | | — | | | | | | 300,000 | | |
Payments for debt issuance costs
|
| | | | (119,000) | | | | | | — | | |
Payments on capital lease obligations
|
| | | | (201,000) | | | | | | (47,000) | | |
Proceeds from issuing common stock
|
| | | | — | | | | | | 1,900,000 | | |
Contribution from noncontrolling interest of variable interest entity
|
| | | | — | | | | | | 1,510,000 | | |
Dividends paid to shareholders
|
| | | | — | | | | | | (1,245,000) | | |
Net cash provided by financing activities
|
| | | $ | 24,625,000 | | | | | $ | 21,763,000 | | |
Net increase in cash and cash equivalents
|
| | | | (163,000) | | | | | | 174,000 | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Beginning of year
|
| | | $ | 965,000 | | | | | $ | 791,000 | | |
End of year
|
| | | $ | 802,000 | | | | | $ | 965,000 | | |
Supplemental disclosures of non-cash investing and financing activities: | | | | | | | | | | | | | |
Conversion of convertible note
|
| | | $ | — | | | | | $ | 2,750,000 | | |
Capital expenditures funded by capital lease borrowings
|
| | | $ | 992,000 | | | | | $ | 180,000 | | |
Accrued dividends
|
| | | $ | — | | | | | $ | 107,000 | | |
Deemed distribution to stockholders
|
| | | $ | — | | | | | $ | 784,000 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | |
Cash paid for income tax
|
| | | $ | 154,000 | | | | | $ | 530,000 | | |
Cash paid for interest
|
| | | $ | 3,316,000 | | | | | $ | 1,499,000 | | |
| Machinery and equipment | | | 5 to 10 years | |
| Leasehold improvements | | | Lower of useful life or lease term | |
| Vehicles | | | 5 years | |
| Furniture and fixtures | | | 7 years | |
| Building | | | 28 to 40 years | |
| Property held under capital leases | | | 3 to 5 years | |
| Computer hardware and software | | | 3 years | |
|
Cash
|
| | | $ | 7,512,000 | | |
|
Property and equipment
|
| | | | 205,000 | | |
|
Other liabilities
|
| | | | (3,000) | | |
|
Accounts Payable
|
| | | | (205,000) | | |
|
Net assets
|
| | | $ | 7,509,000 | | |
| | | | | | ||||||||
Cash
|
| | | $ | 209,000 | | | | | $ | 37,000 | | |
Accounts receivable
|
| | | | 230,000 | | | | | | — | | |
Property and equipment, net
|
| | | | 27,111,000 | | | | | | 19,243,000 | | |
Due from Lollicup USA, Inc.
|
| | | | 3,382,000 | | | | | | 1,049,000 | | |
Deposits
|
| | | | 1,740,000 | | | | | | — | | |
Other assets
|
| | | | 1,266,000 | | | | | | 1,008,000 | | |
Total assets
|
| | | $ | 33,938,000 | | | | | $ | 21,337,000 | | |
Accounts payable
|
| | | $ | 486,000 | | | | | $ | 36,000 | | |
Accrued expenses
|
| | | | 70,000 | | | | | | — | | |
Customer deposits
|
| | | | — | | | | | | 1,500,000 | | |
Long-term debt, current portion
|
| | | | 304,000 | | | | | | 10,699,000 | | |
Long-term debt
|
| | | | 21,017,000 | | | | | | — | | |
Other liabilities
|
| | | | 2,451,000 | | | | | | — | | |
Total liabilities
|
| | | $ | 24,328,000 | | | | | $ | 12,235,000 | | |
| | | | | | ||||||||
Due from affiliated companies
|
| | | $ | 692,000 | | | | | $ | 381,000 | | |
Accounts Payable
|
| | | | 76,000 | | | | | | — | | |
| | |
2019
|
| |
2018
|
| ||||||
Keary Global Ltd. (“Keary global) an its affiliate, Keary International, Ltd.
|
| | | | 12% | | | | | | 14% | | |
(Keary International”) – related parties
|
| | | | | | | | | | | | |
| | |
2019
|
| |
2018
|
| ||||||
Keary Global and its affiliate, Keary International – related parties
|
| | | | 22% | | | | | | 19% | | |
Taizhou Fuling Plastics Co., Ltd
|
| | | | 13% | | | | | | 16% | | |
| | |
Level I
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash equivalents
|
| | | $ | 802,000 | | | | | $ | — | | | | | $ | — | | |
Interest rate swaps
|
| | | | — | | | | | | (1,281,000) | | | | | | | | |
Fair value, December 31, 2019
|
| | | $ | 802,000 | | | | | $ | (1,281,000) | | | | | $ | — | | |
| | | | | | ||||||||
Raw materials
|
| | | $ | 3,698,000 | | | | | $ | 2,243,000 | | |
Work in progress
|
| | | | 127,000 | | | | | | 35,000 | | |
Manufactured and purchase finished goods
|
| | | | 31,957,000 | | | | | | 27,559,000 | | |
| | | | | 35,782,000 | | | | | | 29,837,000 | | |
Less inventory reserve
|
| | | | (354,000) | | | | | | (319,000) | | |
Total inventories
|
| | | $ | 35,428,000 | | | | | $ | 29,518,000 | | |
| | | | | | ||||||||
Machinery and equipment
|
| | | $ | 40,575,000 | | | | | $ | 24,340,000 | | |
Leasehold improvements
|
| | | | 15,071,000 | | | | | | 6,103,000 | | |
Vehicles
|
| | | | 2,424,000 | | | | | | 3,044,000 | | |
Furniture and fixtures
|
| | | | 729,000 | | | | | | 527,000 | | |
Building
|
| | | | 17,237,000 | | | | | | 278,000 | | |
Land
|
| | | | 3,017,000 | | | | | | 3,000,000 | | |
Property held under capital lease (Note 11)
|
| | | | 1,582,000 | | | | | | 590,000 | | |
Construction in progress
|
| | | | — | | | | | | 16,243,000 | | |
Computer hardware and software
|
| | | | 502,000 | | | | | | 223,000 | | |
| | | | | 81,137,000 | | | | | | 54,348,000 | | |
Less accumulated depreciation
|
| | | | (22,117,000) | | | | | | (16,233,000) | | |
Total property and equipment, net
|
| | | $ | 59,020,000 | | | | | $ | 38,115,000 | | |
| | | | | | ||||||||
Accrued expense
|
| | | $ | 718,000 | | | | | $ | 316,000 | | |
Accrued interest
|
| | | | 181,000 | | | | | | 4,000 | | |
Accrued payroll
|
| | | | 1,111,000 | | | | | | 845,000 | | |
Accrued vacation and sick pay
|
| | | | 379,000 | | | | | | 287,000 | | |
Dividends payable
|
| | | | 99,000 | | | | | | 107,000 | | |
Deferred rent liability
|
| | | | 322,000 | | | | | | 101,000 | | |
Income tax payable
|
| | | | 26,000 | | | | | | — | | |
Total accrued expenses
|
| | | $ | 2,836,000 | | | | | $ | 1,660,000 | | |
| | | | | | ||||||||
A promissory note that allowed for advances up to $5,000,000 through
March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,814,677 was converted in March 2018, maturing in March 2023. Principal and interest payment of $90,815 due monthly at the fixed rate of 4.98%. The loan is secured by certain machinery and equipment. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. |
| | | $ | 3,266,000 | | | | | $ | 4,093,000 | | |
A construction loan with advances up to $21,640,000 that expired
May 2019. Funds were disbursed upon request from the construction disbursement company. In May 2019, Global Wells entered into a loan agreement with another financial institution and used the proceeds from the new loan to pay off the principal balance and accrued interest of the construction loan. Interest payment was payable monthly at the rate of prime plus 0.50% (6.00% as of December 31, 2018), with the principal balance due at maturity. The loan was secured by Global Wells’ assets and guaranteed by the Company and Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum cash or equity balance. |
| | | | — | | | | | | 10,699,000 | | |
An equipment loan with a draw down period ending August 28, 2019
for up to $10,000,000, at which point the entire principal outstanding is due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, maturing in June 2024. Principal and interest payment of $192,572 due monthly starting August 2019 at the fixed rate of 5.75%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | 9,267,000 | | | | | | 4,937,000 | | |
A $2,130,000 term loan that expires April 30, 2021. Principal and
interest payment of $53,539 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate (4.75% as of December 31, 2019 and 5.50% as of December 31, 2018). The loan is secured by the company’s assets and guaranteed by the company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | 831,000 | | | | | | 1,417,000 | | |
Subtotal, continue on following page
|
| | | $ | 13,364,000 | | | | | $ | 21,146,000 | | |
| | | | | | ||||||||
Subtotal, continue from previous page
|
| | | $ | 13,364,000 | | | | | $ | 21,146,000 | | |
A $1,620,000 term loan that expires September 30, 2020. Principal and
interest payment of $50,282 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 5.25%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | 442,000 | | | | | | 1,006,000 | | |
A $935,000 term loan that expires December 31, 2021. Principal and
interest payment of $19,834 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 3.50%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible worth, and minimum debt coverage ratio. |
| | | | 459,000 | | | | | | 676,000 | | |
A $1,170,000 term loan that expired December 31, 2019. Principal and
interest payment of $45,621 were due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate minus 0.25% (4.5% as of December 31, 2019 and 5.25% as of December 31, 2018). The loan was secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | — | | | | | | 535,000 | | |
A $1,070,000 term loan that expired September 30, 2019. Principal and
interest payment of $47,829 were due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate plus 0.50% with 5.00% minimum (5.25% as of December 31, 2019 and 6.00% as of December 31, 2018). The loan was secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | — | | | | | | 421,000 | | |
Subtotal, continue on following page
|
| | | $ | 14,265,000 | | | | | $ | 23,784,000 | | |
| | | | | | ||||||||
Subtotal from previous page
|
| | | $ | 14,265,000 | | | | | $ | 23,784,000 | | |
An equipment loan with a draw down period ending May 31, 2019 for
up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, maturing on May 31, 2024. The first principal and interest payment commenced in July 2019. Interest accrued based on prime rate (4.75% as of December 31, 2019 and 5.50% as of December 31, 2018). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain fixed financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. |
| | | | 9,000,000 | | | | | | 2,746,000 | | |
A $724,445 term loan that expired September 1, 2019. Principal and interest payment of $13,651 were due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued at a fixed rate of 4.94%. The loan was secured by certain machinery and equipment and guaranteed by the Company’s stockholders.
|
| | | | — | | | | | | 120,000 | | |
A $3,000,000 term loan that expires December 2024. Interest only
payment due for the first six months. Principal and interest payment of $57,769 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25% (5.00% at December 31, 2019). The loan is secured the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service charge ratio, and debt to EBIDTA rolling ratio. |
| | | | 3,000,000 | | | | | | — | | |
A $21,580,000 term loan that matures in May 2029. Interest accrues at
prime rate less 0.25% (4.50% at December 31, 2019) and principal payments ranging from $24,356 to $39,581 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and is stockholders. The Company incurred debt issuance costs of approximately $119,000, which is reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. |
| | | | 21,434,000 | | | | | | — | | |
Long-term debt
|
| | | | 47,699,000 | | | | | | 26,650,000 | | |
Less: unamortized loan fees
|
| | | | (113,000) | | | | | | — | | |
Less: current portion
|
| | | | (6,891,000) | | | | | | (14,818,000) | | |
Long-term debt, net of current portion
|
| | | $ | 40,695,000 | | | | | $ | 11,832,000 | | |
Years ending December 31,
|
| |
Amount
|
| |||
2020
|
| | | $ | 6,891,000 | | |
2021
|
| | | | 6,261,000 | | |
2022
|
| | | | 6,034,000 | | |
2023
|
| | | | 5,422,000 | | |
2024
|
| | | | 3,356,000 | | |
Thereafter
|
| | | | 19,735,000 | | |
| | | | $ | 47,699,000 | | |
Lender
|
| |
Loan Description
|
| |
Original
Loan Amount |
| |
Maturity Date
|
| |
Interest Rate
|
| ||||||
JPMorgan Chase
|
| |
Equipment Term Loan
|
| | | $ | 4,814,677 | | | | | | 03/01/2023 | | | |
4.98%
|
|
East West Bank
|
| |
Term Loan
|
| | | $ | 21,580,000 | | | | | | 05/05/2029 | | | |
Prime, - 0.25%
|
|
East West Bank
|
| |
Equipment Term Loan
|
| | | $ | 10,000,000 | | | | | | 05/31/2024 | | | |
Prime
|
|
| | |
2019
|
| |
2018
|
| ||||||
Warehouse vehicles
|
| | | $ | 1,582,000 | | | | | $ | 590,000 | | |
Less accumulated depreciation
|
| | | | (652,000) | | | | | | (359,000) | | |
| | | | $ | 930,000 | | | | | $ | 231,000 | | |
December 31,
|
| |
Amount
|
| |||
2020
|
| | | $ | 360,000 | | |
2021
|
| | | | 360,000 | | |
2022
|
| | | | 215,000 | | |
2023
|
| | | | 76,000 | | |
2024
|
| | | | 22,000 | | |
Thereafter
|
| | | | — | | |
| | | | $ | 1,033,000 | | |
Less: future finance charges
|
| | | | (82,000) | | |
Minimum lease payments
|
| | | $ | 951,000 | | |
| | |
Number of
Options |
| |
Weighted-
Average Exercise Price |
| | | |
Aggregate
Intrinsic Value |
| |||||||||||||
Outstanding at December 31, 2018
|
| | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
Granted
|
| | | | 15,000 | | | | | | 10 | | | | | | | | | | | | | | |
Exercised
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Canceled/forfeited
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Outstanding at December 31, 2019
|
| | | | 15,000 | | | | | $ | 10 | | | | | | 9.0 | | | | | $ | — | | |
Expected to vest at December 31, 2019
|
| | | | 15,000 | | | | | $ | 10 | | | | | | 9.0 | | | | | $ | — | | |
Exercisable at December 31, 2019
|
| | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
|
Risk-free interest rate
|
| | | | 2.53% | | |
|
Expected term (years)
|
| | | | 6.25 | | |
|
Volatility
|
| | | | 25% | | |
|
Dividend yield
|
| | | | 0.81% | | |
| | |
Number of
Shares Outstanding |
| |
Weighted
Average Grant Date Fair Value |
| ||||||
Unvested at December 31, 2018
|
| | | | — | | | | | $ | — | | |
Granted
|
| | | | 267,000 | | | | | | 10.00 | | |
Vested
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | — | | | | | | — | | |
Unvested at December 31 2019
|
| | | | 267,000 | | | | | $ | 10.00 | | |
| | |
2019
|
| |
2018
|
| ||||||
Net income attributable to Karat Packaging, Inc.
|
| | | $ | 1,724,000 | | | | | $ | 21,000 | | |
Weighted average number of ordinary shares in issue
|
| | | | 15,190,000 | | | | | | 14,830,312 | | |
Basic earnings per share
|
| | | $ | 0.11 | | | | | $ | 0.00 | | |
| | |
2019
|
| |
2018
|
| ||||||
Net income attributable to Karat Packaging, Inc.
|
| | | $ | 1,724,000 | | | | | $ | 21,000 | | |
Add: Interest expense related to convertible debt
|
| | | | — | | | | | | — | | |
| | | | | 1,724,000 | | | | | | 21,000 | | |
Weighted average number of ordinary shares in issue
|
| | | | 15,190,000 | | | | | | 14,830,312 | | |
Dilutive shares: | | | | | | | | | | | | | |
Stock options and restricted stock units
|
| | | | — | | | | | | — | | |
Adjusted weighted average number of ordinary shares
|
| | |
|
15,190,000
|
| | | |
|
14,830,312
|
| |
Diluted earnings per share
|
| | | $ | 0.11 | | | | | $ | 0.00 | | |
| | |
Amount
|
| |||
2020
|
| | | $ | 5,302,000 | | |
2021
|
| | | | 4,869,000 | | |
2022
|
| | | | 4,960,000 | | |
2023
|
| | | | 4,994,000 | | |
2024
|
| | | | 3,820,000 | | |
Thereafter
|
| | | | 11,279,000 | | |
| | | | $ | 35,224,000 | | |
| | |
2019
|
| |
2018
|
| ||||||
Current | | | | | | | | | | | | | |
Federal
|
| | | $ | — | | | | | $ | — | | |
State
|
| | | | 260,000 | | | | | | 13,000 | | |
| | | | | 260,000 | | | | | | 13,000 | | |
Deferred | | | | | | | | | | | | | |
Federal
|
| | | | 508,000 | | | | | | 1,502,000 | | |
State
|
| | | | 13,000 | | | | | | 156,000 | | |
| | | | | 521,000 | | | | | | 1,658,000 | | |
Provision for income taxes
|
| | | $ | 781,000 | | | | | $ | 1,671,000 | | |
| | |
2019
|
| |
2018
|
| ||||||
Deferred tax assets: | | | | ||||||||||
State Taxes
|
| | | $ | 69,000 | | | | | $ | 29,000 | | |
Investment in Global Wells Investment Group
|
| | | | 101,000 | | | | | | — | | |
Reserves
|
| | | | 159,000 | | | | | | 105,000 | | |
Accruals & Deferred Expenses
|
| | | | 456,000 | | | | | | 82,000 | | |
Inventories
|
| | | | — | | | | | | 329,000 | | |
R&D Credit
|
| | | | 175,000 | | | | | | 37,000 | | |
Section 263A
|
| | | | 449,000 | | | | | | — | | |
Government Grant
|
| | | | 161,000 | | | | | | — | | |
Charitable Contributions
|
| | | | 17,000 | | | | | | — | | |
Net Operating Loss
|
| | | | 1,885,000 | | | | | | 333,000 | | |
Total deferred tax assets
|
| | | | 3,472,000 | | | | | | 915,000 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Fixed Assets – Depreciation
|
| | | | (5,651,000) | | | | | | (2,573,000) | | |
Net deferred tax liability
|
| | | $ | (2,179,000) | | | | | $ | (1,658,000) | | |
| | |
Year ended
|
| |||||||||
| | | | | | ||||||||
Income tax computed at the federal statutory rate
|
| | | $ | 619,000 | | | | | $ | 324,000 | | |
State taxes, net of federal tax benefits
|
| | | | 152,000 | | | | | | 96,000 | | |
Deferred tax effect due to conversion to C-Corporation
|
| | | | — | | | | | | 1,153,000 | | |
Noncontrolling Interest – Income not subject to tax
|
| | | | (92,000) | | | | | | 31,000 | | |
Permanent items
|
| | | | 156,000 | | | | | | 81,000 | | |
R&D Credit
|
| | | | (87,000) | | | | | | (37,000) | | |
Franchise/Gross Receipts Tax
|
| | | | 59,000 | | | | | | — | | |
Other
|
| | | | (26,000) | | | | | | 23,000 | | |
Provision for income taxes
|
| | | $ | 781,000 | | | | | $ | 1,671,000 | | |
| | | | | | ||||||||
Assets | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents (including $0.5 million and $0.2 million associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively)
|
| | | $ | 2,067,000 | | | | | $ | 802,000 | | |
Accounts receivable, net of allowance for doubtful accounts of $198,000 and $101,000, respectively
|
| | | | 23,483,000 | | | | | | 21,020,000 | | |
Inventories
|
| | | | 48,636,000 | | | | | | 35,428,000 | | |
Prepaid expenses and other current assets
|
| | | | 5,417,000 | | | | | | 3,085,000 | | |
Due from affiliated companies
|
| | | | — | | | | | | 692,000 | | |
Total current assets
|
| | | | 79,603,000 | | | | | | 61,027,000 | | |
Property and equipment, net (including $48.1 million and $27.1 million associated with variable interest
entity at September 30, 2020 and December 31, 2019, respectively) |
| | | | 96,561,000 | | | | | | 59,020,000 | | |
Deposits (including $0 and $1.7 million associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively)
|
| | | | 1,369,000 | | | | | | 13,217,000 | | |
Goodwill
|
| | | | 3,113,000 | | | | | | — | | |
Other assets (including $69,000 and $69,000 associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively)
|
| | | | 89,000 | | | | | | 89,000 | | |
Total assets
|
| | | $ | 180,735,000 | | | | | $ | 133,353,000 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable (including $0.1 million and $0.5 million associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively)
|
| | | $ | 19,869,000 | | | | | $ | 19,025,000 | | |
Accrued expenses (including $30,000 and $70,000 associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively)
|
| | | | 4,905,000 | | | | | | 2,810,000 | | |
Related party payable
|
| | | | 6,280,000 | | | | | | 5,110,000 | | |
Credit cards payable
|
| | | | 757,000 | | | | | | 1,074,000 | | |
Income taxes payable
|
| | | | 3,114,000 | | | | | | 26,000 | | |
Customer deposits
|
| | | | 665,000 | | | | | | 676,000 | | |
Capital leases, current portion
|
| | | | 316,000 | | | | | | 316,000 | | |
Long-term debt, current portion (including $0.7 million and $0.3 million associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively)
|
| | | | 10,828,000 | | | | | | 6,891,000 | | |
Total current liabilities
|
| | | | 46,734,000 | | | | | | 35,928,000 | | |
Deferred tax liability
|
| | | | 2,179,000 | | | | | | 2,179,000 | | |
Line of credit
|
| | | | 31,869,000 | | | | | | 26,679,000 | | |
Long-term debt, net of current portion (including $36.9 million and $21.0 million associated with
variable interest entity at September 30, 2020 and December 31, 2019, respectively, and debt discount of $105,000 and $113,000 associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively) |
| | | | 55,812,000 | | | | | | 40,695,000 | | |
Capital leases, net of current portion
|
| | | | 372,000 | | | | | | 635,000 | | |
Other liabilities (including $4.3 million and $2.5 million associated with variable interest entity at September 30, 2020 and December 31, 2019, respectively)
|
| | | | 5,496,000 | | | | | | 3,183,000 | | |
Total liabilities
|
| | | | 142,462,000 | | | | | | 109,299,000 | | |
Commitments and Contingencies (Note 13) | | | | | | | | | | | | | |
Karat Packaging Inc. stockholders’ equity | | | | | | | | | | | | | |
Common stock, $0.001 par value, 100,000,000 shares authorized, 15,190,000 shares issued and 15,167,000 outstanding at September 30, 2020 and 15,190,000 shares issued and outstanding at December 31, 2019
|
| | | | 15,000 | | | | | | 15,000 | | |
Additional paid in capital
|
| | | | 13,981,000 | | | | | | 13,981,000 | | |
Treasury stock, $0.001 par value, 23,000 shares and 0 shares on September 30, 2020 and December 31, 2019, respectively
|
| | | | (248,000) | | | | | | — | | |
Retained earnings
|
| | | | 17,733,000 | | | | | | 1,745,000 | | |
Total Karat Packaging Inc. stockholders’ equity
|
| | | | 31,481,000 | | | | | | 15,741,000 | | |
Noncontrolling interest
|
| | | | 6,792,000 | | | | | | 8,313,000 | | |
Total stockholders’ equity
|
| | | | 38,273,000 | | | | | | 24,054,000 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 180,735,000 | | | | | $ | 133,353,000 | | |
| | |
Nine months ended September 30,
|
| |||||||||
| | | | |
2019
|
| |||||||
Net sales
|
| | | $ | 225,137,000 | | | | | $ | 168,646,000 | | |
Cost of goods sold
|
| | | | 155,308,000 | | | | | | 122,501,000 | | |
Gross profit
|
| | | | 69,829,000 | | | | | | 46,145,000 | | |
Operating expenses: | | | | | | | | | | | | | |
Selling expense
|
| | | | 16,241,000 | | | | | | 12,062,000 | | |
General and administrative expense (including $1.4 million and
$0.6 million associated with variable interest entity for the nine months ended September 30, 2020 and 2019, respectively) |
| | | | 27,948,000 | | | | | | 29,212,000 | | |
Total operating expenses
|
| | | | 44,189,000 | | | | | | 41,274,000 | | |
Operating income
|
| | | | 25,640,000 | | | | | | 4,871,000 | | |
Other income (expense) | | | | | | | | | | | | | |
Rental income
|
| | | | 66,000 | | | | | | — | | |
Other income (expense)
|
| | | | 67,000 | | | | | | (243,000) | | |
Loss on foreign currency transactions
|
| | | | (377,000) | | | | | | (11,000) | | |
Gain on sale of asset (including $0 and $2.4 million associated with variable interest entity for the nine months ended September 30, 2020 and 2019, respectively)
|
| | | | 19,000 | | | | | | 2,369,000 | | |
Interest expense (including $2.9 million of interest expense and $2.3 million of interest expense associated with variable interest entity for the nine months ended September 30, 2020 and 2019,
respectively) |
| | | | (4,858,000) | | | | | | (4,490,000) | | |
Total other expense
|
| | | | (5,083,000) | | | | | | (2,375,000) | | |
Income before provision for income tax
|
| | | | 20,557,000 | | | | | | 2,496,000 | | |
Provision for income tax
|
| | | | 5,483,000 | | | | | | 247,000 | | |
Net income
|
| | | | 15,074,000 | | | | | | 2,249,000 | | |
Net (loss) income attributable to noncontrolling interest
|
| | | | (1,521,000) | | | | | | 394,000 | | |
Net income attributable to Karat Packaging Inc.
|
| | | $ | 16,595,000 | | | | | $ | 1,855,000 | | |
Basic and diluted earnings per share: | | | | | | | | | | | | | |
Basic
|
| | | $ | 1.09 | | | | | $ | 0.12 | | |
Diluted
|
| | | $ | 1.07 | | | | | $ | 0.12 | | |
Weighted average common shares outstanding, basic
|
| | | | 15,180,000 | | | | | | 15,190,000 | | |
Weighted average common shares outstanding, diluted
|
| | | | 15,451,000 | | | | | | 15,472,000 | | |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Treasury stock
|
| |
Retained
Earnings |
| |
Total
Stockholder’s Equity attributable to Karat Packaging Inc. |
| |
Noncontrolling
Interest |
| |
Total
Stockholder’s Equity |
| |||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2019
|
| | | | 15,190,000 | | | | | $ | 15,000 | | | | | $ | 13,981,000 | | | | | | — | | | | | | — | | | | | | 21,000 | | | | | $ | 14,017,000 | | | | | $ | 7,873,000.00 | | | | | $ | 21,890,000 | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,855,000 | | | | | | 1,855,000 | | | | | | 394,000 | | | | | | 2,249,000 | | |
Balance, September 30, 2019
|
| | | | 15,190,000 | | | | | | 15,000 | | | | | | 13,981,000 | | | | | | — | | | | | | — | | | | | | 1,876,000 | | | | | | 15,872,000 | | | | | | 8,267,000 | | | | | | 24,139,000 | | |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Treasury stock
|
| |
Retained
Earnings |
| |
Total
Stockholder’s Equity attributable to Karat Packaging Inc. |
| |
Noncontrolling
Interest |
| |
Total
Stockholder’s Equity |
| |||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2020
|
| | | | 15,190,000 | | | | | $ | 15,000 | | | | | $ | 13,981,000 | | | | | | — | | | | | $ | — | | | | | $ | 1,745,000 | | | | | $ | 15,741,000 | | | | | $ | 8,313,000 | | | | | $ | 24,054,000 | | |
Net income (loss)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 16,595,000 | | | | | | 16,595,000 | | | | | | (1,521,000) | | | | | | 15,074,000 | | |
Treasury stock purchases
|
| | | | — | | | | | | — | | | | | | — | | | | | | (23,000) | | | | | | (248,000) | | | | | | — | | | | | | (248,000) | | | | | | — | | | | | | (248,000) | | |
Dividends paid to stockholders ($0.04 per share)
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (607,000) | | | | | | (607,000) | | | | | | — | | | | | | (607,000) | | |
Balance, September 30, 2020
|
| | | | 15,190,000 | | | | | | 15,000 | | | | | | 13,981,000 | | | | | | (23,000) | | | | | | (248,000) | | | | | | 17,733,000 | | | | | | 31,481,000 | | | | | | 6,792,000 | | | | | | 38,273,000 | | |
| | |
Nine months ended September 30,
|
| |||||||||
| | | | |
2019
|
| |||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net income
|
| | | $ | 15,074,000 | | | | | $ | 2,249,000 | | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 6,103,000 | | | | | | 3,914,000 | | |
Provision for bad debt
|
| | | | 98,000 | | | | | | 103,000 | | |
Reserve for inventory obsolescence
|
| | | | — | | | | | | (119,000) | | |
Gain on sale of asset
|
| | | | (19,000) | | | | | | (2,369,000) | | |
Change in fair value of interest rate swap
|
| | | | 2,028,000 | | | | | | 1,984,000 | | |
Amortization of loan fees
|
| | | | 9,000 | | | | | | 3,000 | | |
(Increase) decrease in operating assets
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (2,458,000) | | | | | | (4,820,000) | | |
Inventories
|
| | | | (13,187,000) | | | | | | (4,149,000) | | |
Prepaid expenses and other current assets
|
| | | | (2,332,000) | | | | | | (273,000) | | |
Due from affiliated companies
|
| | | | (840,000) | | | | | | (325,000) | | |
Deposits
|
| | | | 1,739,000 | | | | | | (1,711,000) | | |
Other assets
|
| | | | — | | | | | | (64,000) | | |
Increase (decrease) in operating liabilities
|
| | | | | | | | | | | | |
Accounts payable
|
| | | | 801,000 | | | | | | (232,000) | | |
Accrued expenses
|
| | | | 1,069,000 | | | | | | 792,000 | | |
Related party payable
|
| | | | 1,170,000 | | | | | | 924,000 | | |
Credit cards payable
|
| | | | (317,000) | | | | | | 270,000 | | |
Income taxes payable
|
| | | | 3,088,000 | | | | | | — | | |
Customer deposits
|
| | | | (11,000) | | | | | | (1,371,000) | | |
Other liabilities
|
| | | | 285,000 | | | | | | 1,902,000 | | |
Net cash provided by (used in) operating activities
|
| | | $ | 12,300,000 | | | | | $ | (3,292,000) | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | | | (27,621,400) | | | | | | (30,312,000) | | |
Proceeds on disposal of property and equipment
|
| | | | 24,400 | | | | | | 10,055,000 | | |
Deposits paid for property and equipment
|
| | | | (5,640,000) | | | | | | (1,821,000) | | |
Effect on initial consolidation of Lollicup Franchising LLC, net of cash acquired
|
| | | | (893,000) | | | | | | — | | |
Net cash used in investing activities
|
| | | $ | (34,130,000) | | | | | $ | (22,078,000) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Net proceeds from line of credit
|
| | | | 5,190,000 | | | | | | 5,146,000 | | |
Proceeds from long-term debt, net of issuance cost
|
| | | | 24,542,000 | | | | | | 46,961,000 | | |
Payments on long-term debt
|
| | | | (5,497,000) | | | | | | (24,187,000) | | |
Dividends paid to shareholders
|
| | | | (607,000) | | | | | | — | | |
Payments for debt issuance costs
|
| | | | — | | | | | | (119,000) | | |
Payments on capital lease obligations
|
| | | | (285,000) | | | | | | (125,000) | | |
Treasury stock acquired
|
| | | | (248,000) | | | | | | — | | |
Net cash provided by financing activities
|
| | | $ | 23,095,000 | | | | | $ | 27,676,000 | | |
Net increase in cash and cash equivalents
|
| | | | 1,265,000 | | | | | | 2,306,000 | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Beginning of year
|
| | | $ | 802,000 | | | | | $ | 965,000 | | |
End of year
|
| | | $ | 2,067,000 | | | | | $ | 3,271,000 | | |
Supplemental disclosures of non-cash investing and financing activities: | | | | | | | | | | | | | |
Capital expenditures funded by capital lease borrowings
|
| | | $ | 23,000 | | | | | $ | 970,000 | | |
Transfers from deposits to property and equipment
|
| | | $ | 15,749,000 | | | | | $ | 17,123,000 | | |
Supplemental disclosures of cash flow information: | | | | | | | | | | | | | |
Cash paid for income tax
|
| | | $ | 2,395,000 | | | | | $ | 170,000 | | |
Cash paid for interest
|
| | | $ | 2,869,000 | | | | | $ | 2,338,000 | | |
| Machinery and equipment | | | 5 to 10 years | |
| Leasehold improvements | | | Lower of useful life or lease term | |
| Vehicles | | | 3-5 years | |
| Furniture and fixtures | | | 7 years | |
| Building | | | 28 to 40 years | |
| Property held under capital leases | | | 3-5 years | |
| Computer hardware and software | | | 3 years | |
| | | | | | ||||||||
Cash
|
| | | $ | 454,000 | | | | | $ | 209,000 | | |
Accounts receivable
|
| | | | 269,000 | | | | | | 230,000 | | |
Prepaid expenses and other current assets
|
| | | | 106,000 | | | | | | — | | |
Property and equipment, net
|
| | | | 48,129,000 | | | | | | 27,111,000 | | |
Due from Lollicup USA Inc.
|
| | | | — | | | | | | 3,382,000 | | |
Deposits
|
| | | | — | | | | | | 1,740,000 | | |
Other assets
|
| | | | 5,293,000 | | | | | | 1,266,000 | | |
Total assets
|
| | | $ | 54,251,000 | | | | | $ | 33,938,000 | | |
Accounts payable
|
| | | $ | 109,000 | | | | | $ | 486,000 | | |
Accrued expenses
|
| | | | 506,000 | | | | | | 70,000 | | |
Due to Lollicup USA Inc.
|
| | | | 3,900,000 | | | | | | — | | |
Long-term debt, current portion
|
| | | | 685,000 | | | | | | 304,000 | | |
Long-term debt, net of current portion
|
| | | | 36,871,000 | | | | | | 21,017,000 | | |
Other liabilities
|
| | | | 4,328,000 | | | | | | 2,451,000 | | |
Total liabilities
|
| | | $ | 46,399,000 | | | | | $ | 24,328,000 | | |
| | | | | | ||||||||
National Distribution
|
| | | $ | 50,092,000 | | | | | $ | 22,959,000 | | |
Distributors
|
| | | | 118,322,000 | | | | | | 110,127,000 | | |
Retail
|
| | | | 30,251,000 | | | | | | 20,057,000 | | |
Online
|
| | | | 26,472,000 | | | | | | 15,503,000 | | |
| | | | $ | 225,137,000 | | | | | $ | 168,646,000 | | |
| | |
Nine-months ended September 30,
|
| |||||||||
| | | | |
2019
|
| |||||||
Keary Global Ltd. (“Keary Global”) and its affiliate, Keary International, Ltd. – related parties
|
| | | | 11% | | | | | | 11% | | |
| | | | | | ||||||||
Keary Global and its affiliate, Keary International – related | | | | | | | | | | | | | |
parties
|
| | | | 22% | | | | | | 22% | | |
Taizhou Fuling Plastics Co.,Ltd
|
| | | | 13% | | | | | | 13% | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash equivalents
|
| | | $ | 2,067,000 | | | | | $ | — | | | | | $ | — | | |
Interest rate swaps
|
| | | | — | | | | | | (3,309,000) | | | | | | — | | |
Fair value, September 30, 2020
|
| | | $ | 2,067,000 | | | | | $ | (3,309,000) | | | | | $ | — | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Cash equivalents
|
| | | $ | 802,000 | | | | | $ | — | | | | | $ | — | | |
Interest rate swaps
|
| | | | — | | | | | | (1,281,000) | | | | | | — | | |
Fair value, December 31, 2019
|
| | | $ | 802,000 | | | | | $ | (1,281,000) | | | | | $ | — | | |
|
Cash
|
| | | $ | 7,000 | | |
|
Accounts receivable
|
| | | | 103,000 | | |
|
Inventories
|
| | | | 21,000 | | |
|
Property and equipment
|
| | | | 257,000 | | |
|
Accounts payable
|
| | | | (42,000) | | |
|
Accrued expenses
|
| | | | (104,000) | | |
|
Related party payable
|
| | | | (2,455,000) | | |
|
Goodwill
|
| | | | 3,113,000 | | |
|
Total purchase consideration
|
| | | $ | 900,000 | | |
|
Less: cash acquired
|
| | | | (7,000) | | |
|
Total purchase consideration, net of cash acquired
|
| | | $ | 893,000 | | |
| | | | | | ||||||||
Raw materials
|
| | | $ | 5,106,000 | | | | | $ | 3,698,000 | | |
Work in progress
|
| | | | 131,000 | | | | | | 127,000 | | |
Finished goods
|
| | | | 43,753,000 | | | | | | 31,957,000 | | |
Subtotal
|
| | | | 48,990,000 | | | | | | 35,782,000 | | |
Less inventory reserve
|
| | | | (354,000) | | | | | | (354,000) | | |
Total inventories
|
| | | $ | 48,636,000 | | | | | $ | 35,428,000 | | |
| | | | | | ||||||||
Machinery and equipment
|
| | | $ | 55,058,000 | | | | | $ | 40,575,000 | | |
Leasehold improvements
|
| | | | 17,653,000 | | | | | | 15,071,000 | | |
Vehicles
|
| | | | 2,723,000 | | | | | | 2,424,000 | | |
Furniture and fixtures
|
| | | | 819,000 | | | | | | 729,000 | | |
Building
|
| | | | 34,134,000 | | | | | | 17,237,000 | | |
Land
|
| | | | 11,907,000 | | | | | | 3,017,000 | | |
Property held under capital leases
|
| | | | 1,607,000 | | | | | | 1,582,000 | | |
Computer hardware and software
|
| | | | 546,000 | | | | | | 502,000 | | |
| | | | | 124,447,000 | | | | | | 81,137,000 | | |
Less accumulated depreciation
|
| | | | (27,886,000) | | | | | | (22,117,000) | | |
Total property and equipment, net
|
| | | $ | 96,561,000 | | | | | $ | 59,020,000 | | |
| | | | | | ||||||||
Accrued expenses
|
| | | $ | 2,074,000 | | | | | $ | 664,000 | | |
Accrued interest
|
| | | | 104,000 | | | | | | 181,000 | | |
Accrued payroll
|
| | | | 1,169,000 | | | | | | 1,111,000 | | |
Accrued vacation and sick pay
|
| | | | 492,000 | | | | | | 379,000 | | |
Accrued shipping expenses
|
| | | | 773,000 | | | | | | 153,000 | | |
Deferred rent liability
|
| | | | 293,000 | | | | | | 322,000 | | |
Total accrued expenses
|
| | | $ | 4,905,000 | | | | | $ | 2,810,000 | | |
| | | | | | ||||||||
A promissory note that allowed for advances up to $5,000,000 through
March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,814,677 was converted in March 2018, maturing in March 2023. Principal and interest payment of $90,815 due monthly at the fixed rate of 4.98%. The loan is secured by certain machinery and equipment. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. |
| | | | 2,563,000 | | | | | $ | 3,266,000 | | |
An equipment loan with a draw down period ending August 28, 2019 for
up to $10,000,000, at which point the entire principal outstanding is due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, maturing in June 2024. Principal and interest payment of $192,572 due monthly starting August 2019 at the fixed rate of 5.75%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | 7,915,000 | | | | | | 9,267,000 | | |
A $2,130,000 term loan that expires April 30, 2021. Principal and interest payment of $53,539 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate (3.25% as of September 30, 2020 and 4.75% as of December 31, 2019). The loan is secured by the company’s assets and guaranteed by the company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to
effective tangible net worth, and minimum debt coverage ratio.
|
| | | | 369,000 | | | | | | 831,000 | | |
Subtotal, continue on following page
|
| | | $ | 10,847,000 | | | | | $ | 13,364,000 | | |
| | | | | | ||||||||
Subtotal from previous page
|
| | | $ | 10,847,000 | | | | | $ | 13,364,000 | | |
A $1,620,000 term loan that expires September 30, 2020. Principal and
interest payment of $50,282 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 5.25%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | — | | | | | | 442,000 | | |
A $935,000 term loan that expires December 31, 2021. Principal and
interest payment of $19,834 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues at a fixed rate of 3.50%. The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. |
| | | | 291,000 | | | | | | 459,000 | | |
An equipment loan with a draw down period ended May 31, 2019 for up
to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, maturing on May 31, 2024. The first principal and interest payment commenced in July 2019. Interest accrued based on prime rate (3.25% as of September 30, 2020 and 4.75% as of December 31, 2019). The loan is secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain fixed financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. |
| | | | 7,500,000 | | | | | | 9,000,000 | | |
A $3,000,000 term loan that expires December 2024. Interest only payment due for the first six months. Principal and interest payment of $57,769 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25% (3.5% at September 30, 2020 and 5% at December 31, 2019).The loan is secured the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service
charge ratio, and debt to EBITDA rolling ratio.
|
| | | | 2,585,000 | | | | | | 3,000,000 | | |
Subtotal, continue on following page
|
| | | $ | 21,223,000 | | | | | $ | 26,265,000 | | |
| | | | | | ||||||||
Subtotal from previous page
|
| | | $ | 21,223,000 | | | | | $ | 25,265,000 | | |
A $21,580,000 term loan that matures in May 2029. Interest accrues at
prime rate less 0.25% (3.0% at September 30, 2020 and 4.5% at December 31, 2019) and principal payments ranging from $24,356 to $39,581 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and its stockholders. The Company incurred debt issuance costs of approximately $119,000, which is reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. |
| | | | 21,208,000 | | | | | | 21,434,000 | | |
A $3,000,000 term loan that expires June 17, 2025. Principal and interest payment of $54,623 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrues based on prime rate plus margin of 0.25% (3.5% as of September 30, 2020). The loan is secured by the company’s assets and guaranteed by the company’s stockholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio.
|
| | | | 2,862,000 | | | | | | — | | |
A $5,000,000 Paycheck Protection Program loan that expires April 16, 2022. Interest accrues at 1%.
|
| | | | 5,000,000 | | | | | | — | | |
A $16,540,000 term loan that matures June 30, 2025. Interest accrues at 4.5% fixed and principal payments ranging from $30,524 to $37,720 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and its stockholders.
|
| | | | 16,452,000 | | | | | | — | | |
Long-term debt
|
| | | | 66,745,000 | | | | | | 47,699,000 | | |
Less: unamortized loan fees
|
| | | | (105,000) | | | | | | (113,000) | | |
Less: current portion
|
| | | | (10,828,000) | | | | | | (6,891,000) | | |
Long-term debt, net of current portion
|
| | | $ | 55,812,000 | | | | | $ | 40,695,000 | | |
|
| | |
Amount
|
| |||
2020 (remainder)
|
| | | $ | 8,042,000 | | |
2021
|
| | | | 8,073,000 | | |
2022
|
| | | | 7,038,000 | | |
2023
|
| | | | 5,958,000 | | |
2024
|
| | | | 17,871,000 | | |
Thereafter
|
| | | | 19,763,000 | | |
| | | | $ | 66,745,000 | | |
| | |
Number of
Options |
| |
Weighted-
Average Exercise Price |
| | | |
Aggregate
Intrinsic Value |
| |||||||||||||
Outstanding at December 31, 2019
|
| | | | 15,000 | | | | | $ | 10.00 | | | | | | 9.0 | | | | | $ | — | | |
Granted
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Exercised
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Canceled/forfeited
|
| | | | — | | | | | | — | | | | | | | | | | | | | | |
Outstanding at September 30, 2020
|
| | | | 15,000 | | | | | $ | 10.00 | | | | | | 8.3 | | | | | $ | — | | |
Expected to vest at September 30, 2020
|
| | | | 15,000 | | | | | $ | 10.00 | | | | | | 8.3 | | | | | $ | — | | |
Exercisable at September 30, 2020
|
| | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
|
Risk-free interest rate
|
| | | | 2.53% | | |
|
Expected term (years)
|
| | | | 6.25 | | |
|
Volatility
|
| | | | 25% | | |
|
Dividend yield
|
| | | | 0.81% | | |
| | |
Number of
Shares Outstanding |
| |
Weighted
Average Grant Date Fair Value |
| ||||||
Unvested at December 31, 2019
|
| | | | 267,000 | | | | | $ | 10.00 | | |
Granted
|
| | | | 5,000 | | | | | | 10.00 | | |
Vested
|
| | | | — | | | | | | — | | |
Forfeited
|
| | | | (16,000) | | | | | | (10.00) | | |
Unvested at September 30, 2020
|
| | | | 256,000 | | | | | $ | 10.00 | | |
| | |
Nine-months ended September 30,
|
| |||||||||
| | | | |
2019
|
| |||||||
Net income attributable to Karat Packaging Inc.
|
| | | $ | 16,595,000 | | | | | $ | 1,855,000 | | |
Weighted average number of ordinary shares in issue
|
| | | | 15,180,000 | | | | | | 15,190,000 | | |
Basic earnings per share
|
| | | $ | 1.09 | | | | | $ | 0.12 | | |
| | |
Nine-months ended September 30,
|
| |||||||||
| | | | |
2019
|
| |||||||
Net income attributable to Karat Packaging Inc.
|
| | | $ | 16,595,000 | | | | | $ | 1,855,000 | | |
Weighted average number of ordinary shares in issue
|
| | | | 15,180,000 | | | | | | 15,190,000 | | |
Dilutive shares
|
| | | | 271,000 | | | | | | 282,000 | | |
Adjusted weighted average number of ordinary shares
|
| | | | 15,451,000 | | | | | | 15,472,000 | | |
Diluted earnings per share
|
| | | $ | 1.07 | | | | | $ | 0.12 | | |
|
2020 (remainder)
|
| | | $ | 1,489,000 | | |
|
2021
|
| | | | 5,961,000 | | |
|
2022
|
| | | | 6,085,000 | | |
|
2023
|
| | | | 6,153,000 | | |
|
2024
|
| | | | 5,014,000 | | |
|
Thereafter
|
| | | | 12,091,000 | | |
| | | | | $ | 36,793,000 | | |
| Stifel | | |
William Blair
|
| |
Truist Securities
|
|
| National Securities Corporation | | |
D.A. Davidson & Co.
|
|
| | |
Amount to be Paid
|
| |||
SEC registration fee
|
| | | $ | 9,735 | | |
FINRA filing fee
|
| | | | * | | |
The Nasdaq Global Market listing application fees
|
| | | | * | | |
Printing and engraving expenses
|
| | | | * | | |
Legal fees and expenses
|
| | | | * | | |
Accounting fees and expenses
|
| | | | * | | |
Transfer agent and registrar fees and expenses
|
| | | | * | | |
Miscellaneous fees and expenses
|
| | | | * | | |
Total
|
| | |
|
*
|
| |
|
Exhibit No.
|
| |
Description
|
| ||||
| | | 1 | .1** | | | | Form of Underwriting Agreement | |
| | | 3 | .1* | | | | | |
| | | 3 | .2* | | | | | |
| | | 4 | .1* | | | | | |
| | | 5 | .1** | | | | Opinion of Akerman LLP | |
| | | 10 | .1*+ | | | | |
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Alan Yu
|
| |
Chief Executive Officer and Chairman of the Board of Directors
(Principal Executive Officer) |
| | | |
|
/s/ Ann T. Sabahat
|
| |
Chief Financial Officer
(Principal Financial and Accounting Officer) |
| | | |
|
/s/ Marvin Cheng
|
| | Vice President — Manufacturing, Secretary and Director | | | | |
|
/s/ Eve Yen
|
| | Director | | | | |
|
/s/ Paul Y. Chen
|
| | Director | | | | |
|
/s/ Eric Chen
|
| | Director | | | |
This ‘S-1’ Filing | Date | Other Filings | ||
---|---|---|---|---|
5/4/29 | ||||
4/30/29 | ||||
7/31/25 | ||||
6/30/25 | ||||
6/17/25 | ||||
5/31/24 | ||||
1/1/23 | ||||
12/15/22 | ||||
4/16/22 | ||||
12/31/21 | 10-K, 4, DEF 14A | |||
12/15/21 | ||||
4/30/21 | ||||
Filed on: | 2/18/21 | DRS, DRS/A | ||
2/1/21 | ||||
12/31/20 | ||||
12/21/20 | DRS/A, DRSLTR | |||
12/15/20 | ||||
9/30/20 | ||||
9/9/20 | ||||
9/4/20 | ||||
9/1/20 | ||||
8/31/20 | ||||
8/1/20 | ||||
7/9/20 | ||||
7/1/20 | ||||
6/30/20 | ||||
5/20/20 | ||||
4/30/20 | ||||
4/16/20 | ||||
3/27/20 | ||||
3/17/20 | ||||
2/24/20 | ||||
2/19/20 | ||||
1/30/20 | ||||
1/16/20 | ||||
1/1/20 | ||||
12/31/19 | ||||
12/15/19 | ||||
10/31/19 | ||||
10/17/19 | RW | |||
9/30/19 | S-1/A | |||
9/1/19 | ||||
8/28/19 | ||||
7/5/19 | ||||
6/30/19 | ||||
6/13/19 | ||||
6/3/19 | ||||
5/31/19 | ||||
5/1/19 | ||||
4/9/19 | ||||
3/31/19 | ||||
2/23/19 | ||||
1/1/19 | ||||
12/31/18 | ||||
12/15/18 | ||||
12/1/18 | ||||
11/15/18 | ||||
11/14/18 | ||||
10/31/18 | ||||
10/1/18 | ||||
9/27/18 | ||||
9/26/18 | ||||
9/14/18 | ||||
7/1/18 | ||||
3/23/18 | ||||
3/14/18 | ||||
1/1/18 | ||||
1/21/01 | ||||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/15/24 Karat Packaging Inc. 10-K 12/31/23 114:8.6M Workiva Inc Wde… FA01/FA 8/31/23 Karat Packaging Inc. 8-K:5,8,9 8/30/23 12:345K EdgarAgents LLC/FA 3/16/23 Karat Packaging Inc. 10-K 12/31/22 102:10M Workiva Inc Wde… FA01/FA 11/15/22 Karat Packaging Inc. S-3 5:1.4M EdgarAgents LLC/FA 3/31/22 Karat Packaging Inc. 10-K 12/31/21 99:18M Workiva Inc Wde… FA01/FA 5/28/21 Karat Packaging Inc. 10-Q 3/31/21 84:6.8M Toppan Merrill/FA 4/23/21 Karat Packaging Inc. S-8 4/23/21 3:85K Toppan Merrill/FA 4/20/21 Karat Packaging Inc. 8-K:1,5,8,9 4/14/21 7:274K Toppan Merrill/FA 4/14/21 Karat Packaging Inc. 8-A12B 1:16K Toppan Merrill/FA 4/07/21 Karat Packaging Inc. S-1/A 4/06/21 2:5.8M Toppan Merrill/FA 3/30/21 Karat Packaging Inc. S-1/A 7:6.2M Toppan Merrill/FA |