Karat Packaging (KRT) 10-Q 12 May 22 2022 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2022	May 04, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-40336
Entity Registrant Name	Karat Packaging Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-2237832
Entity Address, Address Line One	6185 Kimball Avenue
Entity Address, City or Town	Chino
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91708
City Area Code	626
Local Phone Number	965-8882
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	KRT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		19,809,424
Entity Central Index Key	0001758021
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents (including $5.2 million and $1.2 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively)	$ 6,820,000	$ 6,483,000
Accounts receivable, net of allowance for doubtful accounts of $0.8 million and $0.3 million at March 31, 2022 and December 31, 2021, respectively	43,337,000	32,776,000
Inventories	77,337,000	58,472,000
Prepaid expenses and other current assets (including $0.2 million and $0.1 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively)	6,036,000	5,141,000
Total current assets	133,530,000	102,872,000
Property and equipment, net (including $46.3 million and $46.6 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively)	92,138,000	93,475,000
Deposits	10,440,000	6,885,000
Goodwill	3,510,000	3,510,000
Intangible assets, net	373,000	380,000
Other assets (including $0.1 million associated with variable interest entity at both March 31, 2022 and December 31, 2021)	389,000	477,000
Total assets	240,380,000	207,599,000
Current liabilities
Accounts payable (including $0.2 million and $0.1 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively)	24,073,000	18,470,000
Accrued expenses (including $0.2 million and $0.1 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively)	8,343,000	7,813,000
Related party payable	1,260,000	2,003,000
Income taxes payable	1,977,000	85,000
Customer deposits (including $0.1 million associated with variable interest entity as of both March 31, 2022 and December 31, 2021)	1,448,000	1,215,000
Debt, current portion (including $1.2 million associated with variable interest entity as of both March 31, 2022 and December 31, 2021)	1,190,000	1,178,000
Other payable	1,534,000	0
Total current liabilities	39,825,000	30,764,000
Deferred tax liability	5,634,000	5,634,000
Line of credit	10,200,000	0
Long-term debt, net of current portion and debt discount of $0.2 million as of both March 31, 2022 and December 31, 2021 (including $42.0 million and $35.3 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively, and debt discount of $0.2 million associated with variable interest entity as of both March 31, 2022 and December 31, 2021)	41,954,000	35,339,000
Other liabilities (including $1.3 million and $2.6 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively)	2,524,000	3,837,000
Total liabilities	100,137,000	75,574,000
Commitments and Contingencies (Note 12)	0	0
Karat Packaging Inc. stockholders’ equity
Common stock, $0.001 par value, 100,000,000 shares authorized, 19,832,417 and 19,809,417 shares issued and outstanding, respectively, at March 31, 2022; 19,827,417 and 19,804,417 shares issued and outstanding, respectively, at December 31, 2021	20,000	20,000
Additional paid in capital	84,356,000	83,694,000
Treasury stock, $0.001 par value, 23,000 shares at both March 31, 2022 and December 31, 2021	(248,000)	(248,000)
Retained earnings	46,101,000	39,434,000
Total Karat Packaging Inc. stockholders’ equity	130,229,000	122,900,000
Noncontrolling interest	10,014,000	9,125,000
Total stockholders’ equity	140,243,000	132,025,000
Total liabilities and stockholders’ equity	$ 240,380,000	$ 207,599,000

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Cash and cash equivalents	$ 6,820,000	$ 6,483,000
Allowance for doubtful accounts	800,000	300,000
Prepaid expenses and other current assets	6,036,000	5,141,000
Property and equipment, net	92,138,000	93,475,000
Other assets	389,000	477,000
Accounts payable	24,073,000	18,470,000
Accrued expenses	8,343,000	7,813,000
Customer deposits	1,448,000	1,215,000
Long-term debt, current portion	1,190,000	1,178,000
Long-term debt, net of current portion	200,000	200,000
Other liabilities	$ 2,524,000	$ 3,837,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	19,832,417	19,827,417
Common stock, shares outstanding (in shares)	19,809,417	19,804,417
Treasury stock, par value (in dollars per share)	$ 0.001	$ 0.001
Treasury stock, shares (in shares)	23,000	23,000
VIE, Primary Beneficiary
Cash and cash equivalents	$ 5,200,000	$ 1,200,000
Prepaid expenses and other current assets	200,000	100,000
Property and equipment, net	46,300,000	46,600,000
Other assets	100,000	100,000
Accounts payable	200,000	100,000
Accrued expenses	200,000	100,000
Customer deposits	100,000	100,000
Long-term debt, current portion	1,200,000	1,200,000
Long-term debt, net of current portion	42,000,000	35,300,000
Debt discount	200,000	200,000
Other liabilities	$ 1,300,000	$ 2,600,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Net sales	$ 105,413,000	$ 75,673,000
Cost of goods sold	71,124,000	54,047,000
Gross profit	34,289,000	21,626,000
Operating expenses:
Selling expense	9,337,000	6,400,000
General and administrative expense (including $0.6 million associated with variable interest entity for both the three months ended March 31, 2022 and 2021)	15,461,000	11,455,000
Total operating expenses	24,798,000	17,855,000
Operating income	9,491,000	3,771,000
Other income (expense)
Rental income (including $0.2 million associated with variable interest entity for both the three months ended March 31, 2022 and 2021)	238,000	246,000
Other (expense) income	(82,000)	106,000
Gain (loss) on foreign currency transactions	133,000	(165,000)
Interest income, net (including $0.9 million and $0.8 million associated with variable interest entity for the three months ended March 31, 2022 and 2021, respectively)	840,000	278,000
Total other income	1,129,000	465,000
Income before provision for income taxes	10,620,000	4,236,000
Provision for income taxes	2,677,000	1,186,000
Net income	7,943,000	3,050,000
Net income attributable to noncontrolling interest	1,276,000	1,270,000
Net income attributable to Karat Packaging Inc.	$ 6,667,000	$ 1,780,000
Basic and diluted earnings per share:
Basic (in dollars per share)	$ 0.34	$ 0.12
Diluted (in dollars per share)	$ 0.34	$ 0.12
Weighted average common shares outstanding, basic (in shares)	19,807,584	15,167,000
Weighted average common shares outstanding, diluted (in shares)	19,901,384	15,403,000

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
General and administrative expense	$ 15,461	$ 11,455
Rental income	238	246
Interest income (expense)	840	278
VIE, Primary Beneficiary
General and administrative expense	600
Rental income	200
Interest income (expense)	$ 900	$ 800

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Total Stockholders’ Equity attributable to Karat Packaging Inc.	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Earnings	Noncontrolling Interest
Balance at the beginning of period (in shares) at Dec. 31, 2020			15,190,000	23,000
Balance at the beginning of period at Dec. 31, 2020	$ 39,868	$ 32,404	$ 15	$ (248)	$ 13,981	$ 18,656	$ 7,464
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	3,050	1,780				1,780	1,270
Balance at the end of period (in shares) at Mar. 31, 2021			15,190,000	23,000
Balance at the end of period at Mar. 31, 2021	$ 42,918	34,184	$ 15	$ (248)	13,981	20,436	8,734
Balance at the beginning of period (in shares) at Dec. 31, 2021	19,804,417		19,827,417	23,000
Balance at the beginning of period at Dec. 31, 2021	$ 132,025	122,900	$ 20	$ (248)	83,694	39,434	9,125
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 611	611			611
Exercise of common stock options (in shares)	5,000
Exercise of common stock options	$ 51	51			51
Noncontrolling interest tax withholding	(387)						(387)
Net income	$ 7,943	6,667				6,667	1,276
Balance at the end of period (in shares) at Mar. 31, 2022	19,809,417		19,832,417	23,000
Balance at the end of period at Mar. 31, 2022	$ 140,243	$ 130,229	$ 20	$ (248)	$ 84,356	$ 46,101	$ 10,014

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities
Net income	$ 7,943	$ 3,050
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	2,584	2,464
Provision for bad debt	500	0
Reserve for inventory obsolescence	476	0
Change in fair value of interest rate swap	(1,313)	(1,323)
Amortization of loan fees	9	3
Stock-based compensation	611	0
(Increase) decrease in operating assets
Accounts receivable	(11,061)	(1,741)
Inventories	(19,341)	3,049
Prepaid expenses and other current assets	(895)	3,108
Deposits	0	(41)
Other assets	88	2
Increase (decrease) in operating liabilities
Accounts payable	5,526	(2,883)
Accrued expenses	530	551
Related party payable	(743)	(1,618)
Income taxes payable	1,892	(41)
Customer deposits	233	84
Other payable	1,534	(160)
Net cash (used in) provided by operating activities	(11,427)	4,504
Cash flows from investing activities
Purchases of property and equipment	(824)	(273)
Deposits paid for property and equipment	(3,971)	(921)
Acquisition of Pacific Cup, Inc., net of cash acquired	0	(900)
Net cash used in investing activities	(4,795)	(2,094)
Cash flows from financing activities
Proceeds from line of credit	10,200	70
Proceeds from long-term debt	6,885	0
Payments on long-term debt	(267)	(1,888)
Proceeds from exercise of stock options	51	0
Payments on capital lease obligations		(79)
Payments of noncontrolling interest tax withholding	(310)	0
Net cash provided by (used in) financing activities	16,559	(1,897)
Net increase in cash and cash equivalents	337	513
Cash and cash equivalents
Beginning of year	6,483	448
End of year	6,820	961
Supplemental disclosures of non-cash investing and  financing activities:
Transfers from deposit to property and equipment	416	473
Acquisition of Pacific Cup, Inc. included within deposits	0	100
Supplemental disclosures of cash flow information:
Cash paid for income tax	200	0
Cash paid for interest	$ 440	$ 1,088

Nature of Operations

Nature of Operations	3 Months Ended
	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Operations	Nature of Operations Lollicup USA Inc. (“Lollicup”) was incorporated on January 21, 2001 under the laws of the State of California as an S-corporation. Effective January 1, 2018, Lollicup elected to convert from an S-Corporation to a C-Corporation. Karat Packaging Inc. (“Karat Packaging”) was incorporated on September 26, 2018 as a Delaware corporation and became the holding company for Lollicup (collectively, the “Company”) through a share exchange with the shareholders of Lollicup. The Company is a manufacturer and distributor of environmentally friendly, single-use disposable products used in a variety of restaurant and foodservice settings. The Company supplies a wide range of products for the foodservice industry, including food containers, tableware, cups, lids, cutlery, and straws. The products are available in plastic, paper, biopolymer-based and other compostable forms. In addition to manufacturing and distribution, the Company offers customized solutions to the customers, including new product development, design, printing, and logistics services, and distributes certain specialty food and beverages products, such as boba and coffee drinks. The Company supplies products to smaller chains and businesses including boutique coffee houses, bubble tea cafes, pizza parlors and frozen yogurt shops, as well as to distributors and national and regional supermarkets, restaurants and convenience stores.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as promulgated in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-3 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. The financial information as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2022. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021, as included in our Annual Report on Form 10-K filed on March 31, 2022. Principles of Consolidation: The condensed consolidated financial statements include the accounts of Karat Packaging and its wholly-owned and controlled operating subsidiaries, Lollicup, Lollicup Franchising, LLC (“Lollicup Franchising”) and Global Wells, a variable interest entity wherein the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated. Noncontrolling Interests: The Company consolidates its variable interest entity, Global Wells, in which the Company is the primary beneficiary. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the condensed consolidated financial statements separate from Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the condensed consolidated statements of income. Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ materially from the estimates that were assumed in preparing the condensed consolidated financial statements. Estimates that are significant to the condensed consolidated financial statements include stock-based compensation, allowance for doubtful accounts and reserve for slow-moving and obsolete inventory. Reporting Segment: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and supply of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, foam, post-consumer recycled content and renewable materials. It also consists of the distribution of certain specialty food and beverages products, such as boba and coffee drinks. Earnings per Share: Basic earnings per common share is calculated by dividing net income attributable to Karat Packaging by the weighted average number of common shares outstanding during the related period. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive shares. Cash and cash equivalents: The Company considers all highly liquid investments purchased with an original maturity at the date of purchase of three months or less to be cash equivalents. At March 31, 2022 and December 31, 2021, cash and cash equivalents were comprised of cash held in money market, cash on hand and cash deposited with banks. Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable consists primarily of amounts due from customers. Accounts receivable are carried at their estimated collectible amounts and are periodically evaluated for collectability based on past credit history. The Company recognizes an allowance for bad debt on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt write-offs, current past due customers in the aging as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. Inventories: Inventories consist of raw materials, work-in-process, and finished goods. Inventory cost is determined using the first-in, first-out (FIFO) method and valued at lower of cost or net realizable value. The Company maintains reserves for excess and obsolete inventory considering various factors including historic usage, expected demand, anticipated sales price, and product obsolescence. Property and Equipment: Property and equipment are carried at cost, net of accumulated depreciation and amortization, and net of impairment losses, if any. Depreciation of property and equipment are computed by straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the term of the lease, or the estimated life of the improvement, whichever is less. The estimated useful life of property and equipment are as follows: Machinery and equipment 5 years to 10 years Leasehold improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building 28 years to 40 years Property held under capital leases 3 years to 5 years Computer hardware and software 3 years Normal repairs and maintenance are expensed as incurred, whereas significant changes that materially increase values or extend useful lives are capitalized and depreciated over the estimated useful lives of the related assets. Deposits: Deposits are payments made for machinery and equipment, and construction and improvement for the Company’s facilities. Included in deposits are also payments made to lessors of leased properties as security for the full and faithful observance of contracts, which will be refunded to the Company upon expiration or termination of the contract. Impairment of Long-lived Assets: The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The impairment test comprises of two steps. The first step compares the carrying amount of the asset to the sum of expected undiscounted future cash flows. If the sum of expected undiscounted future cash flows exceeds the carrying amount of the asset, no impairment is taken. If the sum of expected undiscounted future cash flows is less than the carrying amount of the asset, a second step is warranted and an impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value calculated using the present value of estimated net future cash flows. For the periods ended March 31, 2022 and March 31, 2021, management concluded that an impairment write-down was not required. Business Combination and Goodwill: The Company applies the acquisition method of accounting for business combinations in accordance with US GAAP, which requires the Company to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets, and liabilities acquired. Such estimates may be based on significant unobservable inputs. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Goodwill is the excess of the acquisition price over the fair value of the tangible and identifiable intangible net assets acquired. The Company performs an impairment test of goodwill annually or whenever events and circumstances indicate that the carrying amount of goodwill may exceed its fair value. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. Goodwill is evaluated for impairment at least annually on October 1, or more frequently if events or changes in circumstances would more likely than not reduce the fair value of its single reporting unit below its carrying value. As of March 31, 2022, goodwill recorded in the accompanying condensed consolidated balance sheets is related to the Company’s acquisition of Pacific Cup, Inc. and Lollicup Franchising. For the periods ended March 31, 2022 and March 31, 2021, the Company determined no impairments have occurred. The following table summarizes the activity in the Company’s goodwill balance: (in thousands) Balance at December 31, 2021 $ 3,510 Goodwill acquired — Balance at March 31, 2022 $ 3,510 Government Grants: Government grants are not recognized unless there is reasonable assurance that the Company and Global Wells will comply with the grants’ conditions and that the grants will be received. As of both March 31, 2022 and December 31, 2021, the Company received cumulative grants of $1,200,000. As of both March 31, 2022 and December 31, 2021, Global Wells received cumulative grants of $1,302,000. These grants are reported as deferred income within other liabilities in the accompanying condensed consolidated balance sheets as there are conditions attached to the grants that the Company and Global Wells have not met. These conditions include requiring the facility in Rockwall, Texas to maintain a certain minimum tax value for the next five calendar years through 2023 (the “Required Period”), continue operations in the facility for the Required Period, have a minimum number of full time equivalent employees with a minimum average annual gross wage employed in the operation of the facility in the Required Period, and promise to not engage in a pattern or practice of unlawful employment of aliens during the Required Period. Derivative Instruments: Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic No. 815, Derivatives and Hedging , requires companies to recognize all of its derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the statement of income during the current period. The Company and Global Wells entered into certain interest rate swaps to manage the interest rate risk, and accounted for such interest rate swaps as a derivative instrument under ASC 815. The interest rate swaps were not designated for hedge accounting and as such, the change in the fair value of interest rate swaps is recognized as interest income/expense in the accompanying condensed consolidated statements of income. Variable Interest Entity: The Company has a variable interest in Global Wells. In 2017, Lollicup along with three other unrelated parties formed Global Wells. Lollicup has a 13.5% ownership interest and a 25% voting interest in Global Wells, located in Rockwall, Texas. The purpose of this entity is to own, construct, and manage a warehouse and manufacturing facility. Global Wells’ operating agreement may require its members to make additional contributions only upon the unanimous decision of the members or where the cash in Global Wells’ bank account falls below $50,000. In the event that a member is unable to make an additional capital contribution, the other members will be required to make contributions to offset the amount that member cannot contribute, up to $25,000. Global Wells was determined to be a variable interest entity in accordance with ASC Topic 810, Consolidations , however, at the time the investment was made, it was determined that Lollicup was not the primary beneficiary. In 2018, Lollicup entered into an operating lease with Global Wells (“Texas Lease”). In June 2020, the Company entered into another operating lease with Global Wells (“New Jersey Lease”). Upon entering into the Texas Lease with Lollicup on March 23, 2018, it was determined that Lollicup holds current and potential rights that give it the power to direct activities of Global Wells that most significantly impact Global Wells’ economic performance, receive significant benefits, or the obligation to absorb potentially significant losses, resulting in Lollicup having a controlling financial interest in Global Wells. As a result, Lollicup was deemed to be the primary beneficiary of Global Wells and has consolidated Global Wells under the risk and reward model of ASC 810, for the period from March 23, 2018. The monthly lease payments for the Texas Lease and New Jersey Lease are eliminated upon consolidation. Assets recognized as a result of consolidating Global Wells do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating Global Wells do not represent additional claims of the Company’s general assets; they represent claims against the specific assets of Global Wells, except for the Company’s guarantee of Global Wells’ term loans. As of March 31, 2022 and December 31, 2021, total loan guaranteed by the Company related to Global Wells amounted to $43,144,000 and $36,517,000, respectively. See Note 8 — Long Term Debt for a description of the two term loans that Global Wells has with financial institutions. The following financial information includes assets and liabilities of Global Wells and are included in the accompanying condensed consolidated balance sheets, except for those that eliminate upon consolidation: March 31, December 31, (in thousands) Cash $ 5,205 $ 1,163 Accounts receivable 257 384 Prepaid expenses and other current assets 162 63 Property and equipment, net 46,309 46,612 Other assets 4,641 4,762 Total assets $ 56,574 $ 52,984 Accounts payable $ 184 $ 497 Accrued expenses 203 68 Income tax payable — 9 Customer deposits 81 88 Due to Lollicup USA Inc. — 2,620 Long-term debt, current portion 1190 1,178 Long-term debt, net of current portion 41,954 35,339 Other liabilities 1,324 2,636 Total liabilities $ 44,936 $ 42,435 Revenue Recognition: The Company generates revenues from customers that include national and regional distributors, chain restaurants and supermarkets, small businesses, and those that purchase for individual consumption. The Company considers revenue disaggregated by customer type to most accurately reflect the nature and uncertainty of its revenue and cash flows that are affected by economic factors. For the three months ended March 31, 2022 and 2021, net sales disaggregated by customer type consists of the amounts shown below. Three Months Ended March 31, 2022 2021 (in thousands) National and regional chains $ 24,906 $ 18,289 Distributors 59,124 40,010 Online 13,549 11,443 Retail 7,834 5,931 Total Revenue $ 105,413 $ 75,673 • National and regional chains revenue: National and regional chains revenue is derived from chain restaurants and supermarkets with locations across multiple states. Revenue from transactions with national and regional chains is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. • Distributors revenue: Distributors revenues are derived from national and regional distributors across the U.S. that purchase the Company’s products for restaurants, offices, schools, and government entities. Revenue from distributions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. • Online revenue: Online revenue is derived from small businesses such as small restaurants, bubble tea shops, coffee shops, juice bars and smoothie shops. Revenue from wholesale transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. • Retail revenue: Retail revenue is derived primarily from regional bubble tea shops, boutique coffee shops and frozen yogurt shops. Revenue from retail transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. The transaction price is the amount of consideration to which the Company expects to be entitled to in exchange for transferring goods to the customer. Revenue is recorded based on the total estimated transaction price, which includes fixed consideration and estimates of variable consideration. Variable consideration includes estimates of rebates and other sales incentives, cash discounts for prompt payment, consideration payable to customers for cooperative advertising and other program incentives, and sales returns. The Company estimates its variable consideration based on contract terms and historical experience of actual results using the expected value method. The performance obligations are generally satisfied shortly after manufacturing and shipment as purchases made by the Company’s customers are manufactured and shipped with minimal lead time. The Company’s contract liabilities consist of rebates and other sales incentives, consideration payable to customers for cooperative advertising and other program incentives, and sales return. As of March 31, 2022 and December 31, 2021, the contract liabilities were not significant to the financial statements. Shipping and handling fees billed to a customer are recorded within net sales, with corresponding shipping and handling costs recorded in selling expense on the accompanying condensed consolidated statements of income. Shipping and handling fees billed to a customer are not deemed to be separate performance obligations for all of the Company’s product sales, as these activities occur before the customer receives the products. Shipping and handling costs included within selling expenses in the condensed consolidated statements of income for the three months ended March 31, 2022 and 2021 were $8,440,000 and $5,483,000 , respectively. Sales taxes collected concurrently with revenue-producing activities and remitted to governmental authorities are excluded from revenue. Sales commissions are expensed as incurred due to the amortization period being less than one year and are recorded in selling expense on the accompanying consolidated statements of income. Advertising Costs: The Company expenses costs of print production, trade show, online marketing, and other advertisements in the period in which the expenditure is incurred. Advertising costs included in operating expenses in the condensed consolidated statements of income w ere $547,000 and $388,000 for the three months ended March 31, 2022 and 2021, respectively. Income Taxes: The Company applies the asset and liability approach for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company applies ASC 740, Income Taxes , which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes potential interest and/or penalties related to income tax matters as income tax expense in the accompanying condensed consolidated statements of income. Accrued interest and penalties are included on the related tax liability in the condensed consolidated balance sheets. The Company had no uncertain tax positions as of March 31, 2022 and December 31, 2021. Concentration of Credit Risk: Cash is maintained at financial institutions and, at times, balances exceed federally insured limits. Management believes that the credit risk related to such deposits is minimal. The Company extends credit based on the valuation of the customers’ financial condition and general collateral is not required. Management believes the Company is not exposed to any material credit risk on these accounts. For the three months ended March 31, 2022 and 2021, respectively, purchases from the following vendor makes up greater than 10 percent of total purchases: Three Months Ended March 31, 2022 2021 Keary Global Ltd. ("Keary Global") and its affiliate, Keary International, Ltd.- related parties 11 % * *Purchases represented less than 10% of total purchases Amounts due to the following vendors at March 31, 2022 and December 31, 2021 that exceed 10 percent of total accounts payable are as follows: March 31, December 31, Keary Global and its affiliate, Keary International - related parties * 10 % Wen Ho Industrial Co., Ltd * 11 % Fuling Technology Co., Ltd. 19 % 21 % PolyQuest 10 % * *Amounts payable represented less than 10% of total accounts payable No customer accounted for more than 10 percent of sales for the three months ended March 31, 2022 and 2021, respectively. No customer accounted for more than 10 percent of accounts receivable as of March 31, 2022 and December 31, 2021. Fair Value Measurements: The Company follows ASC 820, Fair Value Measurements , which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities that the Center has the ability to access as of the measurement date. Level 2 — Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. At March 31, 2022 and December 31, 2021, the Company has financial instruments classified within the fair value hierarchy, which consist of the following: • Interest rate swap that meets the definition of a derivative, classified as Level 2 within the fair value hierarchy, and reported as other liabilities on the condensed consolidated balance sheets. The fair value of interest rate swap is calculated using pricing models that will use volatility to quantify the probability of changes around interest rate trends. • Money market account, classified as Level 1 within the fair value hierarchy, and reported as a current asset on the condensed consolidated balance sheets. The following table summarizes the Company’s fair value measurements by level at March 31, 2022 for the assets and liabilities measured at fair value on a recurring basis (in thousands): Level 1 Level 2 Level 3 Cash equivalents $ 50 $ — $ — Interest rate swap — (22) — Fair value, March 31, 2022 $ 50 $ (22) $ — The following table summarizes the Company’s fair value measurements by level at December 31, 2021 for the assets and liabilities measured at fair value on a recurring basis (in thousands): Level 1 Level 2 Level 3 Cash equivalents $ 2,000 $ — $ — Interest rate swap — (1,334) — Fair value, December 31, 2021 $ 2,000 $ (1,334) $ — The Company has not elected the fair value option as presented by ASC 825, Fair Value Option for Financial Assets and Financial Liabilities , for the financial assets and liabilities that are not otherwise required to be carried at fair value. Under ASC 820, material financial assets and liabilities not carried at fair value, including accounts receivable, accounts payable, accrued and other liabilities, other payable and borrowings under promissory notes and line of credit, are reported at their carrying value. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued and other liabilities and other payable approximate fair value because of the short maturity of these instruments. The carrying amounts of long-term debt and line of credit at March 31, 2022 and December 31, 2021 approximate fair value because the interest rates approximate the current market interest rate or are variable in nature. The fair value of these financial instruments was determined using Level 2 inputs. Foreign Currency: The Company includes gains or losses from foreign currency transactions, such as those resulting from the settlement of foreign receivables or payables, in the consolidated statements of income. The Company recorded a gain on foreign currency transactions of $133,000 and a loss $165,000 for the three months ended March 31, 2022 and 2021, respectively. Stock-Based Compensation: The Company recognizes stock-based compensation expense related to employee stock options and restricted stock units in accordance with ASC 718, Compensation — Stock Compensation . This standard requires the Company to record compensation expense equal to the fair value of awards granted to employees and non-employees. The fair value of share-based payment awards is estimated on the grant-date using the Black-Scholes option pricing model for stock options, and the closing price of the Company's common stock on the trading day immediately prior to the grant date for restricted stock units. Key input assumptions used in the Black-Scholes option pricing model to estimate the grant date fair value of stock options include the fair value of the Company’s common stock, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate, and the Company’s expected annual dividend yield. The risk-free interest rate assumption for options granted under the 2019 Stock Incentive Plan is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s stock options. The expected term of employee stock options under the Plan represents the weighted-average period that the stock options are expected to remain outstanding. The expected term of options granted is calculated based on the “simplified method,” which estimates the expected term based on the average of the vesting period and contractual term of the stock option. The Company determines the expected volatility assumption using the frequency of daily historical prices of comparable public company’s common stock for a period equal to the expected term of the options. The dividend yield assumption for options granted under the Plan is based on the Company’s history and expectation of dividend payouts. Stock-based compensation expense is based on awards that ultimately vest. Forfeitures are accounted for as they occur. The Company has elected to treat stock-based payment awards with graded vesting schedules and time-based service conditions as separate awards and recognizes stock-based compensation expense over the requisite service period using the graded vesting attribution method. The determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If the Company had made different assumptions, its stock-based compensation expense, and its net income could have been significantly different. New and Recently Adopted Accounting Standards: The Company is an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and as such, the Company have elected to take advantage of certain reduced public company reporting requirements. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, as a result, the Company will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for private companies. In February 2016, the FASB issued ASU 2016-2 (Topic 842), “ Leases ”. This ASU amends a number of aspects of lease accounting

Acquisitions

Acquisitions	3 Months Ended
	Mar. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Acquisitions	Acquisitions Pacific Cup, Inc. On March 1, 2021, Lollicup entered into an asset purchase agreement (the “Pacific Cup Agreement”) with Pacific Cup, Inc. (“Pacific Cup”), a manufacturer and distributor of disposable products operating in Kapolei, Hawaii. Pursuant to the Pacific Cup Agreement, Lollicup paid cash consideration of $1,000,000 to acquire certain assets of Pacific Cup. Acquisition-related costs were immaterial. The amounts of revenue and earnings of the acquiree since the acquisition date is included in the condensed consolidated statement of income for the reporting periods, which is not significant for the three months ended March 31, 2022 and the period from March 1, 2021 to March 31, 2021. The goodwill recognized in this transaction was derived from expected opportunities to leverage Pacific Cup’s customer base, manufacturing facility, and sales force to expand the Company’s footprint. Goodwill recognized as a result of this acquisition is deductible for income tax purposes, and subject to annual impairment testing, which may give rise to deferred taxes in future periods. The following table summarizes the final valuation of assets acquired as a result of this acquisition: (in thousands) Inventories $ 153 Property and equipment 50 Customer relationships 400 Goodwill 397 Total assets acquired $ 1,000

Inventories

Inventories	3 Months Ended
	Mar. 31, 2022
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories consist of the following: March 31, December 31, (in thousands) Raw materials $ 18,215 $ 14,075 Finished goods 60,341 45,140 Subtotal 78,556 59,215 Less inventory reserve (1,219) (743) Total inventories $ 77,337 $ 58,472

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and Equipment Property and equipment, net consist of the following: March 31, December 31, (in thousands) Machinery and equipment $ 61,421 $ 60,935 Leasehold improvements 18,886 18,655 Vehicles 5,855 5,384 Furniture and fixtures 955 936 Building 35,387 35,387 Land 11,907 11,907 Computer hardware and software 555 553 134,966 133,757 Less accumulated depreciation (42,828) (40,282) Total property and equipment, net $ 92,138 $ 93,475 Depreciation and amortization expense were $2,577,000 and $2,464,000 for the three months ended March 31, 2022 and 2021, respectively. Depreciation and amortization expense are reported within general and administrative expense except for depreciation and amortization expense related to manufacturing facilities and equipment, which is included in cost of goods sold on the accompanying condensed consolidated statements of income.

Line of Credit

Line of Credit	3 Months Ended
	Mar. 31, 2022
Debt Disclosure [Abstract]
Line of Credit	Line of Credit Pursuant to the terms of the Business Loan Agreement, dated February 23, 2018, between Lollicup, as borrower, and Hanmi Bank, as lender (as amended, the “Loan Agreement”), the Company has a line of credit with a maximum borrowing capacity of $40,000,000 (the “Line of Credit”). The Line of Credit also includes a standby letter of credit sublimit. The Line of Credit was secured by the Company’s assets and guaranteed by the Company’s stockholders. The Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. On October 6, 2021, the Company amended the Loan Agreement. Prior to October 6, 2021, interest accrued at an annual rate of prime less 0.25% with a minimum floor of 3.75%, and the amount that could be borrowed was subject to a borrowing base that was calculated as a percentage of the accounts receivable and inventory balances measured monthly. Additionally, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, minimum debt service coverage ratio, and minimum debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio. The amendment on October 6, 2021, among other things, (1) extended the maturity date to October 6, 2023, (2) revised the interest on any line of credit borrowings to an annual rate of prime less 0.25%, with a minimum floor of 3.25%, (3) removed the requirement for the maximum amount of borrowings to be subject to a borrowing base requirement that was calculated as a percentage of accounts receivable and inventory balances, (4) removed the minimum tangible net worth and minimum debt service coverage ratio from the financial covenant requirement, and (5) added a minimum fixed charge coverage ratio in the financial covenant requirement. As of March 31, 2022, the maximum remaining amount that could be borrowed under the Line of Credit was $29,800,000. The Company had $10,200,000 of borrowings outstanding under the Line of Credit bearing an interest rate of 3.25% per annum as of March 31, 2022. The Company had $0 of borrowings outstanding under the Line of Credit as of December 31, 2021. The amount issued under the standby letter of credit was $0 as of both March 31, 2022 and December 31, 2021. As of both March 31, 2022 and December 31, 2021, the Company was in compliance with the financial covenants under the Line of Credit. Long-term debt consists of the following: March 31, December 31, (in thousands) A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.25% and 3.00% at March 31, 2022 and December 31, 2021, respectively) and principal payments ranging from $24,000 to $40,000 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was 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. $ 20,726 $ 20,808 A $23,000,000 term loan that matures September 30, 2026, with the initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000 through September 2022, which the Company exercised in February 2022. Interest accrues at a fixed rate of 3.5%. Principal and interest payments of $116,000 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 Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. 22,610 15,909 Long-term debt 43,336 36,717 Less: unamortized loan fees (192) (200) Less: current portion (1,190) (1,178) Long-term debt, net of current portion $ 41,954 $ 35,339 At March 31, 2022, future maturities are (in thousands): 2022 (remainder) $ 887 2023 1,224 2024 1,276 2025 1,333 2026 19,703 Thereafter 18,913 Total $ 43,336 The Company was in compliance with all of its financial covenants as of both March 31, 2022 and December 31, 2021.

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2022
Payables and Accruals [Abstract]
Accrued Expenses	Accrued Expenses The following table summarizes information related to accrued expense liabilities: March 31, December 31, (in thousands) Accrued expenses $ 2,576 $ 1,991 Accrued interest 101 68 Accrued payroll 1,702 1,456 Accrued vacation and sick pay 796 416 Accrued shipping expenses 2,487 2,868 Accrued professional services fees 304 642 Deferred rent liability 377 372 Total accrued expenses $ 8,343 $ 7,813

Long-Term Debt

Long-Term Debt	3 Months Ended
	Mar. 31, 2022
Debt Disclosure [Abstract]
Long-Term Debt	Line of Credit Pursuant to the terms of the Business Loan Agreement, dated February 23, 2018, between Lollicup, as borrower, and Hanmi Bank, as lender (as amended, the “Loan Agreement”), the Company has a line of credit with a maximum borrowing capacity of $40,000,000 (the “Line of Credit”). The Line of Credit also includes a standby letter of credit sublimit. The Line of Credit was secured by the Company’s assets and guaranteed by the Company’s stockholders. The Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. On October 6, 2021, the Company amended the Loan Agreement. Prior to October 6, 2021, interest accrued at an annual rate of prime less 0.25% with a minimum floor of 3.75%, and the amount that could be borrowed was subject to a borrowing base that was calculated as a percentage of the accounts receivable and inventory balances measured monthly. Additionally, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, minimum debt service coverage ratio, and minimum debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio. The amendment on October 6, 2021, among other things, (1) extended the maturity date to October 6, 2023, (2) revised the interest on any line of credit borrowings to an annual rate of prime less 0.25%, with a minimum floor of 3.25%, (3) removed the requirement for the maximum amount of borrowings to be subject to a borrowing base requirement that was calculated as a percentage of accounts receivable and inventory balances, (4) removed the minimum tangible net worth and minimum debt service coverage ratio from the financial covenant requirement, and (5) added a minimum fixed charge coverage ratio in the financial covenant requirement. As of March 31, 2022, the maximum remaining amount that could be borrowed under the Line of Credit was $29,800,000. The Company had $10,200,000 of borrowings outstanding under the Line of Credit bearing an interest rate of 3.25% per annum as of March 31, 2022. The Company had $0 of borrowings outstanding under the Line of Credit as of December 31, 2021. The amount issued under the standby letter of credit was $0 as of both March 31, 2022 and December 31, 2021. As of both March 31, 2022 and December 31, 2021, the Company was in compliance with the financial covenants under the Line of Credit. Long-term debt consists of the following: March 31, December 31, (in thousands) A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.25% and 3.00% at March 31, 2022 and December 31, 2021, respectively) and principal payments ranging from $24,000 to $40,000 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was 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. $ 20,726 $ 20,808 A $23,000,000 term loan that matures September 30, 2026, with the initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000 through September 2022, which the Company exercised in February 2022. Interest accrues at a fixed rate of 3.5%. Principal and interest payments of $116,000 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 Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. 22,610 15,909 Long-term debt 43,336 36,717 Less: unamortized loan fees (192) (200) Less: current portion (1,190) (1,178) Long-term debt, net of current portion $ 41,954 $ 35,339 At March 31, 2022, future maturities are (in thousands): 2022 (remainder) $ 887 2023 1,224 2024 1,276 2025 1,333 2026 19,703 Thereafter 18,913 Total $ 43,336 The Company was in compliance with all of its financial covenants as of both March 31, 2022 and December 31, 2021.

Interest Rate Swaps

Interest Rate Swaps	3 Months Ended
	Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Interest Rate Swaps	Interest Rate Swaps In June 2019, Global Wells entered into a ten-year floating-to-fixed interest-rate swap, with an effective date of June 13, 2019 , that is based on the prime rate versus a 5.05% fixed rate. The notional value was $21,580,000 as of June 13, 2019 . The payment dates are the fifth day of the month beginning July 5, 2019 to the termination date of May 4, 2029. As of March 31, 2022 and December 31, 2021, the fair value of the interest rate swap was $22,000 and $1,334,000, respectively, which is reported as other liabilities in the condensed consolidated balance sheets. For the three months ended March 31, 2022 and 2021, Global Wells recognized approximately $1,312,000 and $1,282,000 as interest income related to change in fair value of this interest rate swap for the three months ended March 31, 2022 and 2021, respectively. In June 2019, the Company also entered into a five-year floating-to-fixed interest-rate swap, with an effective date of June 3, 2019, that is based on the prime rate versus 5.19% fixed rate. The notional was $10,000,000 as of June 2019 . The payment dates are the fifth day of the month beginning July 5, 2019 to the maturity date of May 31, 2024. In April 2021, the Company terminated this interest rate swap. For the three months ended March 31, 2021, the Company recognized approximately $42,000 in interest income related to change in fair value of this interest rate swap .

Stock-based Compensation

Stock-based Compensation	3 Months Ended
	Mar. 31, 2022
Share-based Payment Arrangement [Abstract]
Stock-based Compensation	Stock-based Compensation In January 2019, the Company’s Board of Directors adopted the 2019 Stock Incentive Plan (the “Plan”). A total of 2,000,000 shares of common stock were authorized and reserved for issuance under the Plan in the form of incentive or nonqualified stock options and stock awards. A committee appointed by the Board of Directors of the Company determines the terms and conditions of each grant under the Plan. Employees, directors, and consultants are eligible to receive stock options and stock awards under the Plan. The aggregate number of shares available under the Plan and the number of shares subject to outstanding options may be increased or decreased by the Plan administrator to reflect any changes in the outstanding common stock by reason of any recapitalization, reorganization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock or similar transaction. The exercise price of incentive stock options may not be less than the fair market value of the common stock at the date of grant. The exercise price of incentive stock options granted to individuals that own greater than 10% of the voting stock may not be less than 110% of the fair market value of the common stock at the date of grant. The term of each incentive and nonqualified option is based upon such conditions as determined by the option agreement; however, the term can be no more than ten years from the date of the grant. In the case of an incentive stock option granted to an optionee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary, the term of the option will be such shorter term as may be provided in the option agreement, but not more than five years from the date of the grant. As of March 31, 2022, a total of 1,275,250 shares of common stock was available for further award grants under the Plan. For the three months ended March 31, 2022 and 2021, the Company recognized a total of $0.6 million and $0 in stock-based compensation expense, respectively. The restricted stock units and stock options granted prior to April 15, 2021 were subjected to vesting conditions contingent upon the closing of an initial public offering of the Company. Such awards began vesting on April 15, 2021 when the Company completed its initial public offering. The Company recognizes stock-based compensation over the vesting period, which is generally 3 years for both the restricted stock units and stock options. Stock Options A summary of the Company’s stock option activity under the Plan for the period ended March 31, 2022 is as follows: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2021 435,000 $18.76 $ — Granted 50,000 16.53 Exercised (5,000) 10.00 Canceled/forfeited (20,000) 18.86 Outstanding at March 31, 2022 460,000 $18.61 9.6 $ 571,900 Expected to vest at March 31, 2022 460,000 $18.61 9.6 $ 571,900 Exercisable at March 31, 2022 — — — $ — The weighted-average grant date fair-value of the stock options granted for the three months ended March 31, 2022 was $16.53 per share. At March 31, 2022, total remaining stock-based compensation expense for unvested stock options is approximately $1,866,270. The cost is expected to be recognized over a weighted-average period of 1.7 years. The aggregate intrinsic value is calculated by subtracting the exercise price of the option from the closing price of the Company’s common stock on March 31, 2022, multiplied by the number of shares per each option. The assumptions that were used to calculate the grant date fair value of the Company’s stock option grants for the three months ended March 31, 2022 were as follows: Three Months Ended March 31, 2022 Risk-free interest rate 1.70 % Expected term (years) 6.25 years Volatility 30 % Dividend yield 0.40 % Restricted Stock The Company issued restricted stock units to employees of the Company. The following table summarizes the unvested restricted stock units for the period ended March 31, 2022: Number of Weighted Unvested at December 31, 2021 159,000 $ 11.08 Granted 7,500 16.53 Forfeited (1,667) 17.90 Unvested at March 31, 2022 164,833 $ 11.26 At March 31, 2022, total remaining stock-based compensation expense for unvested restricted stock units is approximately $1.0 million. The cost is expected to be recognized over a weighted-average period of 1.2 years.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2022
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share (a) Basic Basic earnings per share is calculated by dividing the net income attributable to Karat Packaging for the period by the weighted average number of common shares outstanding during the related period. Three Months Ended 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 6,667 $ 1,780 Weighted average number of common shares in issue 19,808 15,167 Basic earnings per share $ 0.34 $ 0.12 (b) Diluted Diluted earnings per share is calculated based upon the weighted average number of common shares and common equivalent shares outstanding during the period, calculated using the treasury stock method. Under the treasury stock method, exercise proceeds include the amount the employee must pay for exercising stock options and the amount of compensation cost related to stock awards for future services that the Company has not yet recognized. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. The following table summarizes the calculation of diluted earnings per share: Three Months Ended 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 6,667 $ 1,780 Weighted average number of common shares in issue 19,808 15,167 Dilutive shares Stock options and restricted stock units 93 236 Adjusted weighted average number of common shares 19,901 15,403 Diluted earnings per share $ 0.34 $ 0.12 For the three months ended March 31, 2022 and 2021, a total of 474,000 and 236,000 shares of potentially dilutive shares, respectively, have been excluded in the diluted earnings per share calculation due to its anti-dilutive impact on earnings per share.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Lease Commitments The Company leases its facilities under various operating leases expiring through 2031. The Company also leases automobiles under various operating leases expiring through 2024. At March 31, 2022, approximate future minimum lease obligations are as follows: (in thousands) 2022 (remainder) $ 2,304 2023 3,060 2024 1,824 2025 380 2026 374 Thereafter 1,630 Total $ 9,572 Rent expense included in operating expenses was $644,000 and $708,000 for the three months ended March 31, 2022 and 2021, respectively. Rent expenses included in cost of goods sold was 260,000 and $188,000 for the three months ended March 31, 2022 and 2021, respectively. In September 2020, Global Wells entered into an operating lease with an unrelated party as the landlord. The lease generates monthly rental payments from $58,000 to $61,000 over the lease term of 38 months beginning September 9, 2020. Rental income for the three months ended March 31, 2022 and 2021 were $238,000 and $246,000, respectively. The expected rental income is $538,000 and $611,000 for the remaining nine months of the year ended December 31, 2022 and for the year ended December 31, 2023, respectively. Contingencies The Company is involved from time to time in certain legal actions and claims arising in the ordinary course of business. Management believes that the outcome of such litigation and claims, should they arise in the future, is not likely to have a material effect on the Company’s financial position or results of operations.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Keary Global owns 250,004 shares of common stock as of March 31, 2022, which Keary Global acquired upon exercise of two convertible notes during the third quarter of 2018. Keary Global and its affiliate, Keary International, are owned by one of the Company’s stockholders’ family member. In addition to being a stockholder, Keary Global and Keary International are inventory suppliers and purchasing agents for the Company overseas. The Company has entered into ongoing purchase and supply agreements with Keary Global. At March 31, 2022and December 31, 2021, the Company has accounts payable due to Keary Global and Keary Internation al of $1,260,000 and $2,003,000,r espectively. Purchases for the three months ended March 31, 2022 and 2021 from this related party w ere$11,926,000

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes In determining the interim provision for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income and adds the tax effects of any discrete items in the reporting period in which they occur. For the three months ended March 31, 2022 and 2021, the Company's income tax expense was $2.7 million and $1.2 million, with effective tax rate of 25.2% and 28.0%, respectively. ASC 740, Income Taxes , provides for the recognition of deferred tax assets if realization of these assets is more-likely-than-not. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. Based upon the level of historical taxable income, at this time, the Company determined that sufficient positive evidence existed to conclude that it is more likely than not there will be full utilization of the deferred tax assets in each jurisdiction. The Company remains subject to IRS examination for the 2016 through 2020 tax years, and has received notice in February 2019 that it is under examination for years 2016 and 2017. Additionally, the Company files multiple state and local income tax returns and remains subject to examination in various of these jurisdictions, including California for the 2016 through 2020 tax years and South Carolina for the 2017 through 2020 tax years. The Company accounts for uncertainties in income tax in accordance with ASC 740-10 —  Accounting for Uncertainty in Income Taxes . ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of income. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. As of March 31, 2022, and December 31, 2021, the Company did not have any unrecognized tax benefit. On March 27, 2020, the CARES Act was signed into law by the president. The CARES Act provides several favorable tax provisions. The Company evaluated the impacts of CARES Act and determined it currently has no material impact to the Company’s consolidated financial statements. The Taxpayer Certainty and Disaster Relief Act of 2020, enacted on December 27, 2020, added a temporary exception to the 50% limit (TCJA) on the amount that businesses may deduct for food or beverages. Beginning January 1, 2021, through December 31, 2022, the temporary exception allows a 100% deduction for food or beverages from restaurants. The Company evaluated the impacts and does not believe the Act has material impact to the income tax provision. On March 10, 2021, the “ American Rescue Plan Act of 2021” was signed into law by the president. The American Rescue Plan Act of 2021 provides several tax provisions. The Company evaluated the impacts of the American Rescue Plan Act of 2021 and determined it has no material impact to the income tax provision.

COVID-19

COVID-19	3 Months Ended
	Mar. 31, 2022
Unusual or Infrequent Items, or Both [Abstract]
COVID-19	COVID-19 Since COVID-19 was declared a global pandemic by the World Health Organization, the Company’s business, operations and financial performance have been, and may continue to be, affected by the macroeconomic impacts resulting from the efforts to control the spread of COVID-19. The Company has enacted enhanced health and safety protocols, including sanitizing procedure and health checks, at its facilities to ensure the health and safety of the employees. The raw material and labor shortage and supply chain and transportation disruptions caused by COVID-19 have adversely impacted the Company’s business including, among other things, raw materials inflation, increased freight and shipping costs and sometimes longer inventory lead time. The Company has evolved its operations to navigate such challenges, including the diversification of its supplier network, the adjustment of its inventory purchase pattern, and the continued focus on and investment in automation in its operations and its E-commerce platform. The Company continues to focus on working capital management and the strength of its balance sheet. As of March 31, 2022, the Company had cash and cash equivalents of $6.8 million, additional availability of $29.8 million under its Line of Credit, and working capital of $93.7 million. Given its balance sheet and liquidity position, management believes that the Company has the financial flexibility and resources needed to operate in the current uncertain economic environment. However, if global economic conditions worsen as a result of the pandemic, it could materially impact the Company’s liquidity position and capital needs.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Joint Venture Agreement On April 6, 2022, Lollicup entered into a definitive joint venture agreement (the “JV Agreement”) with Happiness Moon Co., Ltd., a Taiwanese company (“Happiness Moon”), whereby Lollicup and Happiness Moon will jointly establish Green Earth Technology (“Green Earth”) a new Taiwanese corporation. Green Earth will build and operate an approximately 180,000 square foot manufacturing facility (the “Facility”) in Taiwan that will manufacture compostable foodservice products from bagasse. Lollicup will invest approximately $6.0 million for a 49% interest in Green Earth, which capital shall be contributed to Green Earth in three tranches as follows: a. approximately $2.0 million within two weeks of signing of the JV Agreement; b. approximately $2.0 million upon the completion of the Facility and installation of manufacturing machinery and equipment in the Facility; and c. approximately $2.0 million upon the commencement of mass production in the Facility. The JV Agreement stipulates a 20% investment return guarantee for Lollicup and provides that Company may, in certain circumstances as described in the JV Agreement, elect to terminate the JV Agreement and withdraw the amount then invested. Depending on the amount contributed by Lollicup in the three tranches set forth above, upon notice of termination, Happiness Moon shall be obligated to return such investment amount to Lollicup plus 5% per annum within one, two or three years respectively of such notice. Lollicup and Happiness Moon shall each appoint one member to the three-member board of directors, with the third member being an attorney in Taiwan to be designated. There shall also be a board observer. Lease Agreements On April 27, 2022, the Company entered into a 60-month lease agreement commencing on May 1, 2022 for a 70,000 square-foot distribution facility in the City of Industry, California. The term of the lease expires on April 30, 2027 and requires monthly base rent payments ranging from $137,000 to $160,000. On April 29, 2022, the Company entered into a 60-month lease agreement commencing on May 1, 2022 for a 23,000-square-foot distribution facility in Kapolei, Hawaii. The term of the lease expires on April 30, 2027 and requires monthly base rent payments ranging from $33,000 to $38,000. Repayment on Line of Credit From April 1, 2022 through May 6, 2022, the Company repaid $2.0 million and drew additional $4.3 million on its Line of Credit, increasing its outstanding borrowing under the Line of Credit to $12.5 million.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as promulgated in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-3 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. The financial information as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2022. The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021, as included in our Annual Report on Form 10-K filed on March 31, 2022.
Principles of Consolidation	Principles of Consolidation: The condensed consolidated financial statements include the accounts of Karat Packaging and its wholly-owned and controlled operating subsidiaries, Lollicup, Lollicup Franchising, LLC (“Lollicup Franchising”) and Global Wells, a variable interest entity wherein the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated.
Noncontrolling Interests	Noncontrolling Interests: The Company consolidates its variable interest entity, Global Wells, in which the Company is the primary beneficiary. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the condensed consolidated financial statements separate from Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the condensed consolidated statements of income.
Estimates and Assumptions	Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ materially from the estimates that were assumed in preparing the condensed consolidated financial statements. Estimates that are
Reporting Segment	Reporting Segment: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and supply of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, foam, post-consumer recycled content and renewable materials. It also consists of the distribution of certain specialty food and beverages products, such as boba and coffee drinks.
Earnings per Share	Earnings per Share: Basic earnings per common share is calculated by dividing net income attributable to Karat Packaging by the weighted average number of common shares outstanding during the related period. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive shares.
Cash and cash equivalents	Cash and cash equivalents: The Company considers all highly liquid investments purchased with an original maturity at the date of purchase of three months or less to be cash equivalents. At March 31, 2022 and December 31, 2021, cash and cash equivalents were comprised of cash held in money market, cash on hand and cash deposited with banks.
Accounts Receivable and Allowance for Doubtful Accounts	Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable consists primarily of amounts due from customers. Accounts receivable are carried at their estimated collectible amounts and are periodically evaluated for collectability based on past credit history. The Company recognizes an allowance for bad debt on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt write-offs, current past due customers in the aging as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible.
Inventories	Inventories: Inventories consist of raw materials, work-in-process, and finished goods. Inventory cost is determined using the first-in, first-out (FIFO) method and valued at lower of cost or net realizable value. The Company maintains reserves for excess and obsolete inventory considering various factors including historic usage, expected demand, anticipated sales price, and product obsolescence.
Property and Equipment	Property and Equipment: Property and equipment are carried at cost, net of accumulated depreciation and amortization, and net of impairment losses, if any. Depreciation of property and equipment are computed by straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the term of the lease, or the estimated life of the improvement, whichever is less. The estimated useful life of property and equipment are as follows: Machinery and equipment 5 years to 10 years Leasehold improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building 28 years to 40 years Property held under capital leases 3 years to 5 years Computer hardware and software 3 years Normal repairs and maintenance are expensed as incurred, whereas significant changes that materially increase values or extend useful lives are capitalized and depreciated over the estimated useful lives of the related assets.
Deposits	Deposits: Deposits are payments made for machinery and equipment, and construction and improvement for the Company’s facilities. Included in deposits are also payments made to lessors of leased properties as security for the full and faithful observance of contracts, which will be refunded to the Company upon expiration or termination of the contract.
Impairment of Long-lived Assets	Impairment of Long-lived Assets: The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The impairment test comprises of two steps. The first step compares the carrying amount of the asset to the sum of expected undiscounted future cash flows. If the sum of expected undiscounted future cash flows exceeds the carrying amount of the asset, no impairment is taken. If the sum of expected undiscounted future cash flows is less than the carrying amount of the asset, a second step is warranted and an
Business Combination and Goodwill	Business Combination and Goodwill: The Company applies the acquisition method of accounting for business combinations in accordance with US GAAP, which requires the Company to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets, and liabilities acquired. Such estimates may be based on significant unobservable inputs. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Government Grants	Government Grants: Government grants are not recognized unless there is reasonable assurance that the Company and Global Wells will comply with the grants’ conditions and that the grants will be received. As of both March 31, 2022 and December 31, 2021, the Company received cumulative grants of $1,200,000. As of both March 31, 2022 and December 31, 2021, Global Wells received cumulative grants of $1,302,000. These grants are reported as deferred income within other liabilities in the accompanying condensed consolidated balance sheets as there are conditions attached to the grants that the Company and Global Wells have not met. These conditions include requiring the facility in Rockwall, Texas to maintain a certain minimum tax value for the next five calendar years through 2023 (the “Required Period”), continue operations in the facility for the Required Period, have a minimum number of full time equivalent employees with a minimum average annual gross wage employed in the operation of the facility in the Required Period, and promise to not engage in a pattern or practice of unlawful employment of aliens during the Required Period.
Derivative Instruments	Derivative Instruments: Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic No. 815, Derivatives and Hedging , requires companies to recognize all of its derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the statement of income during the current period. The Company and Global Wells entered into certain interest rate swaps to manage the interest rate risk, and accounted for such interest rate swaps as a derivative instrument under ASC 815. The interest rate swaps were not designated for hedge accounting and as such, the change in the fair value of interest rate swaps is recognized as interest income/expense in the accompanying condensed consolidated statements of income.
Variable Interest Entities	Variable Interest Entity: The Company has a variable interest in Global Wells. In 2017, Lollicup along with three other unrelated parties formed Global Wells. Lollicup has a 13.5% ownership interest and a 25% voting interest in Global Wells, located in Rockwall, Texas. The purpose of this entity is to own, construct, and manage a warehouse and manufacturing facility. Global Wells’ operating agreement may require its members to make additional contributions only upon the unanimous decision of the members or where the cash in Global Wells’ bank account falls below $50,000. In the event that a member is unable to make an additional capital contribution, the other members will be required to make contributions to offset the amount that member cannot contribute, up to $25,000. Global Wells was determined to be a variable interest entity in accordance with ASC Topic 810, Consolidations , however, at the time the investment was made, it was determined that Lollicup was not the primary beneficiary. In 2018, Lollicup entered into an operating lease with Global Wells (“Texas Lease”). In June 2020, the Company entered into another operating lease with Global Wells (“New Jersey Lease”). Upon entering into the Texas Lease with Lollicup on March 23, 2018, it was determined that Lollicup holds current and potential rights that give it the power to direct activities of Global Wells that most significantly impact Global Wells’ economic performance, receive significant benefits, or the obligation to absorb potentially significant losses, resulting in Lollicup having a controlling financial interest in Global Wells. As a result, Lollicup was deemed to be the primary beneficiary of Global Wells and has consolidated Global Wells under the risk and reward model of ASC 810, for the period from March 23, 2018. The monthly lease payments for the Texas Lease and New Jersey Lease are eliminated upon consolidation. Assets recognized as a result of consolidating Global Wells do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating Global Wells do not represent additional claims of the Company’s general assets; they represent claims against the specific assets of Global Wells, except for the Company’s guarantee of Global Wells’ term loans. As of March 31, 2022 and December 31, 2021, total loan guaranteed by the Company related to Global Wells amounted to $43,144,000 and $36,517,000, respectively. See Note 8 — Long Term Debt
Revenue Recognition	Revenue Recognition: The Company generates revenues from customers that include national and regional distributors, chain restaurants and supermarkets, small businesses, and those that purchase for individual consumption. The Company considers revenue disaggregated by customer type to most accurately reflect the nature and uncertainty of its revenue and cash flows that are affected by economic factors. National and regional chains revenue: National and regional chains revenue is derived from chain restaurants and supermarkets with locations across multiple states. Revenue from transactions with national and regional chains is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. • Distributors revenue: Distributors revenues are derived from national and regional distributors across the U.S. that purchase the Company’s products for restaurants, offices, schools, and government entities. Revenue from distributions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. • Online revenue: Online revenue is derived from small businesses such as small restaurants, bubble tea shops, coffee shops, juice bars and smoothie shops. Revenue from wholesale transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. • Retail revenue: Retail revenue is derived primarily from regional bubble tea shops, boutique coffee shops and frozen yogurt shops. Revenue from retail transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s manufacturing facility to the customers. The transaction price is the amount of consideration to which the Company expects to be entitled to in exchange for transferring goods to the customer. Revenue is recorded based on the total estimated transaction price, which includes fixed consideration and estimates of variable consideration. Variable consideration includes estimates of rebates and other sales incentives, cash discounts for prompt payment, consideration payable to customers for cooperative advertising and other program incentives, and sales returns. The Company estimates its variable consideration based on contract terms and historical experience of actual results using the expected value method. The performance obligations are generally satisfied shortly after manufacturing and shipment as purchases made by the Company’s customers are manufactured and shipped with minimal lead time. The Company’s contract liabilities consist of rebates and other sales incentives, consideration payable to customers for cooperative advertising and other program incentives, and sales return. As of March 31, 2022 and December 31, 2021, the contract liabilities were not significant to the financial statements. Shipping and handling fees billed to a customer are recorded within net sales, with corresponding shipping and handling costs recorded in selling expense on the accompanying condensed consolidated statements of income. Shipping and handling fees billed to a customer are not deemed to be separate performance obligations for all of the Company’s product sales, as these activities occur before the customer receives the products. Shipping and handling costs included within selling expenses in the condensed consolidated statements of income for the three months ended March 31, 2022 and 2021 were $8,440,000 and $5,483,000 , respectively. Sales taxes collected concurrently with revenue-producing activities and remitted to governmental authorities are excluded from revenue. Sales commissions are expensed as incurred due to the amortization period being less than one year and are recorded in selling expense on the accompanying consolidated statements of income.
Advertising Costs	Advertising Costs: The Company expenses costs of print production, trade show, online marketing, and other advertisements in the period in which the expenditure is incurred.
Income Taxes	Income Taxes: The Company applies the asset and liability approach for financial accounting and reporting for income taxes. Deferred income taxes arise from temporary differences between income tax and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes and are measured using currently enacted tax rates and laws. In addition, a deferred tax asset can be generated by net operating loss carryforwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company applies ASC 740, Income Taxes , which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Concentration of Credit Risk	Concentration of Credit Risk: Cash is maintained at financial institutions and, at times, balances exceed federally insured limits. Management believes that the credit risk related to such deposits is minimal. The Company extends credit based on the valuation of the customers’ financial condition and general collateral is not required. Management believes the Company is not exposed to any material credit risk on these accounts.
Fair Value Measurements	Fair Value Measurements: The Company follows ASC 820, Fair Value Measurements , which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities that the Center has the ability to access as of the measurement date. Level 2 — Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. At March 31, 2022 and December 31, 2021, the Company has financial instruments classified within the fair value hierarchy, which consist of the following: • Interest rate swap that meets the definition of a derivative, classified as Level 2 within the fair value hierarchy, and reported as other liabilities on the condensed consolidated balance sheets. The fair value of interest rate swap is calculated using pricing models that will use volatility to quantify the probability of changes around interest rate trends. • Money market account, classified as Level 1 within the fair value hierarchy, and reported as a current asset on the condensed consolidated balance sheets. The Company has not elected the fair value option as presented by ASC 825, Fair Value Option for Financial Assets and Financial Liabilities , for the financial assets and liabilities that are not otherwise required to be carried at fair value. Under ASC 820, material financial assets and liabilities not carried at fair value, including accounts receivable, accounts payable, accrued and other liabilities, other payable and borrowings under promissory notes and line of credit, are reported at their carrying value. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued and other liabilities and other payable approximate fair value because of the short maturity of these instruments. The carrying amounts of long-term debt and line of credit at March 31, 2022 and December 31, 2021 approximate fair value because the interest rates approximate the current market interest rate or are variable in nature. The fair value of these financial instruments was determined using Level 2 inputs.
Foreign Currency	Foreign Currency: The Company includes gains or losses from foreign currency transactions, such as those resulting from the settlement of foreign receivables or payables, in the consolidated statements of income.
Stock-Based Compensation	Stock-Based Compensation: The Company recognizes stock-based compensation expense related to employee stock options and restricted stock units in accordance with ASC 718, Compensation — Stock Compensation . This standard requires the Company to record compensation expense equal to the fair value of awards granted to employees and non-employees. The fair value of share-based payment awards is estimated on the grant-date using the Black-Scholes option pricing model for stock options, and the closing price of the Company's common stock on the trading day immediately prior to the grant date for restricted stock units. Key input assumptions used in the Black-Scholes option pricing model to estimate the grant date fair value of stock options include the fair value of the Company’s common stock, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate, and the Company’s expected annual dividend yield. The risk-free interest rate assumption for options granted under the 2019 Stock Incentive Plan is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s stock options. The expected term of employee stock options under the Plan represents the weighted-average period that the stock options are expected to remain outstanding. The expected term of options granted is calculated based on the “simplified method,” which estimates the expected term based on the average of the vesting period and contractual term of the stock option. The Company determines the expected volatility assumption using the frequency of daily historical prices of comparable public company’s common stock for a period equal to the expected term of the options. The dividend yield assumption for options granted under the Plan is based on the Company’s history and expectation of dividend payouts. Stock-based compensation expense is based on awards that ultimately vest. Forfeitures are accounted for as they occur. The Company has elected to treat stock-based payment awards with graded vesting schedules and time-based service conditions as separate awards and recognizes stock-based compensation expense over the requisite service period using the graded vesting attribution method. The determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If the Company had made different assumptions, its stock-based compensation expense, and its net income could have been significantly different.
New and Recently Adopted Accounting Standards	New and Recently Adopted Accounting Standards: The Company is an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and as such, the Company have elected to take advantage of certain reduced public company reporting requirements. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, as a result, the Company will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for private companies. In February 2016, the FASB issued ASU 2016-2 (Topic 842), “ Leases ”. This ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The FASB subsequently issued ASU 2018-11 (Topic 842), “Leases: Targeted Improvements” which amends ASC 842 in two important areas, including (i) allowing lessors to combine lease and associated nonlease components by class of underlying asset in contracts that meet certain criteria and, (ii) provides entities with an optional method for adopting the new leasing guidance by recognizing a cumulative-effect adjustment to the opening balance of the retained earnings, and not to restate the comparative periods presented at the adoption date. The effective date for ASC 842 for public business entities is annual reporting periods beginning after December 15, 2018. The effective date for all other entities is annual reporting periods beginning after December 15, 2021. The Company will adopt the new standard in annual reporting period beginning after December 15, 2021, and is currently assessing the impact of this standard on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 “ Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ” which adds to U.S. GAAP an impairment model known as the current expected credit loss (CECL) model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU is also intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years for public business entities that are U.S. Securities and Exchange Commission (SEC) filers. For all other public business entities, the ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted beginning after December 15, 2018, including interim periods within those fiscal years. The FASB subsequently issued ASU 2019-10 (Topic 326), “Financial Instruments-Credit Losses: Effective Dates” which amends the effective date for SEC filers that are eligible to be ‘smaller reporting companies’, non-SEC filers and all other companies, including not-for-profit companies and employee benefit plans. For calendar-year end companies that are eligible for the deferral, the effective date is January 1, 2023. The Company will adopt the new standard in annual reporting period beginning after January 1, 2023, and is currently assessing the impact of this standard on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU 2020-3 “ Codification Improvements to Financial Instruments ”. The guidance in this ASU clarifies the requirement for all entities to provide the fair value option disclosures in paragraphs 825-10-50-24 through 50-32 of the FASB’s ASC. The guidance also clarifies that the contractual term of a net investment in a lease determined in accordance with ASC 842, “Leases”, should be the contractual term used to measure expected credit losses under ASC 326, “Financial Instruments — Credit Losses”. This ASU is effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Schedule of estimated useful life of property and equipment	The estimated useful life of property and equipment are as follows: Machinery and equipment 5 years to 10 years Leasehold improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building 28 years to 40 years Property held under capital leases 3 years to 5 years Computer hardware and software 3 years
Schedule of goodwill	The following table summarizes the activity in the Company’s goodwill balance: (in thousands) Balance at December 31, 2021 $ 3,510 Goodwill acquired — Balance at March 31, 2022 $ 3,510
Schedule of variable interest entity financial information	The following financial information includes assets and liabilities of Global Wells and are included in the accompanying condensed consolidated balance sheets, except for those that eliminate upon consolidation: March 31, December 31, (in thousands) Cash $ 5,205 $ 1,163 Accounts receivable 257 384 Prepaid expenses and other current assets 162 63 Property and equipment, net 46,309 46,612 Other assets 4,641 4,762 Total assets $ 56,574 $ 52,984 Accounts payable $ 184 $ 497 Accrued expenses 203 68 Income tax payable — 9 Customer deposits 81 88 Due to Lollicup USA Inc. — 2,620 Long-term debt, current portion 1190 1,178 Long-term debt, net of current portion 41,954 35,339 Other liabilities 1,324 2,636 Total liabilities $ 44,936 $ 42,435
Summary of net sales disaggregated by customer type	For the three months ended March 31, 2022 and 2021, net sales disaggregated by customer type consists of the amounts shown below. Three Months Ended March 31, 2022 2021 (in thousands) National and regional chains $ 24,906 $ 18,289 Distributors 59,124 40,010 Online 13,549 11,443 Retail 7,834 5,931 Total Revenue $ 105,413 $ 75,673
Schedule of concentration of credit risk	For the three months ended March 31, 2022 and 2021, respectively, purchases from the following vendor makes up greater than 10 percent of total purchases: Three Months Ended March 31, 2022 2021 Keary Global Ltd. ("Keary Global") and its affiliate, Keary International, Ltd.- related parties 11 % * *Purchases represented less than 10% of total purchases Amounts due to the following vendors at March 31, 2022 and December 31, 2021 that exceed 10 percent of total accounts payable are as follows: March 31, December 31, Keary Global and its affiliate, Keary International - related parties * 10 % Wen Ho Industrial Co., Ltd * 11 % Fuling Technology Co., Ltd. 19 % 21 % PolyQuest 10 % * *Amounts payable represented less than 10% of total accounts payable
Summary of fair value measurements by level for the assets and liabilities measured at fair value on a recurring basis	The following table summarizes the Company’s fair value measurements by level at March 31, 2022 for the assets and liabilities measured at fair value on a recurring basis (in thousands): Level 1 Level 2 Level 3 Cash equivalents $ 50 $ — $ — Interest rate swap — (22) — Fair value, March 31, 2022 $ 50 $ (22) $ — The following table summarizes the Company’s fair value measurements by level at December 31, 2021 for the assets and liabilities measured at fair value on a recurring basis (in thousands): Level 1 Level 2 Level 3 Cash equivalents $ 2,000 $ — $ — Interest rate swap — (1,334) — Fair value, December 31, 2021 $ 2,000 $ (1,334) $ —

Acquisitions (Tables)

Acquisitions (Tables)	3 Months Ended
	Mar. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Summary of assets acquired and liabilities assumed	The following table summarizes the final valuation of assets acquired as a result of this acquisition: (in thousands) Inventories $ 153 Property and equipment 50 Customer relationships 400 Goodwill 397 Total assets acquired $ 1,000

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Mar. 31, 2022
Inventory Disclosure [Abstract]
Schedule of inventories	Inventories consist of the following: March 31, December 31, (in thousands) Raw materials $ 18,215 $ 14,075 Finished goods 60,341 45,140 Subtotal 78,556 59,215 Less inventory reserve (1,219) (743) Total inventories $ 77,337 $ 58,472

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Schedule of property and equipment, net	Property and equipment, net consist of the following: March 31, December 31, (in thousands) Machinery and equipment $ 61,421 $ 60,935 Leasehold improvements 18,886 18,655 Vehicles 5,855 5,384 Furniture and fixtures 955 936 Building 35,387 35,387 Land 11,907 11,907 Computer hardware and software 555 553 134,966 133,757 Less accumulated depreciation (42,828) (40,282) Total property and equipment, net $ 92,138 $ 93,475

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2022
Payables and Accruals [Abstract]
Summary of accrued expense liabilities	The following table summarizes information related to accrued expense liabilities: March 31, December 31, (in thousands) Accrued expenses $ 2,576 $ 1,991 Accrued interest 101 68 Accrued payroll 1,702 1,456 Accrued vacation and sick pay 796 416 Accrued shipping expenses 2,487 2,868 Accrued professional services fees 304 642 Deferred rent liability 377 372 Total accrued expenses $ 8,343 $ 7,813

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
	Mar. 31, 2022
Debt Disclosure [Abstract]
Schedule of long-term debt	Long-term debt consists of the following: March 31, December 31, (in thousands) A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.25% and 3.00% at March 31, 2022 and December 31, 2021, respectively) and principal payments ranging from $24,000 to $40,000 along with interest are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was 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. $ 20,726 $ 20,808 A $23,000,000 term loan that matures September 30, 2026, with the initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000 through September 2022, which the Company exercised in February 2022. Interest accrues at a fixed rate of 3.5%. Principal and interest payments of $116,000 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 Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. 22,610 15,909 Long-term debt 43,336 36,717 Less: unamortized loan fees (192) (200) Less: current portion (1,190) (1,178) Long-term debt, net of current portion $ 41,954 $ 35,339
Schedule of future maturities	At March 31, 2022, future maturities are (in thousands): 2022 (remainder) $ 887 2023 1,224 2024 1,276 2025 1,333 2026 19,703 Thereafter 18,913 Total $ 43,336

Stock-based Compensation (Table

Stock-based Compensation (Tables)	3 Months Ended
	Mar. 31, 2022
Share-based Payment Arrangement [Abstract]
Summary of stock option activity	A summary of the Company’s stock option activity under the Plan for the period ended March 31, 2022 is as follows: Number of Weighted- Weighted- Aggregate Outstanding at December 31, 2021 435,000 $18.76 $ — Granted 50,000 16.53 Exercised (5,000) 10.00 Canceled/forfeited (20,000) 18.86 Outstanding at March 31, 2022 460,000 $18.61 9.6 $ 571,900 Expected to vest at March 31, 2022 460,000 $18.61 9.6 $ 571,900 Exercisable at March 31, 2022 — — — $ —
Assumptions used to calculate grant date fair value	The assumptions that were used to calculate the grant date fair value of the Company’s stock option grants for the three months ended March 31, 2022 were as follows: Three Months Ended March 31, 2022 Risk-free interest rate 1.70 % Expected term (years) 6.25 years Volatility 30 % Dividend yield 0.40 %
Summary of unvested restricted stock unit activity	The Company issued restricted stock units to employees of the Company. The following table summarizes the unvested restricted stock units for the period ended March 31, 2022: Number of Weighted Unvested at December 31, 2021 159,000 $ 11.08 Granted 7,500 16.53 Forfeited (1,667) 17.90 Unvested at March 31, 2022 164,833 $ 11.26

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2022
Earnings Per Share [Abstract]
Schedule of earnings per share	Basic earnings per share is calculated by dividing the net income attributable to Karat Packaging for the period by the weighted average number of common shares outstanding during the related period. Three Months Ended 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 6,667 $ 1,780 Weighted average number of common shares in issue 19,808 15,167 Basic earnings per share $ 0.34 $ 0.12 The following table summarizes the calculation of diluted earnings per share: Three Months Ended 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 6,667 $ 1,780 Weighted average number of common shares in issue 19,808 15,167 Dilutive shares Stock options and restricted stock units 93 236 Adjusted weighted average number of common shares 19,901 15,403 Diluted earnings per share $ 0.34 $ 0.12

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum lease obligations	At March 31, 2022, approximate future minimum lease obligations are as follows: (in thousands) 2022 (remainder) $ 2,304 2023 3,060 2024 1,824 2025 380 2026 374 Thereafter 1,630 Total $ 9,572

Nature of Operations (Details)

Nature of Operations (Details)	3 Months Ended
	Mar. 31, 2022distribution_center
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Distribution centers operated by entity	4

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended
	Mar. 31, 2022segment
Accounting Policies [Abstract]
Reportable segment	1

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Estimated Useful Life (Details)	3 Months Ended
	Mar. 31, 2022
Vehicles
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	5 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	7 years
Computer hardware and software
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	3 years
Minimum | Machinery and equipment
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	5 years
Minimum | Building
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	28 years
Minimum | Property held under capital leases
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	3 years
Maximum | Machinery and equipment
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	10 years
Maximum | Building
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	40 years
Maximum | Property held under capital leases
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment	5 years

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Capitalized and Depreciated (Details)	3 Months Ended
	Mar. 31, 2022USD ($)reporting_unit	Dec. 31, 2021USD ($)
Business Combination, Goodwill [Abstract]
Reporting unit | reporting_unit	1
Impairments of goodwill	$ 0
Government Grants
Cumulative grants	1,200,000
Global Wells
Government Grants
Cumulative grants	$ 1,302,000	$ 1,302,000

Summary of Significant Accoun_7

Summary of Significant Accounting Policies - Schedule of Goodwill (Details)	3 Months Ended
	Mar. 31, 2022USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 3,510,000
Goodwill acquired	0
Goodwill, ending balance	$ 3,510,000

Summary of Significant Accoun_8

Summary of Significant Accounting Policies - Global Wells (Details) - Global Wells	12 Months Ended
	Dec. 31, 2017USD ($)unrelated_party	Mar. 31, 2022USD ($)	Dec. 31, 2021USD ($)
Variable Interest Entity [Line Items]
Other unrelated parties | unrelated_party	3
Ownership interest	13.50%
Voting interest	25.00%
Minimum bank account to make additional contributions from members	$ 50,000
Contributions to offset the amount that member cannot contribute (up to)	$ 25,000
Total loan guaranteed		$ 43,144,000	$ 36,517,000

Summary of Significant Accoun_9

Summary of Significant Accounting Policies - Assets and Liabilities of Global Wells (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 6,820,000	$ 6,483,000
Accounts receivable	43,337,000	32,776,000
Prepaid expenses and other current assets	6,036,000	5,141,000
Property and equipment, net	92,138,000	93,475,000
Other assets	389,000	477,000
Total assets	240,380,000	207,599,000
Accounts payable	24,073,000	18,470,000
Accrued expenses	8,343,000	7,813,000
Income taxes payable	1,977,000	85,000
Customer deposits	1,448,000	1,215,000
Due to Lollicup USA Inc.	1,260,000	2,003,000
Long-term debt, current portion	1,190,000	1,178,000
Long-term debt, net of current portion	200,000	200,000
Other liabilities	2,524,000	3,837,000
Total liabilities	100,137,000	75,574,000
Global Wells
Variable Interest Entity [Line Items]
Cash and cash equivalents	5,205,000	1,163,000
Accounts receivable	257,000	384,000
Prepaid expenses and other current assets	162,000	63,000
Property and equipment, net	46,309,000	46,612,000
Other assets	4,641,000	4,762,000
Total assets	56,574,000	52,984,000
Accounts payable	184,000	497,000
Accrued expenses	203,000	68,000
Income taxes payable	0	9,000
Customer deposits	81,000	88,000
Due to Lollicup USA Inc.	0	2,620,000
Long-term debt, current portion	1,190,000	1,178,000
Long-term debt, net of current portion	41,954,000	35,339,000
Other liabilities	1,324,000	2,636,000
Total liabilities	$ 44,936,000	$ 42,435,000

Summary of Significant Accou_10

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Line Items]
Net sales	$ 105,413	$ 75,673
Cost of goods sold	71,124	54,047
Selling expenses
Disaggregation of Revenue [Line Items]
Cost of goods sold	8,440	5,483
National and regional chains
Disaggregation of Revenue [Line Items]
Net sales	24,906	18,289
Distributors
Disaggregation of Revenue [Line Items]
Net sales	59,124	40,010
Online
Disaggregation of Revenue [Line Items]
Net sales	13,549	11,443
Retail
Disaggregation of Revenue [Line Items]
Net sales	$ 7,834	$ 5,931

Summary of Significant Accou_11

Summary of Significant Accounting Policies - Advertising Costs and Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Marketing and Advertising Expense [Abstract]
Advertising costs	$ 547,000	$ 388,000
Income Tax Disclosure [Abstract]
Uncertain tax positions	$ 0		$ 0

Summary of Significant Accou_12

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Supplier	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Purchases | Keary Global and its affiliate, Keary International - related parties
Concentration Risk [Line Items]
Concentration risk percentage	11.00%
Accounts payable | Keary Global and its affiliate, Keary International - related parties
Concentration Risk [Line Items]
Concentration risk percentage		10.00%
Accounts payable | Wen Ho Industrial Co., Ltd
Concentration Risk [Line Items]
Concentration risk percentage		11.00%
Accounts payable | Fuling Technology Co., Ltd.
Concentration Risk [Line Items]
Concentration risk percentage	19.00%	21.00%
Accounts payable | PolyQuest
Concentration Risk [Line Items]
Concentration risk percentage	10.00%

Summary of Significant Accou_13

Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 50	$ 2,000
Interest rate swap	0	0
Fair value	50	2,000
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Interest rate swap	(22)	(1,334)
Fair value	(22)	(1,334)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Interest rate swap	0	0
Fair value	$ 0	$ 0

Summary of Significant Accou_14

Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Foreign Currency
Loss of foreign currency transactions	$ 133	$ (165)

Acquisitions - Narrative (Detai

Acquisitions - Narrative (Details) $ in Thousands	Mar. 01, 2021USD ($)
Pacific Cup, Inc
Business Acquisition [Line Items]
Cash consideration	$ 1,000

Acquisitions - Pacific Cup (Det

Acquisitions - Pacific Cup (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Mar. 01, 2021
Business Acquisition [Line Items]
Goodwill	$ 3,510,000	$ 3,510,000
Pacific Cup, Inc
Business Acquisition [Line Items]
Inventories			$ 153,000
Property and equipment			50,000
Customer relationships			400,000
Goodwill			397,000
Total assets acquired			$ 1,000,000

Inventories (Details)

Inventories (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 18,215,000	$ 14,075,000
Finished goods	60,341,000	45,140,000
Subtotal	78,556,000	59,215,000
Less inventory reserve	(1,219,000)	(743,000)
Total inventories	$ 77,337,000	$ 58,472,000

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 134,966,000		$ 133,757,000
Less accumulated depreciation	(42,828,000)		(40,282,000)
Total property and equipment, net	92,138,000		93,475,000
Depreciation and amortization expense	2,577,000	$ 2,464,000
Machinery and equipment
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	61,421,000		60,935,000
Leasehold improvements
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	18,886,000		18,655,000
Vehicles
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	5,855,000		5,384,000
Furniture and fixtures
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	955,000		936,000
Building
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	35,387,000		35,387,000
Land
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	11,907,000		11,907,000
Computer hardware and software
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 555,000		$ 553,000

Line of Credit (Details)

Line of Credit (Details) - USD ($)	Oct. 06, 2021	Jul. 09, 2020	Mar. 31, 2022	Dec. 31, 2021	Feb. 23, 2018
Line of Credit Facility [Line Items]
Line of credit			$ 10,200,000	$ 0
Line of credit
Line of Credit Facility [Line Items]
Maximum borrowing			29,800,000		$ 40,000,000
Floor rate	3.25%	3.75%
Line of credit			$ 10,200,000	0
Fixed interest rate			3.25%
Standby letter of credit
Line of Credit Facility [Line Items]
Line of credit			$ 0	$ 0
Prime Rate | Line of credit
Line of Credit Facility [Line Items]
Spread on variable rate	0.25%	0.25%

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued expenses	$ 2,576,000	$ 1,991,000
Accrued interest	101,000	68,000
Accrued payroll	1,702,000	1,456,000
Accrued vacation and sick pay	796,000	416,000
Accrued shipping expenses	2,487,000	2,868,000
Accrued professional services fees	304,000	642,000
Deferred rent liability	377,000	372,000
Total accrued expenses	$ 8,343,000	$ 7,813,000

Long-Term Debt - Schedule of Lo

Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Long-term debt	$ 43,336,000	$ 36,717,000
Less: unamortized loan fees	(192,000)	(200,000)
Long-term debt, current portion	(1,190,000)	(1,178,000)
Long-term debt, net of current portion and debt discount of $0.2 million as of both March 31, 2022 and December 31, 2021 (including $42.0 million and $35.3 million associated with variable interest entity at March 31, 2022 and December 31, 2021, respectively, and debt discount of $0.2 million associated with variable interest entity as of both March 31, 2022 and December 31, 2021)	41,954,000	35,339,000
Term Loan, Maturing May 2029
Debt Instrument [Line Items]
Long-term debt	20,726,000	$ 20,808,000
Face amount of loan	21,580,000
Debt issuance costs	119,000
Term Loan, Maturing May 2029 | Minimum
Debt Instrument [Line Items]
Monthly principal and interest payments	24,000
Term Loan, Maturing May 2029 | Maximum
Debt Instrument [Line Items]
Monthly principal and interest payments	$ 40,000
Term Loan, Maturing May 2029 | Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	0.25%
Interest rate during the period	3.25%	3.00%
Term Loan, Maturing September 30, 2026
Debt Instrument [Line Items]
Long-term debt	$ 22,610,000	$ 15,909,000
Face amount of loan	23,000,000
Monthly principal and interest payments	116,000
Amount converted to term loan	16,115,000
Term loan, accordion feature	$ 6,885,000
Fixed interest rate	3.50%

Long-Term Debt - Schedule of Fu

Long-Term Debt - Schedule of Future Maturities (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Future maturities:
2022 (remainder)	$ 887,000
2023	1,224,000
2024	1,276,000
2025	1,333,000
2026	19,703,000
Thereafter	18,913,000
Long-term debt	$ 43,336,000	$ 36,717,000

Interest Rate Swaps (Details)

Interest Rate Swaps (Details) - Interest Rate Swap - USD ($)	1 Months Ended	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Jun. 13, 2019	Jun. 03, 2019
Derivative [Line Items]
Term of contract	5 years
Fixed interest rate						5.19%
Notional value	$ 10,000,000
Derivative interest income			$ 42,000
Global Wells
Derivative [Line Items]
Term of contract	10 years
Fixed interest rate					5.05%
Notional value					$ 21,580,000
Derivative interest income		$ 1,312,000	$ 1,282,000
Other Liabilities | Global Wells
Derivative [Line Items]
Derivative fair value		$ 22,000		$ 1,334,000

Stock-based Compensation - Narr

Stock-based Compensation - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Jan. 31, 2019
Stock-based Compensation
Shares authorized (in shares)			2,000,000
Shares reserved for issuance (in shares)	1,275,250		2,000,000
Stock-based compensation expense	$ 600,000	$ 0
Granted (in dollars per share)	$ 16.53
Remaining stock-based compensation expense for unvested stock options	$ 1,866,270
Remaining stock-based compensation expense for unvested restricted stock units	$ 1,000,000
Share-based Payment Arrangement, Option
Stock-based Compensation
Vesting period	3 years
Cost not yet recognized, period for recognition	1 year 8 months 12 days
Restricted Stock Units (RSUs)
Stock-based Compensation
Cost not yet recognized, period for recognition	1 year 2 months 12 days
Maximum
Stock-based Compensation
Award term	10 years
Incentive Stock Optionee, Stock Ownership Greater than Ten Percent of Voting Power
Stock-based Compensation
Minimum exercise price to fair market value of common stock at the date of grant	110.00%
Incentive Stock Optionee, Stock Ownership Greater than Ten Percent of Voting Power | Maximum
Stock-based Compensation
Award term	5 years

Stock-based Compensation - Summ

Stock-based Compensation - Summary of Stock Options Activity (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Number of Options
Outstanding at beginning of period (in shares)	435,000
Granted (in shares)	50,000
Exercised (in shares)	(5,000)
Canceled/forfeited (in shares)	(20,000)
Outstanding at end of period (in shares)	460,000	435,000
Number of options, expected to vest (in shares)	460,000
Number of options, exercisable (in shares)	0
Weighted- Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 18.76
Granted (in dollars per share)	16.53
Exercised (in dollars per share)	10
Canceled/forfeited (in dollars per share)	18.86
Outstanding at end of period (in dollars per share)	18.61	$ 18.76
Weighted average exercise price, expected to vest (in dollars per share)	18.61
Weighted average exercise price, exercisable (in dollars per share)	$ 0
Stock Option Activity, Additional Disclosures
Weighted average remaining contract life, options outstanding	9 years 7 months 6 days
Weighted average remaining contract life, expected to vest	9 years 7 months 6 days
Weighted average remaining contract life, exercisable	0 years
Aggregate intrinsic value, options outstanding	$ 571,900	$ 0
Aggregate intrinsic value, expected to vest	571,900
Aggregate intrinsic value, exercisable	$ 0

Stock-based Compensation - Assu

Stock-based Compensation - Assumptions Used to Calculate Grant Date Fair Value (Details)	3 Months Ended
	Mar. 31, 2022
Share-based Payment Arrangement [Abstract]
Risk-free interest rate	1.70%
Expected term (years)	6 years 3 months
Volatility	30.00%
Dividend yield	0.40%

Stock-based Compensation - Su_2

Stock-based Compensation - Summary of Unvested Restricted Stock Units (Details) - Restricted Stock Units (RSUs)	3 Months Ended
	Mar. 31, 2022$ / sharesshares
Number of Shares Outstanding
Outstanding at beginning of period (in shares) | shares	159,000
Granted (in shares) | shares	7,500
Forfeited (in shares) | shares	(1,667)
Outstanding at end of period (in shares) | shares	164,833
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 11.08
Granted (in dollars per share) | $ / shares	16.53
Forfeited (in dollars per share) | $ / shares	17.90
Outstanding at end of period (in dollars per share) | $ / shares	$ 11.26

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share Reconciliation [Abstract]
Net income attributable to Karat Packaging Inc.	$ 6,667,000	$ 1,780,000
Weighted average number of common shares in issue (in shares)	19,807,584	15,167,000
Basic earnings per share (in dollars per share)	$ 0.34	$ 0.12
Weighted Average Number of Shares Outstanding, Diluted [Abstract]
Net income attributable to Karat Packaging Inc.	$ 6,667,000	$ 1,780,000
Weighted average common shares outstanding, basic (in shares)	19,807,584	15,167,000
Dilutive shares
Stock options and restricted stock units (in shares)	93,000	236,000
Adjusted weighted average number of common shares (in shares)	19,901,384	15,403,000
Diluted earnings per share (in dollars per share)	$ 0.34	$ 0.12
Potentially dilutive shares excluded from diluted earnings per share calculation (in shares)	474,000	236,000

Commitments and Contingencies -

Commitments and Contingencies - Future Minimum Lease Obligations (Details) $ in Thousands	Mar. 31, 2022USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2022 (remainder)	$ 2,304
2023	3,060
2024	1,824
2025	380
2026	374
Thereafter	1,630
Total	$ 9,572

Commitments and Contingencies_2

Commitments and Contingencies - Narrative (Details) - USD ($)	Sep. 09, 2020	Mar. 31, 2022	Mar. 31, 2021
Lessee, Lease, Description [Line Items]
Lease revenue		$ 238,000	$ 246,000
Payments receivable in 2022		538,000
Payments receivable in 2023		611,000
Operating Expense
Lessee, Lease, Description [Line Items]
Monthly lease payment		644,000
Monthly lease payment			708,000
Cost of Sales
Lessee, Lease, Description [Line Items]
Monthly lease payment		$ 260,000
Monthly lease payment			$ 188,000
Global Wells
Lessee, Lease, Description [Line Items]
Term of contract	38 months
Global Wells | Minimum
Lessee, Lease, Description [Line Items]
Monthly lease payment	$ 58,000
Global Wells | Maximum
Lessee, Lease, Description [Line Items]
Monthly lease payment	$ 61,000

Related Party Transactions (Det

Related Party Transactions (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022USD ($)shares	Mar. 31, 2021USD ($)	Sep. 30, 2018convertible_note	Dec. 31, 2021USD ($)shares
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares) | shares	19,809,417			19,804,417
Related party payable	$ 1,260			$ 2,003
Affiliated Entity | Keary Global
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares) | shares	250,004
Number of exercised convertible notes | convertible_note			2
Related party payable	$ 1,260			2,003
Purchases from related party	11,926	$ 5,055
Affiliated Entity | Keary International
Related Party Transaction [Line Items]
Related party payable	1,260			$ 2,003
Purchases from related party	$ 11,926	$ 5,055

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income tax expense	$ 2,677	$ 1,186
Effective tax rate	25.20%	28.00%

COVID-19 (Details)

COVID-19 (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021	Feb. 23, 2018
Unusual or Infrequent Item, or Both [Line Items]
Cash and cash equivalents	$ 6,820,000	$ 6,483,000
Working capital	93,700,000
Line of credit
Unusual or Infrequent Item, or Both [Line Items]
Maximum borrowing	$ 29,800,000		$ 40,000,000

Subsequent Events (Details)

Subsequent Events (Details) $ in Thousands	Apr. 29, 2022USD ($)ft²	Apr. 27, 2022USD ($)ft²	Apr. 06, 2022USD ($)ft²	May 06, 2022USD ($)	Mar. 31, 2022USD ($)	Dec. 31, 2021USD ($)
Subsequent Event [Line Items]
Line of credit					$ 10,200	$ 0
Subsequent Event | Industry, California
Subsequent Event [Line Items]
Area of real estate property | ft²		70,000
Term of contract		60 months
Subsequent Event | Kappolei, Hawaii
Subsequent Event [Line Items]
Area of real estate property | ft²	23,000
Term of contract	60 months
Subsequent Event | Line of credit
Subsequent Event [Line Items]
Repayments of long-term lines of credit				$ 2,000
Proceeds from long-term lines of credit				4,300
Line of credit				$ 12,500
Subsequent Event | Minimum | Industry, California
Subsequent Event [Line Items]
Monthly base rent payments		$ 137
Subsequent Event | Minimum | Kappolei, Hawaii
Subsequent Event [Line Items]
Monthly base rent payments	$ 33
Subsequent Event | Maximum | Industry, California
Subsequent Event [Line Items]
Monthly base rent payments		$ 160
Subsequent Event | Maximum | Kappolei, Hawaii
Subsequent Event [Line Items]
Monthly base rent payments	$ 38
Subsequent Event | Green Earth Technology
Subsequent Event [Line Items]
Area of real estate property | ft²			180,000
Noncontrolling interest in joint ventures			$ 6,000
Subsequent Event | Green Earth Technology | Lollicup Franchising, LLC
Subsequent Event [Line Items]
Noncontrolling interest, ownership percentage by noncontrolling owners			49.00%
Subsequent Event | Green Earth Technology | Tranche One
Subsequent Event [Line Items]
Noncontrolling interest in joint ventures			$ 2,000
Subsequent Event | Green Earth Technology | Tranche Two
Subsequent Event [Line Items]
Noncontrolling interest in joint ventures			2,000
Subsequent Event | Green Earth Technology | Tranche Three
Subsequent Event [Line Items]
Noncontrolling interest in joint ventures			$ 2,000
Subsequent Event | Happiness Moon
Subsequent Event [Line Items]
Noncontrolling interest in joint ventures, investment return guarantee			20.00%
Additional annual amount upon notice of termination, percentage			5.00%