Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 25, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K/A | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 Public Float | $ 102,247,296 | ||
Entity Common Stock, Shares Outstanding | 19,809,424 | ||
Documents Incorporated by Reference | This Amendment No. 1 on Form 10-K/A (the “Amendment”) is being filed to correct a typographical error relating to the date of the report by BDO USA, LLP, our Independent Registered Public Accounting Firm, that had appeared on page 36 of the original Form 10-K of Karat Packaging Inc. for the fiscal year ended December 31, 2021, as filed on March 31, 2022 (the "2021 Form 10-K"). The correct date of the report is March 31, 2022, and a copy of the report, with the corrected date, is included with this Amendment. The corrected report replaces in its entirety the report originally included on page 36 under “Part II- Item 8. Financial Statements and Supplementary Data.” In addition, the Company is including in this Amendment currently dated certifications from its Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, attached hereto as Exhibits 31.1 and 31.2 and Exhibits 32.1 and 32.2, respectively. The exhibits listed in Part IV-Item 15. Exhibits and Financial Statement Schedules are filed herewith in accordance with Rule 12b-15 of the Exchange Act. Except as expressly set forth above, this Amendment does not, and does not purport to, amend, update or restate the information in any other item of the 2021 Form 10-K or reflect any events that have occurred after the filing of the 2021 Form 10-K. | ||
Entity Central Index Key | 0001758021 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Firm ID | 243 |
Auditor Name | BDO USA, LLP |
Auditor Location | Los Angeles, California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents (including $1.2 million and $0.1 million associated with variable interest entity at December 31, 2021 and 2020, respectively) | $ 6,483,000 | $ 448,000 |
Accounts receivable, net of allowance for doubtful accounts of $0.3 million at both December 31, 2021 and 2020 | 32,776,000 | 23,838,000 |
Inventories | 58,472,000 | 48,961,000 |
Prepaid expenses and other current assets (including $0.1 million associated with variable interest entity at both December 31, 2021 and 2020) | 5,141,000 | 6,530,000 |
Total current assets | 102,872,000 | 79,777,000 |
Property and equipment, net (including $46.6 million and $47.8 million associated with variable interest entity at December 31, 2021 and 2020, respectively) | 93,475,000 | 95,533,000 |
Deposits | 6,885,000 | 2,456,000 |
Goodwill | 3,510,000 | 3,113,000 |
Intangible assets, net | 380,000 | 0 |
Deferred tax asset | 0 | 64,000 |
Other assets (including $0.1 million associated with variable interest entity at both December 31, 2021 and 2020) | 477,000 | 161,000 |
Total assets | 207,599,000 | 181,104,000 |
Current liabilities | ||
Accounts payable (including $0.1 million and $0.6 million associated with variable interest entity at December 31, 2021 and 2020, respectively) | 18,470,000 | 20,069,000 |
Accrued expenses (including $0.1 million associated with variable interest entity at both December 31, 2021 and 2020) | 7,813,000 | 4,959,000 |
Related party payable | 2,003,000 | 5,038,000 |
Credit cards payable | 0 | 794,000 |
Income taxes payable | 85,000 | 41,000 |
Customer deposits (including $0.1 million and $0.0 million associated with variable interest entity at December 31, 2021 and 2020, respectively) | 1,215,000 | 551,000 |
Capital leases, current portion | 0 | 321,000 |
Debt, current portion (including $1.2 million and $0.7 million associated with variable interest entity at December 31, 2021 and 2020, respectively) | 1,178,000 | 11,364,000 |
Total current liabilities | 30,764,000 | 43,137,000 |
Deferred tax liability | 5,634,000 | 6,181,000 |
Line of credit | 0 | 33,169,000 |
Long-term debt, net of current portion and debt discount of $0.2 million and $0.1 million at December 31, 2021 and December 31, 2020, respectively (including $35.3 million and $36.7 million associated with variable interest entity at December 31, 2021 and 2020, respectively, and debt discount of $0.2 million and $0.1 million associated with variable interest entity at December 31, 2021 and 2020, respectively) | 35,339,000 | 53,410,000 |
Capital leases, net of current portion | 0 | 290,000 |
Other liabilities (including $2.6 million and $3.9 million associated with variable interest entity at December 31, 2021 and 2020, respectively) | 3,837,000 | 5,049,000 |
Total liabilities | 75,574,000 | 141,236,000 |
Commitments and Contingencies (Note 13) | ||
Karat Packaging Inc. stockholders’ equity | ||
Common stock, $0.001 par value, 100,000,000 shares authorized, 19,827,417 and 19,804,417 shares issued and outstanding, respectively, as of December 31, 2021 and 15,190,000 and 15,167,000 shares issued and outstanding, respectively, as of December 31, 2020 | 20,000 | 15,000 |
Additional paid in capital | 83,694,000 | 13,981,000 |
Treasury stock, $0.001 par value, 23,000 shares as of both December 31, 2021 and 2020 | (248,000) | (248,000) |
Retained earnings | 39,434,000 | 18,656,000 |
Total Karat Packaging Inc. stockholders’ equity | 122,900,000 | 32,404,000 |
Noncontrolling interest | 9,125,000 | 7,464,000 |
Total stockholders’ equity | 132,025,000 | 39,868,000 |
Total liabilities and stockholders’ equity | $ 207,599,000 | $ 181,104,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Cash and cash equivalents | $ 6,483 | $ 448 |
Allowance for doubtful accounts | 300 | 300 |
Prepaid expenses and other current assets | 5,141 | 6,530 |
Property and equipment, net | 93,475 | 95,533 |
Other assets | 477 | 161 |
Accounts payable | 18,470 | 20,069 |
Accrued expenses | 7,813 | 4,959 |
Customer deposits | 1,215 | 551 |
Long-term debt, current portion | 1,178 | 11,364 |
Debt issuance costs, net | 200 | 102 |
Other liabilities | $ 3,837 | $ 5,049 |
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) | 19,827,417 | 15,190,000 |
Common stock, shares outstanding (in shares) | 19,804,417 | 15,167,000 |
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 | $ 1,200 | $ 100 |
Prepaid expenses and other current assets | 100 | 100 |
Property and equipment, net | 46,600 | 47,800 |
Other assets | 100 | 100 |
Accounts payable | 100 | 600 |
Accrued expenses | 100 | 100 |
Customer deposits | 100 | 0 |
Long-term debt, current portion | 1,200 | 700 |
Debt issuance costs, net | 35,300 | 36,700 |
Debt discount | (200) | (100) |
Other liabilities | $ 2,600 | $ 3,900 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Net sales | $ 364,244,000 | $ 295,518,000 |
Cost of goods sold | 256,417,000 | 206,393,000 |
Gross profit | 107,827,000 | 89,125,000 |
Operating expenses: | ||
Selling expenses | 32,261,000 | 22,186,000 |
General and administrative expenses (including $2.5 million and $2.0 million associated with variable interest entity for the years ended December 31, 2021 and 2020, respectively) | 52,421,000 | 39,242,000 |
Total operating expenses | 84,682,000 | 61,428,000 |
Operating income | 23,145,000 | 27,697,000 |
Other income (expenses) | ||
Rental income (including $0.9 million and $0.3 million associated with variable interest entity for the years ended December 31, 2021 and 2020, respectively) | 931,000 | 322,000 |
Other income | 259,000 | 72,000 |
Loss on foreign currency transactions | (412,000) | (688,000) |
Gain on sale of asset | 0 | 16,000 |
Interest expense, net (including $0.5 million and $2.9 million associated with variable interest entity for the years ended December 31, 2021 and 2020, respectively) | (1,395,000) | (5,492,000) |
Gain on forgiveness of debt | 5,000,000 | 0 |
Total other income (expenses) | 4,383,000 | (5,770,000) |
Income before provision for income taxes | 27,528,000 | 21,927,000 |
Provision for income taxes | 5,089,000 | 5,259,000 |
Net income | 22,439,000 | 16,668,000 |
Net income (loss) attributable to noncontrolling interest | 1,661,000 | (849,000) |
Net income attributable to Karat Packaging Inc. | $ 20,778,000 | $ 17,517,000 |
Basic and diluted earnings per share: | ||
Basic (in dollars per share) | $ 1.13 | $ 1.15 |
Diluted (in dollars per share) | $ 1.12 | $ 1.13 |
Weighted average common shares outstanding, basic (in shares) | 18,409,243 | 15,176,809 |
Weighted average common shares outstanding, diluted (in shares) | 18,566,260 | 15,447,809 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
General and administrative expenses | $ 52,421 | $ 39,242 |
Rental income | 931 | 322 |
Interest expense | 1,395 | 5,492 |
VIE, Primary Beneficiary | ||
General and administrative expenses | 2,500 | 2,000 |
Rental income | 900 | 300 |
Interest expense | $ (500) | $ (2,900) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) | 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, 2019 | 15,190,000 | 0 | |||||
Balance at the beginning of period at Dec. 31, 2019 | $ 24,054,000 | $ 15,741,000 | $ 15,000 | $ 0 | $ 13,981,000 | $ 1,745,000 | $ 8,313,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Treasury stock purchases (in shares) | (23,000) | ||||||
Treasury stock purchases | (248,000) | (248,000) | $ (248,000) | ||||
Dividends paid to stockholders | (606,000) | (606,000) | (606,000) | ||||
Net income (loss) | $ 16,668,000 | 17,517,000 | 17,517,000 | (849,000) | |||
Balance at the end of period (in shares) at Dec. 31, 2020 | 15,167,000 | 15,190,000 | 23,000 | ||||
Balance at the end of period at Dec. 31, 2020 | $ 39,868,000 | 32,404,000 | $ 15,000 | $ (248,000) | 13,981,000 | 18,656,000 | 7,464,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Dividends paid to stockholders | 0 | ||||||
Issuance of common stock in connection with our initial public offering, net of issuance costs (in shares) | 4,542,500 | ||||||
Issuance of common stock in connection with our initial public offering, net of issuance costs | 67,592,000 | 67,592,000 | $ 5,000 | 67,587,000 | |||
Issuance of common stock upon vesting of restricted stock units (in shares) | 84,917 | ||||||
Stock-based compensation | $ 2,026,000 | 2,026,000 | 2,026,000 | ||||
Exercise of stock options (in shares) | 10,000 | 10,000 | |||||
Exercise of stock options | $ 100,000 | 100,000 | 100,000 | ||||
Net income (loss) | $ 22,439,000 | 20,778,000 | 20,778,000 | 1,661,000 | |||
Balance at the end of period (in shares) at Dec. 31, 2021 | 19,804,417 | 19,827,417 | (23,000) | ||||
Balance at the end of period at Dec. 31, 2021 | $ 132,025,000 | $ 122,900,000 | $ 20,000 | $ (248,000) | $ 83,694,000 | $ 39,434,000 | $ 9,125,000 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends paid to stockholders (in dollars per share) | $ 0.04 | |
Net of issuance costs | $ 5,088 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | ||
Net income | $ 22,439 | $ 16,668 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 10,044 | 8,569 |
Provision for bad debt | 0 | 149 |
Reserve for inventory obsolescence | 68 | 321 |
Gain on sale of asset | 0 | (16) |
Change in fair value of interest rate swap | (1,512) | 1,566 |
Amortization of loan fees | 18 | 12 |
Deferred income taxes | (483) | 3,938 |
Stock-based compensation | 2,026 | 0 |
Gain on forgiveness of debt | (5,000) | 0 |
(Increase) decrease in operating assets | ||
Accounts receivable | (8,938) | (2,864) |
Inventories | (9,426) | (13,833) |
Prepaid expenses and other current assets | 1,389 | (3,445) |
Due from affiliated companies | 0 | (840) |
Deposits | (64) | 2,432 |
Other assets | (316) | (72) |
Increase (decrease) in operating liabilities | ||
Accounts payable | (1,599) | 1,001 |
Accrued expenses | 2,854 | 1,123 |
Related party payable | (3,035) | (72) |
Credit cards payable | (794) | (280) |
Income taxes payable | 44 | 15 |
Customer deposits | 664 | (125) |
Other liabilities | 300 | 300 |
Net cash provided by operating activities | 8,679 | 14,547 |
Cash flows from investing activities | ||
Purchases of property and equipment | (4,175) | (29,536) |
Proceeds on disposal of property and equipment | 0 | 24 |
Deposits paid for property and equipment | (8,206) | (6,946) |
Effect on initial consolidation of Lollicup Franchising Inc, net of cash acquired | 0 | (893) |
Acquisition of Pacific Cup, Inc., net of cash acquired | (900) | 0 |
Net cash used in investing activities | (13,281) | (37,351) |
Cash flows from financing activities | ||
Proceeds from line of credit | 1,470 | 6,490 |
Payments on line of credit | (34,639) | 0 |
Proceeds from long-term debt | 15,997 | 24,540 |
Payments on long-term debt | (39,272) | (7,364) |
Proceeds from issuance of common stock in connection with initial public offering, net of issuance costs | 67,592 | 0 |
Proceeds from exercise of stock options | 100 | 0 |
Dividends paid to shareholders | 0 | (606) |
Payments on capital lease obligations | (611) | (362) |
Treasury stock acquired | 0 | (248) |
Net cash provided by financing activities | 10,637 | 22,450 |
Net increase (decrease) in cash and cash equivalents | 6,035 | (354) |
Cash and cash equivalents | ||
Beginning of year | 448 | 802 |
End of year | 6,483 | 448 |
Supplemental disclosures of non-cash investing and financing activities: | ||
Capital expenditures funded by capital lease borrowings | 0 | 23 |
Transfers from deposit to property and equipment | 4,981 | 15,275 |
Acquisition price of Pacific Cup, Inc. included within deposits | 100 | 0 |
Gain on forgiveness of debt | 5,000 | 0 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income tax | 4,836 | 2,495 |
Cash paid for interest | $ 2,895 | $ 3,887 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2021 | |
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 2020, the Company began to supply personal protective equipment related products to its customers such as face shields and face masks. In addition to manufacturing and distribution, the Company offers customized solutions to the customers, including new product development, design, printing, and logistics services. The Company also supplies products to smaller chains and businesses including boutique coffeehouses, bubble tea cafes, pizza parlors and frozen yogurt shops. The Company is also beginning to supply products to national and regional supermarkets as well as convenience stores. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation: The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). Principles of Consolidation: The consolidated financial statements include the accounts of the Karat Packaging and its wholly owned and controlled operating subsidiaries Lollicup and Lollicup Franchising, LLC (“Lollicup Franchising”) (effective September 1, 2020, refer to Note 3) and Global Wells Investment Group LLC (“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. The Company became the primary beneficiary of Global Wells on March 23, 2018 upon execution of an operating lease agreement allowing the Company to lease Global Wells’ facility. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income (loss) attributable to noncontrolling interests is disclosed in the consolidated statements of income. Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with 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 consolidated financial statements. Estimates that are significant to the consolidated financial statements include stock-based compensation, allowance for doubtful accounts and reserve for slow-moving and obsolete inventory. Reporting Segments: 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 personal protective equipment related products such as face shields and face masks. The Company’s long-lived assets are all located in the United States, and its revenues are all generated in the United States. Earnings per share: Basic earnings per common share is calculated by dividing net income attributable to Karat Packaging, Inc 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 December 31, 2021 and 2020, cash and cash equivalents were comprised of cash held in money markets, 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 to 10 years Leasehold Improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building 28 to 40 years Property held under capital leases 3 to 5 years Computer hardware and software 3 years 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 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 years ended December 31, 2021 and 2020, 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 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. During the years ended December 31, 2021 and 2020, the Company determined no impairments have occurred. The following table summarizes the activity in the Company's goodwill from December 31, 2019 to December 31, 2021: (in thousands) Balance at December 31, 2019 $3,113 Goodwill acquired — Balance at December 31, 2020 $3,113 Goodwill acquired 397 Balance at December 31, 2021 $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 December 31, 2021, the Company and Global Wells received cumulative grants of $1,200,000 and $1,302,000, respectively. As of December 31, 2020, the Company and Global Wells received cumulative grants of $900,000 and $1,302,000, respectively. These grants are reported as deferred income within other liabilities in the accompanying consolidated balance sheets as there are conditions attached to the grants that the Company and Global Wells have not met. These conditions include requiring its 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 statement of financial position 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 statements 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 was 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 consolidated statements of income. Variable Interest Entities: The Company has a variable interest in two entities, Global Wells and Lollicup Franchising, LLC (prior to September 1, 2020, the acquisition date, see Note 3). 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 new 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 Topic 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. Global Wells has a term loan with a financial institution, which provides for advances up to $21,580,000 and expires May 2029 (the “2029 Term Loan ” ). The 2029 Term Loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and certain of its shareholders. Additionally, in June 2020, Global Wells entered into a $16,540,000 term loan with a financial institution that matured September 2021 to purchase land and building in Branchburg, New Jersey (the “2021 Term Loan ” ). The 2021 Term Loan was collateralized by substantially all of the Company’s and Global Well’s assets and was guaranteed by the Company and certain of its shareholders. In September 2021, Global Wells refinanced the 2021 Term Loan by entering into a $23,000,000 term loan that matures September 30, 2026 (the “2026 Term Loan ” ). The 2026 Term Loan provides an initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000. The 2026 Term Loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s shareholders. As of December 31, 2021 and 2020, total loan guaranteed by the Company related to Global Wells amounted to $36,517,000 and $37,491,000, respectively. The following financial information includes assets and liabilities of Global Wells and are included in the accompanying consolidated balance sheets, except for those that eliminate upon consolidation: December 31, 2021 December 31, 2020 (in thousands) Cash $ 1,163 $ 81 Accounts receivable 384 343 Prepaid expenses and other current assets 63 98 Property and equipment, net 46,612 47,826 Other assets 4,762 5,260 Total assets 52,984 53,608 Accounts payable $ 497 $ 564 Accrued expenses 68 128 Income tax payable 9 — Customer deposits 88 — Due to Lollicup USA Inc. 2,620 2,990 Long-term debt, current portion 1,178 694 Long-term debt, net of current portion 35,339 36,697 Other liabilities 2,636 3,906 Total liabilities $ 42,435 $ 44,979 Lollicup Franchising, LLC Prior to the acquisition on September 1, 2020 (see Note 3 — Acquisitions ), the Company’s two major shareholders shared common ownership with Lollicup Franchising, LLC (“Lollicup Franchising”). Lollicup Franchising owns and operates two stores and also licenses its name to third party store owners and operators. The Company sells inventory to Lollicup Franchising and to the licensed third-party stores. In connection with the sales to third-party stores, the Company had an incentive program with Lollicup Franchising where a certain percentage of the sales to the third-party stores were paid to Lollicup Franchising prior the acquisition on September 1, 2020. The Company incurred incentive program expenses of $79,000 for the period from January 1, 2020 through August 31, 2020, which was reported as a contra to net sales in the accompanying consolidated statement of income. The Company determined that the Company held a variable interest in Lollicup Franchising, however, it was determined that the Company was not the primary beneficiary. The Company did not have any explicit arrangements and implicit variable interest where the Company was required to provide financial support to Lollicup Franchising. The Company determined that the maximum exposure to loss as a result of its involvement with Lollicup Franchising is zero. Revenue Recognition: The Company generates revenues from sale of products to customers that include national distributors, fast food restaurants with multiple locations, 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 years ended December 31, 2021 and 2020, net sales disaggregated by customer type consist of the amounts shown below. Year Ended December 31, 2021 2020 (in thousands) National and regional chains $ 86,017 $ 67,875 Distributors 199,902 157,164 Online 50,271 33,194 Retail 28,054 37,285 $ 364,244 $ 295,518 • 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 national 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 our manufacturing facility to the customers. • National and regional chains revenue: National and regional chains revenue is derived from 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 our 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 our 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 online 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 our 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 or services 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 primarily of rebates and other sales incentives, consideration payable to customers for cooperative advertising and other program incentives, and sales return. As of December 31, 2021 and 2020, the contract liabilities were not considered 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 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 consolidated statements of income for the years ended December 31, 2021 and 2020 were $28,525,000 and $17,572,000, 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 the line item general and administrative expenses in the consolidated statements of income were $2,488,000 and $1,516,000 for the years ended December 31, 2021 and 2020, 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 consolidated statements of income. Accrued interest and penalties are included on the related tax liability in the consolidated balance sheets. The Company had no uncertain tax positions as of December 31, 2021 and 2020. 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 years ended December 31, 2021 and 2020, purchases from the following vendor makes up greater than 10 percent of total purchases: Year Ended December 31, 2021 2020 Keary Global Ltd. (“Keary Global”) and its affiliate, Keary International, Ltd. – related parties 12 % 11 % Amounts due to the following vendors at December 31, 2021 and 2020, respectively, that exceed 10 percent of total accounts payable are as follows: December 31, 2021 December 31, 2020 Keary Global and its affiliate, Keary International – related parties 10 % 18 % Taizhou Fuling Plastics Co.,Ltd * 11 % Fuling Technology Co., Ltd. 21 % * Wen Ho Industrial Co., Ltd 11 % * * Amounts payable represented less than 10% of total accounts payable. No customer accounted for more than 10 percent of sales or accounts receivable for the years ended December 31, 2021 and 2020. 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 December 31, 2021 and 2020, the Company has financial instruments classified within the fair value hierarchy, which consist of the following: • Interest rate swaps that meet the definition of a derivative, classified as Level 2 within the fair value hierarchy, and reported as an asset or liability on the consolidated balance sheets depending on its fair value. The fair value of interest rate swaps 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 consolidated balance sheets. The following table summarize 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: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 2,000 $ — $ — Interest rate swap — (1,334) — Fair value, December 31, 2021 $ 2,000 $ (1,334) $ — The following table summarize the Company’s fair value measurements by level at December 31, 2020 for the assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 448 $ — $ — Interest rate swaps — (2,847) — Fair value, December 31, 2020 $ 448 $ (2,847) $ — 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, 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, and accrued and other liabilities approximate fair value because of the short maturity of these instruments. The carrying amounts of long-term debt and line of credit at December 31, 2021 and 2020 approximates fair value because the interest rate approximates the current market interest rate. 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 loss on foreign currency transactions of $412,000 and $688,000 for the years ended December 31, 2021 and 2020, respectively. Stock-Based Compensation: The Company recognizes stock-based compensation expense related to shared-based payment awards, including 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 on the date of grant is estimated 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 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 determined 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 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2021 | |
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 consolidated statement of income for the reporting period, which is not significant from March 1, 2021 through December 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 Lollicup Franchising, LLC On September 1, 2020, Lollicup entered into a membership interest purchase agreement (the Agreement) with Lollicup Franchising, LLC (Lollicup Franchising), a provider of specialty tea and coffee to consumers through operating retail stores within the United States. Pursuant to the Agreement, Lollicup paid cash consideration of $900,000 for the 100% membership interest of Lollicup Franchising. Prior to closing of the Agreement, the majority shareholders of the Company were also the majority shareholders of Lollicup Franchising. Acquisition-related costs were insignificant. The goodwill recognized in this transaction was derived from expected benefits from new management strategy and cost synergies. 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 assets acquired and liabilities assumed as a result of this acquisition: (in thousands) Cash $ 7 Accounts receivable 103 Inventories 21 Property and equipment 257 Goodwill 3,113 Accounts payable (42) Accrued expenses (104) Related party payable (2,455) Total assets acquired and liabilities assumed $ 900 Less: cash acquired (7) Total purchase consideration, net of cash acquired $ 893 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following: December 31, 2021 December 31, 2020 (in thousands) Raw materials $ 14,075 $ 4,251 Work in progress — 133 Finished goods 45,140 45,252 Subtotal 59,215 49,636 Less inventory reserve (743) (675) Total inventories $ 58,472 $ 48,961 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment December 31, 2021 December 31, 2020 (in thousands) Machinery and equipment $ 60,935 $ 55,528 Leasehold improvements 18,655 17,832 Vehicles 5,384 3,447 Furniture and fixtures 936 851 Building 35,387 34,134 Land 11,907 11,907 Property held under capital leases — 1,607 Computer hardware and software 553 546 133,757 125,852 Less accumulated depreciation and amortization (40,282) (30,319) Total property and equipment, net $ 93,475 $ 95,533 On July 7, 2021, the Company purchased a warehouse building located in Summerville, South Carolina for a purchase price of $1,252,750. The facility commenced operations on September 1, 2021 as an additional distribution facility. |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2021 | |
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 July 9, 2020, the Company amended the Line of Credit to extend the maturity date to May 23, 2022. On October 6, 2021, the Company amended the Loan Agreement again. 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 December 31, 2021, the maximum amount that could be borrowed was $40,000,000. The Company had $0 and $33,169,000 of borrowings outstanding under the Line of Credit as of December 31, 2021 and 2020, respectively. The amount issued under the standby letter of credit was $0 and $900,000 as of December 31, 2021 and 2020, respectively. As of both December 31, 2021 and 2020, the Company was in compliance with the financial covenants under the Line of Credit. Long-term debt consists of the following: December 31, 2021 December 31, 2020 (in thousands) A promissory note that allowed for advances up to $5,000,000 through March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,815,000 was converted in March 2018, set to mature in March 2023. Principal and interest payment of $91,000 due monthly at the fixed rate of 4.98%. The loan was secured by certain machinery and equipment. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. The loan was paid off in 2021. $ — $ 2,322 An equipment loan with a draw down period ending August 28, 2019 for up to $10,000,000, at which point the entire principal outstanding was due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, set to mature in July 2024. Principal and interest payment of $193,000 due monthly starting August 2019 at the fixed rate of 5.75%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. — 7,450 A $2,130,000 term loan that expired April 30, 2021. Principal and interest payment of $56,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate. The loan was secured by the company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. — 212 A $935,000 term loan that expired December 31, 2021. Principal and interest payment of $20,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued at a fixed rate of 3.50%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. — 234 Subtotal, continue on following page $ — $ 10,218 December 31, 2021 December 31, 2020 (in thousands) Subtotal from previous page $ — $ 10,218 An equipment loan with a draw down period ended May 31, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, set to mature on May 31, 2024. The first principal and interest payment commenced in July 2019. Interest accrued based on prime rate. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain fixed financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. The loan was paid off in 2021. — 7,000 A $3,000,000 term loan that was set to expire December 2024. Interest only payment due for the first six months. Principal and interest payment of $58,000 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service charge ratio, and debt to EBITDA rolling ratio. The loan was paid off in 2021. — 2,444 A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.00% at December 31, 2021 and 2020) 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 certain of its shareholders. 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. 20,808 21,130 A $3,000,000 term loan that was set to expire June 17, 2025. Principal and interest payment of $55,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate plus margin of 0.25% (3.50% as of December 31, 2020). The loan was secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. — 2,723 A $5,000,000 Paycheck Protection Program loan that was set to expire April 16, 2022. Interest accrued at 1.0%. The loan was forgiven in June 2021. — 5,000 Subtotal, continue on following page $ 20,808 $ 48,515 KARAT PACKAGING INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 December 31, 2020 (in thousands) Subtotal from previous page $ 20,808 $ 48,515 A $16,540,000 term loan that was set to mature June 30, 2025. Interest accrued at 4.5% fixed and principal payments ranging from $31,000 to $0 along with interest 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 certain of its shareholders. This loan was refinanced in September 2021 (see below). — 16,361 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. 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 shareholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. 15,909 — Long-term debt 36,717 64,876 Less: unamortized loan fees (200) (102) Less: current portion (1,178) (11,364) Long-term debt, net of current portion $ 35,339 $ 53,410 At December 31, 2021, future maturities are: (in thousands) 2022 $ 1,178 2023 1,224 2024 1,276 2025 1,333 2026 12,794 Thereafter 18,912 $ 36,717 The Company was in compliance with all its financial covenants as of both December 31, 2021 and 2020. On April 16, 2020, the Company received loan proceeds in the amount of $5,000,000 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are potentially forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1% with a deferral of payments for the first six months. In October 2020, the PPP loan was amended to extend the deferral of payments until September 2021. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support ongoing operations. This certification further required the Company to take into account its current business activity and ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the potential forgiveness of these PPP loan, are dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan is based on its future adherence to the forgiveness criteria. If, despite the good faith belief that given the Company’s circumstances all eligibility requirements for the PPP loan were satisfied, it is later determined that the Company is ineligible to receive the PPP loan, it may be required to repay the PPP loan in its entirety and/or be subject to additional penalties. The Company applied for the forgiveness of the PPP loan, and on June 10, 2021, the Company was granted loan forgiveness, in whole, by meeting the conditions for use of loan proceeds. The loan forgiveness of $5.0 million was recorded as gain on forgiveness of debt in the accompanying consolidated statements of income. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses The following table summarizes information related to accrued expense liabilities: December 31, 2021 December 31, 2020 (in thousands) Accrued expenses $ 1,991 $ 1,796 Accrued interest 68 199 Accrued payroll 1,456 1,253 Accrued vacation and sick pay 416 496 Accrued shipping expenses 2,868 433 Accrued professional services fees 642 481 Deferred rent liability 372 301 Total accrued expenses $ 7,813 $ 4,959 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2021 | |
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 July 9, 2020, the Company amended the Line of Credit to extend the maturity date to May 23, 2022. On October 6, 2021, the Company amended the Loan Agreement again. 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 December 31, 2021, the maximum amount that could be borrowed was $40,000,000. The Company had $0 and $33,169,000 of borrowings outstanding under the Line of Credit as of December 31, 2021 and 2020, respectively. The amount issued under the standby letter of credit was $0 and $900,000 as of December 31, 2021 and 2020, respectively. As of both December 31, 2021 and 2020, the Company was in compliance with the financial covenants under the Line of Credit. Long-term debt consists of the following: December 31, 2021 December 31, 2020 (in thousands) A promissory note that allowed for advances up to $5,000,000 through March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,815,000 was converted in March 2018, set to mature in March 2023. Principal and interest payment of $91,000 due monthly at the fixed rate of 4.98%. The loan was secured by certain machinery and equipment. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. The loan was paid off in 2021. $ — $ 2,322 An equipment loan with a draw down period ending August 28, 2019 for up to $10,000,000, at which point the entire principal outstanding was due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, set to mature in July 2024. Principal and interest payment of $193,000 due monthly starting August 2019 at the fixed rate of 5.75%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. — 7,450 A $2,130,000 term loan that expired April 30, 2021. Principal and interest payment of $56,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate. The loan was secured by the company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. — 212 A $935,000 term loan that expired December 31, 2021. Principal and interest payment of $20,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued at a fixed rate of 3.50%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. — 234 Subtotal, continue on following page $ — $ 10,218 December 31, 2021 December 31, 2020 (in thousands) Subtotal from previous page $ — $ 10,218 An equipment loan with a draw down period ended May 31, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, set to mature on May 31, 2024. The first principal and interest payment commenced in July 2019. Interest accrued based on prime rate. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain fixed financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. The loan was paid off in 2021. — 7,000 A $3,000,000 term loan that was set to expire December 2024. Interest only payment due for the first six months. Principal and interest payment of $58,000 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service charge ratio, and debt to EBITDA rolling ratio. The loan was paid off in 2021. — 2,444 A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.00% at December 31, 2021 and 2020) 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 certain of its shareholders. 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. 20,808 21,130 A $3,000,000 term loan that was set to expire June 17, 2025. Principal and interest payment of $55,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate plus margin of 0.25% (3.50% as of December 31, 2020). The loan was secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. — 2,723 A $5,000,000 Paycheck Protection Program loan that was set to expire April 16, 2022. Interest accrued at 1.0%. The loan was forgiven in June 2021. — 5,000 Subtotal, continue on following page $ 20,808 $ 48,515 KARAT PACKAGING INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 December 31, 2020 (in thousands) Subtotal from previous page $ 20,808 $ 48,515 A $16,540,000 term loan that was set to mature June 30, 2025. Interest accrued at 4.5% fixed and principal payments ranging from $31,000 to $0 along with interest 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 certain of its shareholders. This loan was refinanced in September 2021 (see below). — 16,361 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. 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 shareholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. 15,909 — Long-term debt 36,717 64,876 Less: unamortized loan fees (200) (102) Less: current portion (1,178) (11,364) Long-term debt, net of current portion $ 35,339 $ 53,410 At December 31, 2021, future maturities are: (in thousands) 2022 $ 1,178 2023 1,224 2024 1,276 2025 1,333 2026 12,794 Thereafter 18,912 $ 36,717 The Company was in compliance with all its financial covenants as of both December 31, 2021 and 2020. On April 16, 2020, the Company received loan proceeds in the amount of $5,000,000 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are potentially forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1% with a deferral of payments for the first six months. In October 2020, the PPP loan was amended to extend the deferral of payments until September 2021. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support ongoing operations. This certification further required the Company to take into account its current business activity and ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the potential forgiveness of these PPP loan, are dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan is based on its future adherence to the forgiveness criteria. If, despite the good faith belief that given the Company’s circumstances all eligibility requirements for the PPP loan were satisfied, it is later determined that the Company is ineligible to receive the PPP loan, it may be required to repay the PPP loan in its entirety and/or be subject to additional penalties. The Company applied for the forgiveness of the PPP loan, and on June 10, 2021, the Company was granted loan forgiveness, in whole, by meeting the conditions for use of loan proceeds. The loan forgiveness of $5.0 million was recorded as gain on forgiveness of debt in the accompanying consolidated statements of income. |
Interest Rate Swaps
Interest Rate Swaps | 12 Months Ended |
Dec. 31, 2021 | |
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 Jun 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 December 31, 2021 and 2020, the fair value of the interest rate swap was $1,334,000 and $2,604,000, respectively, which is reported as other liabilities in the accompanying consolidated balance sheets. For the years ended December 31, 2021 and 2020, Global Wells recognized approximately $1,270,000 as interest income and $1,454,000 as interest expense, respectively, related to change in fair value of this interest rate swap. In June 2019, the Company also entered into a five-year floating-to-fixed interest-rate swap, with an effective date of June 03, 2019, that was based on the prime rate versus 5.19% fixed rate. The notional was $10,000,000 as of June 30, 2019. The payment dates were the fifth day of the month beginning July 5, 2019 to the termination date of May 31, 2024. In April 2021, the Company terminated the interest rate swap with a notional amount of $10,000,000, recognizing $196,200 in swap termination fee, which was included in the interest expense, net in the consolidated statements of income for the year ended December 31, 2021. For the years ended December 31, 2021 and 2020, the Company recognized approximately $47,000 as interest income and $112,000 as interest expense, respectively, related to change in fair value of this interest rate swap. As of December 31, 2020, the fair value of the interest rate swap was $243,000, which is reported as other liabilities in the accompanying consolidated balance sheet. |
Obligations Under Capital Lease
Obligations Under Capital Leases | 12 Months Ended |
Dec. 31, 2021 | |
Assets and Liabilities, Lessee [Abstract] | |
Obligations Under Capital Leases | Obligations Under Capital Leases The Company leased certain warehouse vehicles under capital leases that were set to expire in various years through 2024. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or fair value of the assets. The assets are depreciated over their estimated useful lives. Depreciation of property under capital leases is included in depreciation and amortization expense within the general and administrative operating expenses. Interest rates on capitalized leases varied from 3.55% to 6.50% and were imputed based on the lower of the Company’s incremental borrowing rate at the inception of each lease or the lessor’s implicit rate of return. The capital leases provided for bargain purchase options and were guaranteed by the stockholders of the Company. In October 2021, the Company paid off all its existing capital lease obligations with the remaining balance of $0.3 million. Following is a summary of property held under capital leases: December 31, 2021 December 31, 2020 (in thousands) Warehouse vehicles $ — $ 1,607 Less: accumulated depreciation — (1,026) Total property held under capital leases, net $ — $ 581 |
Stockholder_s Equity
Stockholder’s Equity | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Stockholder’s Equity | Stockholder’s EquityThe Company’s Certificate of Incorporation authorize both common and preferred stock. The total number of shares of all classes of stock authorized for issuance is 110,000,000 shares, par value of $0.001, with 10,000,000 designed as preferred stock and 100,000,000 designated as common stock. Each holder of common stock and preferred stock shall be entitled to one vote per share held. In June 2020, Company declared a dividend of $0.04 per share of the Company's common stock. The Company recorded $606,000 of cash dividends as of December 31, 2020. The Company did not declare any dividend for the year ended December 31, 2021. In March 2020, the Company re-acquired 10,000 of its own shares from an existing shareholder. The total amount paid to acquire the shares was $107,000 and has been deducted from shareholders’ equity. In July 2020, the Company re-acquired 13,000 of its own shares from an existing shareholder. The total amount paid to acquire the shares was $141,000 and has been deducted from shareholders’ equity. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
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 has been 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 December 31, 2021, a total of 1,311,083 shares of common stock was available for further award grants under the Plan. Stock Options A summary of the Company’s stock option activity under the Plan for the year ended December 31, 2021 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contract Life (In Years) Aggregate Intrinsic Value Outstanding at December 31, 2020 15,000 $ 10.00 8 years $ — Granted 430,000 18.86 Exercised (10,000) 10.00 $ 116,000 Outstanding at December 31, 2021 435,000 $ 18.76 9.7 years $ 632,000 Expected to vest at December 31, 2021 435,000 $ 18.76 9.7 years $ 632,000 Exercisable at December 31, 2021 5,000 $ 10.00 7 years $ 51,000 The weighted-average grant date fair-value of the stock options granted for the year ended December 31, 2021 was $5.74 per share. At December 31, 2021, total remaining stock-based compensation cost for unvested stock options was approximately $2,090,000. The cost is expected to be recognized over a weighted-average period of 1.8 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 December 31, 2021, 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 year ended December 31, 2021 were as follows: December 31, 2021 Risk-free interest rate 1.22 % Expected term (years) 6.25 years Volatility 30 % Dividend yield 0.40 % There were no stock options granted for the year ended December 31, 2020. Restricted Stock Units The Company issued restricted stock units to its employees. The following table summarizes the unvested restricted stock units for the period ended December 31, 2021: Number of Shares Outstanding Weighted Average Grant Date Fair Value Unvested at December 31, 2020 256,000 $ 10.00 Granted 40,000 17.98 Vested (84,917) 11.55 Forfeited (52,083) 11.14 Unvested at December 31, 2021 159,000 $ 11.08 The weighted-average grant-date fair value of restricted stock units granted during the years ended December 31, 2021 and 2020 was 17.98 and 10.00 respectively. The total fair value of restricted stock units, as of their respective vesting date, during the years ended December 31, 2021 and 2020 was $1,884,000 and 0, respectively. In September 2021, the Company’s Board of Directors accelerated the vesting of the Company’s restricted stock units, with each tranche of award vesting 6 months earlier than the original vesting date. The acceleration of the restricted stock units vesting was treated as an award modification under ASC 718, resulting in an additional stock-based compensation expense of approximately $719,000 recognized for the year ended December 31, 2021. At December 31, 2021, total remaining stock-based compensation cost for unvested restricted stock units was approximately $1,151,000. The cost is expected to be recognized over a weighted-average period of 1.4 years. For the years ended December 31, 2021 and 2020, the Company recognize d a total of $2,026,000 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 three years for both the restricted stock units and stock options. The Company recognized a net tax benefit of $237,000 and $0 from compensation expense related to stock options and restricted stock units during the year ended December 31, 2021 and 2020, respectively. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2021 | |
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 equity holders of the Company for the year by the weighted average number of common shares outstanding during the period. Year Ended December 31, 2021 2020 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 20,778 $ 17,517 Weighted average shares 18,409 15,177 Basic earnings per share $ 1.13 $ 1.15 (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: Year Ended December 31, 2021 2020 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 20,778 $ 17,517 Weighted average shares 18,409 15,177 Dilutive shares Stock options and restricted stock units 157 271 Total dilutive shares 18,566 15,448 Diluted earnings per share $ 1.12 $ 1.13 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease Commitments The Company and Global Wells lease facilities under various operating leases expiring through 2031. The Company also leases automobiles under various operating leases expiring through 2024. At December 31, 2021, approximate future minimum lease obligations are: (in thousands) 2022 $ 3,055 2023 3,060 2024 1,824 2025 380 2026 374 Thereafter 1,629 $ 10,322 Rent expense for the years ended December 31, 2021 and 2020 were approximately $1,783,000 and $1,212,000, respectively. In September 2020, Global Wells entered into an operating lease with an unrelated party as the landlord. The lease term is for 38 months beginning September 9, 2020 and generates monthly rental payments from $58,000 to $61,000 over the lease term. Rental income for the year ended December 31, 2021 and December 31, 2020 were $931,000 and $322,000, respectively. The expected rental income is $716,000 and $611,000 for the year ended December 31, 2022 and 2023, respectively. Contingencies |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Lollicup Franchising was determined to be a related party by virtue of common ownership from January 1, 2020 to August 31, 2020. The Company acquired all of the membership interest of Lollicup Franchising from the Company’s two primary shareholders for $900,000 in September 2020. Lollicup Franchising is a wholly-owned subsidiary of the Company and is eliminated upon consolidation as of September 2020 (see Note 3). Sales for the period from January 1, 2020 to August 31, 2020 to Lollicup Franchising were not significant. The Company has incurred incentive program expenses of $79,000 for the period from January 1, 2020 to August 31, 2020.Keary Global owns 250,004 shares of the Company's common stock as of December 31, 2021, 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. As of December 31, 2021 and 2020, the Company has accounts payable due to Keary Global and Keary International, of $2,003,000 and $5,038,000, respectively. Purchases for the years ended December 31, 2021 and 2020 from this related party were $37,021,000 and $27,985,000, respectively. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Employee Benefits | Employee Benefits The Company maintains a 401(k) plan for employees who meet specific requirements. The Company matches 100% of the employees’ contributions up to 3% of each employee’s salary, 87.5% of the employees’ contributions up to 4% of each employee’s salary, and 80% of the employees’ contributions up to 5% of each employee’s salary. The Company’s portion of the contributions is expensed as incurred with a total expense of $322,000 and $254,000 for the years ended December 31, 2021 and 2020, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the year ended December 31, 2021 and 2020, respectively, consisted of: Year Ended December 31, 2021 2020 (in thousands) Current Federal $ 4,504 $ 109 State 1,068 1,212 5,572 1,321 Deferred Federal (576) 4,172 State 93 (234) (483) 3,938 Provision for income taxes $ 5,089 $ 5,259 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes. The Company’s deferred tax assets (liabilities), calculated using effective tax rates is as follows: December 31, 2021 December 31, 2020 (in thousands) Deferred tax assets: State taxes $ 257 $ 237 Reserves 537 590 Accruals & deferred expenses 188 132 Tenant improvement allowance 1,216 1,336 R&D credit 44 45 Section 263A 1,196 993 Government grant 311 235 Stock based compensation 267 — Total deferred tax assets 4,016 3,568 Deferred tax liabilities: Fixed assets – depreciation (9,518) (9,613) Investment in Global Wells Investment Group (132) (72) Total deferred tax liabilities (9,650) (9,685) Net deferred tax liability $ (5,634) $ (6,117) Reconciliation of income taxes are as follows from statutory rate of 21% to the effective tax rate for the year ended December 31, 2021 and 2020, respectively: Year Ended December 31, 2021 2020 (in thousands) Income tax computed at the federal statutory rate $ 5,780 $ 4,608 State taxes, net of federal tax benefits 1,055 939 Noncontrolling Interest -Income not subject to tax (349) 178 Government forgiveness of debt (1,050) — Permanent items 201 100 R&D Credit (239) (295) Excess tax benefit from stock based compensation (237) — Other (72) (271) Provision for income taxes $ 5,089 $ 5,259 The Company applies the provision of ASC 740, Income Taxes . Under ASC 740, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. 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. As such, as of December 31, 2021, the Company did not record any valuation allowance. The Company may be audited by the Internal Revenue Service and various state tax authorities. Disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws and regulations. The Company evaluates its exposures associated with the tax filing positions and, while it believes its positions comply with applicable laws, may record liabilities based upon estimates of the ultimate outcome of these matters and the guidance provided in ASC 740. 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 December 31, 2021, and 2020, 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 has no material impact to the income tax provision. 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 incorporated such impacts into its 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 Update
COVID-19 Update | 12 Months Ended |
Dec. 31, 2021 | |
Unusual or Infrequent Items, or Both [Abstract] | |
COVID-19 Update | COVID-19 Update 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. While PPE related products boosted the Company’s net sales by $38.1 million for the year ended December 31, 2020, such sales have declined to approximately $2.7 million, or under 1.0% of net sales for the year ended December 31, 2021. 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 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, On April 16, 2020, the Company received PPE loan proceeds in the amount of $5.0 million. The PPP, established as part of the CARES Act, provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are potentially forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The Company applied for the forgiveness of the PPE loan, and was granted loan forgiveness in whole, by meeting the conditions for use of loan proceeds on June 10, 2021. The Company recorded loan forgiveness of $5.0 million as gain on forgiveness of debt in the accompanying consolidated statement of income. Additionally, the Company successfully completed its initial public offering in April 2021, raising total proceeds of $67.6 million, which strengthened its liquidity and allowed it to repay borrowings under its Line of Credit of $34.6 million and certain term loans totaling $39.3 million during the year ended December 31, 2021. The Company continues to focus on working capital management and the strength of its balance sheet. As of December 31, 2021, the Company had cash and cash equivalents of $6.5 million, and additional availability of $40.0 million under its Line of Credit and $6.9 million under its 2026 Term Loan. 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. The full extent to which COVID-19 impacts the Company's business and financial results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On February 22, 2022, Global Wells exercised its option to draw the additional $6.9 million under its 2026 Term Loan, and immediately repaid $2.1 million to settle its intercompany payable to Lollicup with the proceeds. Global Wells retained the remaining balance for general corporate purposes. Subsequent to December 31, 2021 through the date the financial statements are issued, the Company drew a total of $10.2 million and repaid a total of $0.0 million under its Line of Credit. During this period, the Company also made deposits for constructions and purchase of machinery and equipment totaling $3.9 million. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). |
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of the Karat Packaging and its wholly owned and controlled operating subsidiaries Lollicup and Lollicup Franchising, LLC (“Lollicup Franchising”) (effective September 1, 2020, refer to Note 3) and Global Wells Investment Group LLC (“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. The Company became the primary beneficiary of Global Wells on March 23, 2018 upon execution of an operating lease agreement allowing the Company to lease Global Wells’ facility. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income (loss) attributable to noncontrolling interests is disclosed in the consolidated statements of income. |
Estimates and Assumptions | Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with 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 consolidated financial statements. Estimates that are significant to the consolidated financial statements include stock-based compensation, allowance for doubtful accounts and reserve for slow-moving and obsolete inventory. |
Reporting Segments | Reporting Segments: 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 personal protective equipment related products such as face shields and face masks. The Company’s long-lived assets are all located in the United States, and its revenues are all generated in the United States. |
Earnings per Share | Earnings per share: Basic earnings per common share is calculated by dividing net income attributable to Karat Packaging, Inc 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 December 31, 2021 and 2020, cash and cash equivalents were comprised of cash held in money markets, 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 to 10 years Leasehold Improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building 28 to 40 years Property held under capital leases 3 to 5 years Computer hardware and software 3 years |
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 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 years ended December 31, 2021 and 2020, management concluded that an impairment write-down was not required. |
Business Combination and Goodwill | Business Combination and Goodwill: The Company applies the acquisition method of accounting for business combinations in accordance with 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 |
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 December 31, 2021, the Company and Global Wells received cumulative grants of $1,200,000 and $1,302,000, respectively. As of December 31, 2020, the Company and Global Wells received cumulative grants of $900,000 and $1,302,000, respectively. These grants are reported as deferred income within other liabilities in the accompanying consolidated balance sheets as there are conditions attached to the grants that the Company and Global Wells have not met. These conditions include requiring its facility in Rockwall, Texas to maintain a certain minimum tax value for the next five |
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 statement of financial position 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 statements 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 was 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 consolidated statements of income. |
Variable Interest Entities | Variable Interest Entities: The Company has a variable interest in two entities, Global Wells and Lollicup Franchising, LLC (prior to September 1, 2020, the acquisition date, see Note 3). 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 new 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 Topic 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. Global Wells has a term loan with a financial institution, which provides for advances up to $21,580,000 and expires May 2029 (the “2029 Term Loan ” ). The 2029 Term Loan is collateralized by substantially all of the Company’s and Global Well’s assets and is guaranteed by the Company and certain of its shareholders. Additionally, in June 2020, Global Wells entered into a $16,540,000 term loan with a financial institution that matured September 2021 to purchase land and building in Branchburg, New Jersey (the “2021 Term Loan ” ). The 2021 Term Loan was collateralized by substantially all of the Company’s and Global Well’s assets and was guaranteed by the Company and certain of its shareholders. In September 2021, Global Wells refinanced the 2021 Term Loan by entering into a $23,000,000 term loan that matures September 30, 2026 (the “2026 Term Loan ” ). The 2026 Term Loan provides an initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000. The 2026 Term Loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s shareholders. As of December 31, 2021 and 2020, total loan guaranteed by the Company related to Global Wells amounted to $36,517,000 and $37,491,000, respectively. Lollicup Franchising, LLC Prior to the acquisition on September 1, 2020 (see Note 3 — Acquisitions ), the Company’s two major shareholders shared common ownership with Lollicup Franchising, LLC (“Lollicup Franchising”). Lollicup Franchising owns and operates two stores and also licenses its name to third party store owners and operators. The Company sells inventory to Lollicup Franchising and to the licensed third-party stores. In connection with the sales to third-party stores, the Company had an incentive program with Lollicup Franchising where a certain percentage of the sales to the third-party stores were paid to Lollicup Franchising prior the acquisition on September 1, 2020. The Company incurred incentive program expenses of $79,000 for the period from January 1, 2020 through August 31, 2020, which was reported as a contra to net sales in the accompanying consolidated statement of income. The Company determined that the Company held a variable |
Revenue Recognition | Revenue Recognition: The Company generates revenues from sale of products to customers that include national distributors, fast food restaurants with multiple locations, 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. 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 national 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 our manufacturing facility to the customers. • National and regional chains revenue: National and regional chains revenue is derived from 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 our 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 our 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 online 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 our 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 or services 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 primarily of rebates and other sales incentives, consideration payable to customers for cooperative advertising and other program incentives, and sales return. As of December 31, 2021 and 2020, the contract liabilities were not considered 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 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 consolidated statements of income for the years ended December 31, 2021 and 2020 were $28,525,000 and $17,572,000, respectively. Sales taxes collected concurrently with revenue-producing activities and remitted to governmental authorities are excluded from revenue. |
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. |
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 December 31, 2021 and 2020, the Company has financial instruments classified within the fair value hierarchy, which consist of the following: • Interest rate swaps that meet the definition of a derivative, classified as Level 2 within the fair value hierarchy, and reported as an asset or liability on the consolidated balance sheets depending on its fair value. The fair value of interest rate swaps 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 consolidated balance sheets. The following table summarize 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: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 2,000 $ — $ — Interest rate swap — (1,334) — Fair value, December 31, 2021 $ 2,000 $ (1,334) $ — The following table summarize the Company’s fair value measurements by level at December 31, 2020 for the assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 448 $ — $ — Interest rate swaps — (2,847) — Fair value, December 31, 2020 $ 448 $ (2,847) $ — 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, and borrowings under promissory notes and line of credit, are reported at their carrying value. |
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 shared-based payment awards, including 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 on the date of grant is estimated 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 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 determined 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. |
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 has 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 2016-02 (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 periods 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 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 June 2018, the FASB issued ASU 2018-07 (Topic 718), “ Compensation — Stock Compensation: Improvements to Non-employee Share based Payment Accounting ”, which supersedes Subtopic 505-50 and expands the scope of ASC Topic 718 to include share-based payments issued to nonemployees for goods and services. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide financing to the issuer or awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC Topic 606. The FASB subsequently issued ASU 2019-08 (Topic 718), “ Compensation — Stock Compensation ” which clarifies guidance in Topic 718 on measurement and classification of share-based payments to customers. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606. The Company adopted this ASU as of January 1, 2020 and adoption of this guidance did not have a material impact on the Company’s financial position, results of operations and cash flow. In August 2018, the FASB issued ASU 2018-13 “ Fair Value Measurement (Topic 820) Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement ”. The guidance in this ASU eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. Entities are no longer required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy but require public companies to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. Certain provisions are applied prospectively while others are applied retrospectively. This ASU is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company adopted this ASU as of January 1, 2020 and adoption of this guidance did not have a material impact on the Company’s financial position, results of operations and cash flow. In December 2019, the FASB issued ASU 2019-12 “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ”. The guidance in this ASU eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. For public entities, the amendments in this Update are effective for fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendment is permitted. The Company adopted the new standard as of January 1, 2021, and the adoption of this guidance did not have a material impact on the Company’s financial position, results of operations and cash flow. In March 2020, the FASB issued ASU 2020-03 “ 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) | 12 Months Ended |
Dec. 31, 2021 | |
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 to 10 years Leasehold Improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building 28 to 40 years Property held under capital leases 3 to 5 years Computer hardware and software 3 years |
Schedule of goodwill | The following table summarizes the activity in the Company's goodwill from December 31, 2019 to December 31, 2021: (in thousands) Balance at December 31, 2019 $3,113 Goodwill acquired — Balance at December 31, 2020 $3,113 Goodwill acquired 397 Balance at December 31, 2021 $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 consolidated balance sheets, except for those that eliminate upon consolidation: December 31, 2021 December 31, 2020 (in thousands) Cash $ 1,163 $ 81 Accounts receivable 384 343 Prepaid expenses and other current assets 63 98 Property and equipment, net 46,612 47,826 Other assets 4,762 5,260 Total assets 52,984 53,608 Accounts payable $ 497 $ 564 Accrued expenses 68 128 Income tax payable 9 — Customer deposits 88 — Due to Lollicup USA Inc. 2,620 2,990 Long-term debt, current portion 1,178 694 Long-term debt, net of current portion 35,339 36,697 Other liabilities 2,636 3,906 Total liabilities $ 42,435 $ 44,979 |
Summary of net sales disaggregated by customer type | For the years ended December 31, 2021 and 2020, net sales disaggregated by customer type consist of the amounts shown below. Year Ended December 31, 2021 2020 (in thousands) National and regional chains $ 86,017 $ 67,875 Distributors 199,902 157,164 Online 50,271 33,194 Retail 28,054 37,285 $ 364,244 $ 295,518 |
Schedule of concentration of credit risk | For the years ended December 31, 2021 and 2020, purchases from the following vendor makes up greater than 10 percent of total purchases: Year Ended December 31, 2021 2020 Keary Global Ltd. (“Keary Global”) and its affiliate, Keary International, Ltd. – related parties 12 % 11 % Amounts due to the following vendors at December 31, 2021 and 2020, respectively, that exceed 10 percent of total accounts payable are as follows: December 31, 2021 December 31, 2020 Keary Global and its affiliate, Keary International – related parties 10 % 18 % Taizhou Fuling Plastics Co.,Ltd * 11 % Fuling Technology Co., Ltd. 21 % * Wen Ho Industrial Co., Ltd 11 % * * 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 summarize 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: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 2,000 $ — $ — Interest rate swap — (1,334) — Fair value, December 31, 2021 $ 2,000 $ (1,334) $ — The following table summarize the Company’s fair value measurements by level at December 31, 2020 for the assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 448 $ — $ — Interest rate swaps — (2,847) — Fair value, December 31, 2020 $ 448 $ (2,847) $ — |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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 The following table summarizes the assets acquired and liabilities assumed as a result of this acquisition: (in thousands) Cash $ 7 Accounts receivable 103 Inventories 21 Property and equipment 257 Goodwill 3,113 Accounts payable (42) Accrued expenses (104) Related party payable (2,455) Total assets acquired and liabilities assumed $ 900 Less: cash acquired (7) Total purchase consideration, net of cash acquired $ 893 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following: December 31, 2021 December 31, 2020 (in thousands) Raw materials $ 14,075 $ 4,251 Work in progress — 133 Finished goods 45,140 45,252 Subtotal 59,215 49,636 Less inventory reserve (743) (675) Total inventories $ 58,472 $ 48,961 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | December 31, 2021 December 31, 2020 (in thousands) Machinery and equipment $ 60,935 $ 55,528 Leasehold improvements 18,655 17,832 Vehicles 5,384 3,447 Furniture and fixtures 936 851 Building 35,387 34,134 Land 11,907 11,907 Property held under capital leases — 1,607 Computer hardware and software 553 546 133,757 125,852 Less accumulated depreciation and amortization (40,282) (30,319) Total property and equipment, net $ 93,475 $ 95,533 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Summary of accrued expense liabilities | The following table summarizes information related to accrued expense liabilities: December 31, 2021 December 31, 2020 (in thousands) Accrued expenses $ 1,991 $ 1,796 Accrued interest 68 199 Accrued payroll 1,456 1,253 Accrued vacation and sick pay 416 496 Accrued shipping expenses 2,868 433 Accrued professional services fees 642 481 Deferred rent liability 372 301 Total accrued expenses $ 7,813 $ 4,959 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consists of the following: December 31, 2021 December 31, 2020 (in thousands) A promissory note that allowed for advances up to $5,000,000 through March 2018, at which point it converted to a term loan. Outstanding principal balance of $4,815,000 was converted in March 2018, set to mature in March 2023. Principal and interest payment of $91,000 due monthly at the fixed rate of 4.98%. The loan was secured by certain machinery and equipment. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum fixed charge coverage ratio and net income. The loan was paid off in 2021. $ — $ 2,322 An equipment loan with a draw down period ending August 28, 2019 for up to $10,000,000, at which point the entire principal outstanding was due, unless extended. Outstanding principal balance of $9,476,000 was converted to a term loan in June 2019, set to mature in July 2024. Principal and interest payment of $193,000 due monthly starting August 2019 at the fixed rate of 5.75%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. — 7,450 A $2,130,000 term loan that expired April 30, 2021. Principal and interest payment of $56,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate. The loan was secured by the company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. — 212 A $935,000 term loan that expired December 31, 2021. Principal and interest payment of $20,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued at a fixed rate of 3.50%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. — 234 Subtotal, continue on following page $ — $ 10,218 December 31, 2021 December 31, 2020 (in thousands) Subtotal from previous page $ — $ 10,218 An equipment loan with a draw down period ended May 31, 2019 for up to $10,000,000. After the draw period, the outstanding principal balance is converted to a term loan payable, set to mature on May 31, 2024. The first principal and interest payment commenced in July 2019. Interest accrued based on prime rate. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company was required to comply with certain fixed financial covenants, including a fixed charge coverage ratio and a minimum tangible net worth. The loan was paid off in 2021. — 7,000 A $3,000,000 term loan that was set to expire December 2024. Interest only payment due for the first six months. Principal and interest payment of $58,000 due monthly beginning January 2020 with the remaining principal and unpaid interest due at maturity. Interest accrues at prime rate plus 0.25%. The loan was secured by the Company’s assets and guaranteed by certain of the Company’s shareholders. In accordance with the loan agreement, the Company must comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, debt service charge ratio, and debt to EBITDA rolling ratio. The loan was paid off in 2021. — 2,444 A $21,580,000 term loan that matures in May 2029. Interest accrues at prime rate less 0.25% (3.00% at December 31, 2021 and 2020) 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 certain of its shareholders. 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. 20,808 21,130 A $3,000,000 term loan that was set to expire June 17, 2025. Principal and interest payment of $55,000 due monthly with the remaining principal and unpaid interest due at maturity. Interest accrued based on prime rate plus margin of 0.25% (3.50% as of December 31, 2020). The loan was secured by the Company’s assets and guaranteed by the Company’s stockholders. In accordance with the loan agreement, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum effective tangible net-worth, maximum debt to effective tangible net worth, and minimum debt coverage ratio. The loan was paid off in 2021. — 2,723 A $5,000,000 Paycheck Protection Program loan that was set to expire April 16, 2022. Interest accrued at 1.0%. The loan was forgiven in June 2021. — 5,000 Subtotal, continue on following page $ 20,808 $ 48,515 KARAT PACKAGING INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 December 31, 2020 (in thousands) Subtotal from previous page $ 20,808 $ 48,515 A $16,540,000 term loan that was set to mature June 30, 2025. Interest accrued at 4.5% fixed and principal payments ranging from $31,000 to $0 along with interest 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 certain of its shareholders. This loan was refinanced in September 2021 (see below). — 16,361 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. 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 shareholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. 15,909 — Long-term debt 36,717 64,876 Less: unamortized loan fees (200) (102) Less: current portion (1,178) (11,364) Long-term debt, net of current portion $ 35,339 $ 53,410 |
Schedule of future maturities | At December 31, 2021, future maturities are: (in thousands) 2022 $ 1,178 2023 1,224 2024 1,276 2025 1,333 2026 12,794 Thereafter 18,912 $ 36,717 |
Obligations Under Capital Lea_2
Obligations Under Capital Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Assets and Liabilities, Lessee [Abstract] | |
Summary of property held under capital leases | Following is a summary of property held under capital leases: December 31, 2021 December 31, 2020 (in thousands) Warehouse vehicles $ — $ 1,607 Less: accumulated depreciation — (1,026) Total property held under capital leases, net $ — $ 581 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of stock option activity | A summary of the Company’s stock option activity under the Plan for the year ended December 31, 2021 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contract Life (In Years) Aggregate Intrinsic Value Outstanding at December 31, 2020 15,000 $ 10.00 8 years $ — Granted 430,000 18.86 Exercised (10,000) 10.00 $ 116,000 Outstanding at December 31, 2021 435,000 $ 18.76 9.7 years $ 632,000 Expected to vest at December 31, 2021 435,000 $ 18.76 9.7 years $ 632,000 Exercisable at December 31, 2021 5,000 $ 10.00 7 years $ 51,000 |
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 year ended December 31, 2021 were as follows: December 31, 2021 Risk-free interest rate 1.22 % 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 its employees. The following table summarizes the unvested restricted stock units for the period ended December 31, 2021: Number of Shares Outstanding Weighted Average Grant Date Fair Value Unvested at December 31, 2020 256,000 $ 10.00 Granted 40,000 17.98 Vested (84,917) 11.55 Forfeited (52,083) 11.14 Unvested at December 31, 2021 159,000 $ 11.08 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | Basic earnings per share is calculated by dividing the net income attributable to equity holders of the Company for the year by the weighted average number of common shares outstanding during the period. Year Ended December 31, 2021 2020 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 20,778 $ 17,517 Weighted average shares 18,409 15,177 Basic earnings per share $ 1.13 $ 1.15 The following table summarizes the calculation of diluted earnings per share: Year Ended December 31, 2021 2020 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 20,778 $ 17,517 Weighted average shares 18,409 15,177 Dilutive shares Stock options and restricted stock units 157 271 Total dilutive shares 18,566 15,448 Diluted earnings per share $ 1.12 $ 1.13 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease obligations | At December 31, 2021, approximate future minimum lease obligations are: (in thousands) 2022 $ 3,055 2023 3,060 2024 1,824 2025 380 2026 374 Thereafter 1,629 $ 10,322 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provisions | The provision for income taxes for the year ended December 31, 2021 and 2020, respectively, consisted of: Year Ended December 31, 2021 2020 (in thousands) Current Federal $ 4,504 $ 109 State 1,068 1,212 5,572 1,321 Deferred Federal (576) 4,172 State 93 (234) (483) 3,938 Provision for income taxes $ 5,089 $ 5,259 |
Schedule of Deferred Tax Assets and Liabilities | The Company’s deferred tax assets (liabilities), calculated using effective tax rates is as follows: December 31, 2021 December 31, 2020 (in thousands) Deferred tax assets: State taxes $ 257 $ 237 Reserves 537 590 Accruals & deferred expenses 188 132 Tenant improvement allowance 1,216 1,336 R&D credit 44 45 Section 263A 1,196 993 Government grant 311 235 Stock based compensation 267 — Total deferred tax assets 4,016 3,568 Deferred tax liabilities: Fixed assets – depreciation (9,518) (9,613) Investment in Global Wells Investment Group (132) (72) Total deferred tax liabilities (9,650) (9,685) Net deferred tax liability $ (5,634) $ (6,117) |
Schedule of Reconciliation of Income Taxes | Reconciliation of income taxes are as follows from statutory rate of 21% to the effective tax rate for the year ended December 31, 2021 and 2020, respectively: Year Ended December 31, 2021 2020 (in thousands) Income tax computed at the federal statutory rate $ 5,780 $ 4,608 State taxes, net of federal tax benefits 1,055 939 Noncontrolling Interest -Income not subject to tax (349) 178 Government forgiveness of debt (1,050) — Permanent items 201 100 R&D Credit (239) (295) Excess tax benefit from stock based compensation (237) — Other (72) (271) Provision for income taxes $ 5,089 $ 5,259 |
Nature of Operations (Details)
Nature of Operations (Details) | 12 Months Ended |
Dec. 31, 2021 distribution_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) | 12 Months Ended |
Dec. 31, 2021 entity segment | |
Accounting Policies [Abstract] | |
Reportable segment | segment | 1 |
Variable interest entity, number of entities | entity | 2 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Estimated Useful Life (Details) | 12 Months Ended |
Dec. 31, 2021 | |
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) | 12 Months Ended | |
Dec. 31, 2021 USD ($) reporting_unit | Dec. 31, 2020 USD ($) | |
Business Combination, Goodwill [Abstract] | ||
Reporting unit | reporting_unit | 1 | |
Impairments of goodwill | $ 0 | $ 0 |
Government Grants | ||
Cumulative grants | 1,200,000 | 900,000 |
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) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 3,113 | $ 3,113 |
Goodwill acquired | 397 | 0 |
Goodwill, ending balance | $ 3,510 | $ 3,113 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Global Wells (Details) | 12 Months Ended | ||
Dec. 31, 2021 USD ($) | Dec. 31, 2017 USD ($) unrelated_party | Dec. 31, 2020 USD ($) | |
Term Loan, Maturing May 2029 | |||
Variable Interest Entity [Line Items] | |||
Face amount of loan | $ 21,580,000 | ||
Term Loan, Maturing June 30, 2025 | |||
Variable Interest Entity [Line Items] | |||
Face amount of loan | 16,540,000 | ||
Term Loan, Maturing September 30, 2026 | |||
Variable Interest Entity [Line Items] | |||
Face amount of loan | 23,000,000 | ||
Amount converted to term loan | 16,115,000 | ||
Term loan, accordion feature | 6,885,000 | ||
Global Wells | |||
Variable Interest Entity [Line Items] | |||
Other unrelated parties | unrelated_party | 3 | ||
Ownership interest | 13.50% | ||
Voting interest | 25% | ||
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 | $ 36,517,000 | $ 37,491,000 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Assets and Liabilities of Global Wells (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Variable Interest Entity [Line Items] | ||
Cash and cash equivalents | $ 6,483 | $ 448 |
Accounts receivable | 32,776 | 23,838 |
Prepaid expenses and other current assets | 5,141 | 6,530 |
Property and equipment, net | 93,475 | 95,533 |
Other assets | 477 | 161 |
Total assets | 207,599 | 181,104 |
Accounts payable | 18,470 | 20,069 |
Accrued expenses | 7,813 | 4,959 |
Income taxes payable | 85 | 41 |
Due to Lollicup USA Inc. | 2,003 | 5,038 |
Long-term debt, current portion | 1,178 | 11,364 |
Other liabilities | 3,837 | 5,049 |
Total liabilities | 75,574 | 141,236 |
Global Wells | ||
Variable Interest Entity [Line Items] | ||
Cash and cash equivalents | 1,163 | 81 |
Accounts receivable | 384 | 343 |
Prepaid expenses and other current assets | 63 | 98 |
Property and equipment, net | 46,612 | 47,826 |
Other assets | 4,762 | 5,260 |
Total assets | 52,984 | 53,608 |
Accounts payable | 497 | 564 |
Accrued expenses | 68 | 128 |
Income taxes payable | 9 | 0 |
Customer deposits | 88 | 0 |
Due to Lollicup USA Inc. | 2,620 | 2,990 |
Long-term debt, current portion | 1,178 | 694 |
Long-term debt, net of current portion | 35,339 | 36,697 |
Other liabilities | 2,636 | 3,906 |
Total liabilities | $ 42,435 | $ 44,979 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Lollicup Franchising, LLC (Details) - Lollicup Franchising, LLC | 8 Months Ended | ||
Sep. 01, 2020 store shareholder | Aug. 31, 2020 USD ($) | Dec. 31, 2021 USD ($) | |
Variable Interest Entity [Line Items] | |||
Major shareholders who share common ownership with Lollicup Franchising | shareholder | 2 | ||
Store owned | store | 2 | ||
Incentive program expenses | 79,000 | ||
Maximum exposure to loss | $ 0 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 364,244,000 | $ 295,518,000 |
Cost of goods sold | 256,417,000 | 206,393,000 |
Selling expenses | ||
Disaggregation of Revenue [Line Items] | ||
Cost of goods sold | 28,525,000 | 17,572,000 |
National and regional chains | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 86,017,000 | 67,875,000 |
Distributors | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 199,902,000 | 157,164,000 |
Online | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 50,271,000 | 33,194,000 |
Retail | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 28,054,000 | $ 37,285,000 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Advertising Costs and Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Marketing and Advertising Expense [Abstract] | ||
Advertising costs | $ 2,488,000 | $ 1,516,000 |
Income Tax Disclosure [Abstract] | ||
Uncertain tax positions | $ 0 | $ 0 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Supplier | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Purchases | Keary Global and its affiliate, Keary International – related parties | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 12% | 11% |
Accounts payable | Keary Global and its affiliate, Keary International – related parties | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 10% | 18% |
Accounts payable | Taizhou Fuling Plastics Co.,Ltd | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 11% | |
Accounts payable | Fuling Technology Co., Ltd. | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 21% | |
Accounts payable | Wen Ho Industrial Co., Ltd | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 11% |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 2,000 | $ 448 |
Interest rate swaps | 0 | 0 |
Fair value | 2,000 | 448 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Interest rate swaps | (1,334) | (2,847) |
Fair value | (1,334) | (2,847) |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Interest rate swaps | 0 | 0 |
Fair value | $ 0 | $ 0 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Foreign Currency | ||
Loss of foreign currency transactions | $ 412,000 | $ 688,000 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) | Mar. 01, 2021 | Sep. 01, 2020 |
Pacific Cup, Inc | ||
Business Acquisition [Line Items] | ||
Cash consideration | $ 1,000,000 | |
Lollicup Franchising, LLC | ||
Business Acquisition [Line Items] | ||
Cash consideration | $ 900,000 | |
Lollicup Franchising, LLC | ||
Business Acquisition [Line Items] | ||
Membership interest acquired | 100% |
Acquisitions - Summary of Asset
Acquisitions - Summary of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Sep. 01, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 01, 2021 | Dec. 31, 2019 | |
Business Acquisition [Line Items] | |||||
Goodwill | $ 3,510 | $ 3,113 | $ 3,113 | ||
Total purchase consideration, net of cash acquired | $ 900 | $ 0 | |||
Pacific Cup, Inc | |||||
Business Acquisition [Line Items] | |||||
Inventories | $ 153 | ||||
Property and equipment | 50 | ||||
Goodwill | 397 | ||||
Customer relationships | 400 | ||||
Total assets acquired and liabilities assumed | $ 1,000 | ||||
Lollicup Franchising, LLC | |||||
Business Acquisition [Line Items] | |||||
Cash | $ 7 | ||||
Accounts receivable | 103 | ||||
Inventories | 21 | ||||
Property and equipment | 257 | ||||
Goodwill | 3,113 | ||||
Accounts payable | (42) | ||||
Accrued expenses | (104) | ||||
Related party payable | (2,455) | ||||
Total assets acquired and liabilities assumed | 900 | ||||
Less: cash acquired | (7) | ||||
Total purchase consideration, net of cash acquired | $ 893 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 14,075 | $ 4,251 |
Work in progress | 0 | 133 |
Finished goods | 45,140 | 45,252 |
Subtotal | 59,215 | 49,636 |
Less inventory reserve | (743) | (675) |
Total inventories | $ 58,472 | $ 48,961 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | $ 133,757 | $ 125,852 |
Less accumulated depreciation and amortization | (40,282) | (30,319) |
Total property and equipment, net | 93,475 | 95,533 |
Machinery and equipment | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 60,935 | 55,528 |
Leasehold improvements | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 18,655 | 17,832 |
Vehicles | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 5,384 | 3,447 |
Furniture and fixtures | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 936 | 851 |
Building | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 35,387 | 34,134 |
Land | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 11,907 | 11,907 |
Property held under capital leases | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | 0 | 1,607 |
Computer hardware and software | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment, gross | $ 553 | $ 546 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jul. 07, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | $ 10,024,000 | $ 8,569,000 | |
Global Wells | |||
Property, Plant and Equipment [Line Items] | |||
Payments to acquire land held-for-use | $ 1,252,750 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | Oct. 06, 2021 | Jul. 09, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Feb. 23, 2018 |
Line of Credit Facility [Line Items] | |||||
Line of credit | $ 0 | $ 33,169,000 | |||
Line of credit | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing | 40,000,000 | $ 40,000,000 | |||
Floor rate | 3.25% | 3.75% | |||
Line of credit | 0 | 33,169,000 | |||
Standby letter of credit | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit | $ 0 | $ 900,000 | |||
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 ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued expenses | $ 1,991 | $ 1,796 |
Accrued interest | 68 | 199 |
Accrued payroll | 1,456 | 1,253 |
Accrued vacation and sick pay | 416 | 496 |
Accrued shipping expenses | 2,868 | 433 |
Accrued professional services fees | 642 | 481 |
Deferred rent liability | 372 | 301 |
Total accrued expenses | $ 7,813 | $ 4,959 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Apr. 16, 2020 | |
Debt Instrument [Line Items] | |||
Long-term debt | $ 36,717,000 | $ 64,876,000 | |
Less: unamortized loan fees | (200,000) | (102,000) | |
Less: current portion | (1,178,000) | (11,364,000) | |
Long-term debt, net of current portion | 35,339,000 | 53,410,000 | |
Promissory Note | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 5,000,000 | ||
Amount converted to term loan | 4,815,000 | ||
Term Loan, Maturing March 2023 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 2,322,000 | |
Monthly principal and interest payments | $ 91,000 | ||
Fixed interest rate | 4.98% | ||
Equipment Loan, Draw Down Period Ending August 28, 2019 | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 10,000,000 | ||
Amount converted to term loan | 9,476,000 | ||
Term Loan, Maturing July 2024 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 7,450,000 | |
Monthly principal and interest payments | $ 193,000 | ||
Fixed interest rate | 5.75% | ||
Term Loan, Maturing April 30, 2021 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | 212,000 | |
Monthly principal and interest payments | 56,000 | ||
Face amount of loan | 2,130,000 | ||
Term Loan, Maturing December 31, 2021 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 234,000 | |
Monthly principal and interest payments | $ 20,000 | ||
Fixed interest rate | 3.50% | ||
Face amount of loan | $ 935,000 | ||
Subtotal 1 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 10,218,000 | |
Equipment Loan With Draw Down Period Ending May 31, 2019 | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 10,000,000 | ||
Term Loan, Maturing May 31, 2024 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 7,000,000 | |
Term Loan, Maturing December 2024 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 0 | 2,444,000 | |
Monthly principal and interest payments | 58,000 | ||
Face amount of loan | $ 3,000,000 | ||
Term Loan, Maturing December 2024 | Prime Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.25% | ||
Term Loan, Maturing May 2029 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 20,808,000 | $ 21,130,000 | |
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% | ||
Term Loan, Maturing June 17, 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 2,723,000 | |
Monthly principal and interest payments | 55,000 | ||
Face amount of loan | $ 3,000,000 | ||
Term Loan, Maturing June 17, 2025 | Prime Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 0.25% | 3.50% | |
Paycheck Protection Program, CARES Act | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 5,000,000 | |
Fixed interest rate | 1% | 1% | |
Face amount of loan | $ 5,000,000 | ||
Subtotal 2 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 20,808,000 | 48,515,000 | |
Term Loan, Maturing June 30, 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | 16,361,000 | |
Fixed interest rate | 4.50% | ||
Face amount of loan | $ 16,540,000 | ||
Term Loan, Maturing June 30, 2025 | Minimum | |||
Debt Instrument [Line Items] | |||
Monthly principal and interest payments | 31,000 | ||
Term Loan, Maturing June 30, 2025 | Maximum | |||
Debt Instrument [Line Items] | |||
Monthly principal and interest payments | 0 | ||
Term Loan, Maturing September 30, 2026 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 15,909,000 | $ 0 | |
Amount converted to term loan | 16,115,000 | ||
Monthly principal and interest payments | $ 116,000 | ||
Fixed interest rate | 3.50% | ||
Face amount of loan | $ 23,000,000 | ||
Term loan, accordion feature | $ 6,885,000 |
Long-Term Debt - Schedule of Fu
Long-Term Debt - Schedule of Future Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Future maturities: | ||
2022 | $ 1,178 | |
2023 | 1,224 | |
2024 | 1,276 | |
2025 | 1,333 | |
2026 | 12,794 | |
Thereafter | 18,912 | |
Long-term debt | $ 36,717 | $ 64,876 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | 12 Months Ended | |||
Jun. 10, 2021 | Apr. 16, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||||
Gain on forgiveness of debt | $ 5,000,000 | $ 0 | ||
Paycheck Protection Program, CARES Act | ||||
Debt Instrument [Line Items] | ||||
Loan proceeds received | $ 5,000,000 | |||
Fixed interest rate | 1% | 1% | ||
Debt instrument, deferred payments, term | 6 months | |||
Gain on forgiveness of debt | $ 5,000,000 |
Interest Rate Swaps (Details)
Interest Rate Swaps (Details) - Interest Rate Swap - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2021 | Jun. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 13, 2019 | Jun. 03, 2019 | |
Derivative [Line Items] | ||||||
Term of contract | 5 years | |||||
Fixed interest rate | 5.19% | |||||
Notional amount | $ 10,000,000 | $ 10,000,000 | ||||
Derivative interest income | $ 47,000 | |||||
Derivative interest expense | $ 112,000 | |||||
Derivative, swap termination fee | $ 196,200 | |||||
Global Wells | ||||||
Derivative [Line Items] | ||||||
Term of contract | 10 years | |||||
Fixed interest rate | 5.05% | |||||
Notional amount | $ 21,580,000 | |||||
Derivative interest income | 1,270,000 | |||||
Derivative interest expense | 1,454,000 | |||||
Other Liabilities | ||||||
Derivative [Line Items] | ||||||
Derivative fair value | 243,000 | |||||
Other Liabilities | Global Wells | ||||||
Derivative [Line Items] | ||||||
Derivative fair value | $ 1,334,000 | $ 2,604,000 |
Obligations Under Capital Lea_3
Obligations Under Capital Leases - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Capital Lease Obligations [Line Items] | |||
Repayments of finance lease, right-of-use asset | $ 300 | $ 611 | $ 362 |
Minimum | |||
Schedule of Capital Lease Obligations [Line Items] | |||
Interest rates on capitalized leases | 3.55% | ||
Maximum | |||
Schedule of Capital Lease Obligations [Line Items] | |||
Interest rates on capitalized leases | 6.50% |
Obligations Under Capital Lea_4
Obligations Under Capital Leases - Summary of Property Held Under Capital Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets and Liabilities, Lessee [Abstract] | ||
Warehouse vehicles | $ 0 | $ 1,607 |
Less: accumulated depreciation | 0 | (1,026) |
Total property held under capital leases, net | $ 0 | $ 581 |
Stockholder_s Equity (Details)
Stockholder’s Equity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2021 | Jul. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||||||
Shares authorized (in shares) | 110,000,000 | |||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Preferred stock, par value (in dollars per share) | $ 0.001 | |||||
Preferred stock, shares authorized (in shares) | 10,000,000 | |||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | ||||
Common stock, dividends declared (in dollars per share) | $ 0.04 | |||||
Dividends paid to stockholders | $ 0 | $ 606,000 | ||||
Treasury stock acquired (in shares) | 13,000 | 10,000 | ||||
Treasury stock acquired, value | $ 141,000 | $ 107,000 | 248,000 | $ 248,000 | ||
Issuance of common stock in connection with our initial public offering, net of issuance costs (in shares) | 4,542,500 | |||||
Issuance of common stock in connection with our initial public offering, net of issuance costs | $ 67,600,000 | $ 67,592,000 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Jan. 31, 2019 | |
Stock-based Compensation | |||
Shares authorized (in shares) | 2,000,000 | ||
Shares reserved for issuance (in shares) | 1,311,083 | 2,000,000 | |
Weighted average grant date fair value | $ 5.74 | ||
Remaining stock-based compensation expense for unvested stock options | $ 2,090,000 | ||
Granted (in shares) | 430,000 | 0 | |
Accelerated award vesting period | 6 months | ||
Share-based payment arrangement, accelerated cost | $ 719,000 | ||
Stock-based compensation expense | 2,026,000 | $ 0 | |
Tax benefit, share-based payment arrangement, amount | $ 237,000 | $ 0 | |
Share-based Payment Arrangement, Option | |||
Stock-based Compensation | |||
Cost not yet recognized, period for recognition | 1 year 9 months 18 days | ||
Vesting period | 3 years | ||
Restricted Stock Units (RSUs) | |||
Stock-based Compensation | |||
Cost not yet recognized, period for recognition | 1 year 4 months 24 days | ||
Granted (in dollars per share) | $ 17.98 | $ 10 | |
Fair value on vesting date | $ 1,884,000 | $ 0 | |
Nonvested award, cost not yet recognized, amount | $ 1,151,000 | ||
Vesting period | 3 years | ||
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% | ||
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 ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Options | ||
Outstanding at beginning of period (in shares) | 15,000 | |
Granted (in shares) | 430,000 | 0 |
Exercised (in shares) | (10,000) | |
Outstanding at end of period (in shares) | 435,000 | 15,000 |
Number of options, expected to vest (in shares) | 435,000 | |
Number of options, exercisable (in shares) | 5,000 | |
Weighted-Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 10 | |
Granted (in dollars per share) | 18.86 | |
Exercised (in dollars per share) | 10 | |
Outstanding at end of period (in dollars per share) | 18.76 | $ 10 |
Weighted average exercise price, expected to vest (in dollars per share) | 18.76 | |
Weighted average exercise price, exercisable (in dollars per share) | $ 10 | |
Stock Option Activity, Additional Disclosures | ||
Weighted average remaining contract life, options outstanding | 9 years 8 months 12 days | 8 years |
Weighted average remaining contract life, expected to vest | 9 years 8 months 12 days | |
Weighted average remaining contract life, exercisable | 7 years | |
Aggregate intrinsic value, options outstanding | $ 632,000 | $ 0 |
Aggregate intrinsic value, options exercised | 116,000 | |
Aggregate intrinsic value, expected to vest | 632,000 | |
Aggregate intrinsic value, exercisable | $ 51,000 |
Stock-based Compensation - Assu
Stock-based Compensation - Assumptions Used to Calculate Grant Date Fair Value (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Risk-free interest rate | 1.22% |
Expected term (years) | 6 years 3 months |
Volatility | 30% |
Dividend yield | 0.40% |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Unvested Restricted Stock Units (Details) - Restricted Stock Units (RSUs) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares Outstanding | ||
Outstanding at beginning of period (in shares) | 256,000 | |
Granted (in shares) | 40,000 | |
Vested (in shares) | (84,917) | |
Forfeited (in shares) | (52,083) | |
Outstanding at end of period (in shares) | 159,000 | 256,000 |
Weighted Average Grant Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 10 | |
Granted (in dollars per share) | 17.98 | $ 10 |
Vested (in dollars per share) | 11.55 | |
Forfeited (in dollars per share) | 11.14 | |
Outstanding at end of period (in dollars per share) | $ 11.08 | $ 10 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share Reconciliation [Abstract] | ||
Net income attributable to Karat Packaging Inc. | $ 20,778 | $ 17,517 |
Weighted average number of ordinary shares in issue (in shares) | 18,409,243 | 15,176,809 |
Basic earnings per share (in dollars per share) | $ 1.13 | $ 1.15 |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||
Net income attributable to Karat Packaging Inc. | $ 20,778 | $ 17,517 |
Weighted average common shares outstanding, basic (in shares) | 18,409,243 | 15,176,809 |
Dilutive shares | ||
Stock options and restricted stock units (in shares) | 157,000 | 271,000 |
Adjusted weighted average number of common shares (in shares) | 18,566,260 | 15,447,809 |
Diluted earnings per share (in dollars per share) | $ 1.12 | $ 1.13 |
Potentially dilutive shares excluded from diluted earnings per share calculation (in shares) | 234,072 | 282,000 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) | 12 Months Ended | ||
Sep. 09, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | |||
Rent expense | $ 1,783,000 | $ 1,212,000 | |
Rental income | 931,000 | $ 322,000 | |
Future minimum payments receivable, current | 716,000 | ||
Future minimum payments receivable, in two years | $ 611,000 | ||
Global Wells | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease term | 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 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Lease Obligations (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2022 | $ 3,055 |
2023 | 3,060 |
2024 | 1,824 |
2025 | 380 |
2026 | 374 |
Thereafter | 1,629 |
Future minimum lease obligations | $ 10,322 |
Related Party Transactions (Det
Related Party Transactions (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2020 USD ($) | Sep. 30, 2018 convertible_note | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | |
Related Party Transaction [Line Items] | ||||
Common stock, shares outstanding (in shares) | shares | 19,804,417 | 15,167,000 | ||
Related party payable | $ 2,003,000 | $ 5,038,000 | ||
Affiliated Entity | Lollicup Franchising, LLC | ||||
Related Party Transaction [Line Items] | ||||
Cash consideration | $ 900,000 | |||
Incentive program expenses | 79,000 | |||
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 | $ 2,003,000 | $ 5,038,000 | ||
Purchases from related party | 37,021,000 | 27,985,000 | ||
Affiliated Entity | Keary International | ||||
Related Party Transaction [Line Items] | ||||
Related party payable | 2,003,000 | 5,038,000 | ||
Purchases from related party | $ 37,021,000 | $ 27,985,000 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Contribution Plan Disclosure [Line Items] | ||
Contributions | $ 322,000 | $ 254,000 |
Tranche One | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution, percent of match | 100% | |
Employer matching contribution, percent of employees' gross pay | 3% | |
Tranche Two | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution, percent of match | 87.50% | |
Employer matching contribution, percent of employees' gross pay | 4% | |
Tranche Three | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Employer matching contribution, percent of match | 80% | |
Employer matching contribution, percent of employees' gross pay | 5% |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Provisions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current | ||
Federal | $ 4,504 | $ 109 |
State | 1,068 | 1,212 |
Current income tax provision | 5,572 | 1,321 |
Deferred | ||
Federal | (576) | 4,172 |
State | 93 | (234) |
Deferred income tax provision | (483) | 3,938 |
Provision for income taxes | $ 5,089 | $ 5,259 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
State taxes | $ 257 | $ 237 |
Reserves | 537 | 590 |
Accruals & deferred expenses | 188 | 132 |
Tenant improvement allowance | 1,216 | 1,336 |
R&D credit | 44 | 45 |
Section 263A | 1,196 | 993 |
Government grant | 311 | 235 |
Stock based compensation | 267 | 0 |
Total deferred tax assets | 4,016 | 3,568 |
Deferred tax liabilities: | ||
Fixed assets – depreciation | (9,518) | (9,613) |
Investment in Global Wells Investment Group | (132) | (72) |
Total deferred tax liabilities | (9,650) | (9,685) |
Net deferred tax liability | $ (5,634) | $ (6,117) |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax computed at the federal statutory rate | $ 5,780,000 | $ 4,608,000 |
State taxes, net of federal tax benefits | 1,055,000 | 939,000 |
Noncontrolling Interest -Income not subject to tax | (349,000) | 178,000 |
Government forgiveness of debt | (1,050,000) | 0 |
Permanent items | 201,000 | 100,000 |
R&D Credit | (239,000) | (295,000) |
Excess tax benefit from stock based compensation | (237,000) | 0 |
Other | (72,000) | (271,000) |
Provision for income taxes | $ 5,089,000 | $ 5,259,000 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | Dec. 31, 2021 USD ($) |
Income Tax Disclosure [Abstract] | |
Deferred tax assets, valuation allowance | $ 0 |
COVID-19 Update (Details)
COVID-19 Update (Details) - USD ($) | 12 Months Ended | ||||
Jun. 10, 2021 | Apr. 16, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Feb. 23, 2018 | |
Unusual or Infrequent Item, or Both [Line Items] | |||||
Increase (decrease) in revenue | $ (2,700,000) | $ 38,100,000 | |||
Increase (decrease) in revenue, percentage of sales | 1% | ||||
Gain on forgiveness of debt | $ 5,000,000 | 0 | |||
Proceeds from issuance of common stock in connection with initial public offering, net of issuance costs | 67,592,000 | 0 | |||
Repayments of lines of credit | 34,639,000 | 0 | |||
Repayments of long-term debt | 39,272,000 | 7,364,000 | |||
Cash and cash equivalents | 6,483,000 | $ 448,000 | |||
Line of credit | |||||
Unusual or Infrequent Item, or Both [Line Items] | |||||
Repayments of lines of credit | 34,600,000 | ||||
Maximum borrowing | 40,000,000 | $ 40,000,000 | |||
Paycheck Protection Program, CARES Act | |||||
Unusual or Infrequent Item, or Both [Line Items] | |||||
Loan proceeds received | $ 5,000,000 | ||||
Gain on forgiveness of debt | $ 5,000,000 | ||||
Certain Term Loans | |||||
Unusual or Infrequent Item, or Both [Line Items] | |||||
Repayments of long-term debt | 39,300,000 | ||||
Term Loan, Maturing September 30, 2026 | |||||
Unusual or Infrequent Item, or Both [Line Items] | |||||
Term loan, accordion feature | $ 6,885,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Feb. 22, 2022 | Mar. 21, 2022 | Dec. 31, 2021 | |
Term Loan, Maturing September 30, 2026 | |||
Subsequent Event [Line Items] | |||
Term loan, accordion feature | $ 6,885 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Deposits assets | $ 3,900 | ||
Subsequent Event | Line of credit | |||
Subsequent Event [Line Items] | |||
Term loan, accordion feature | 10,200 | ||
Repayments of related party debt | $ 0 | ||
Subsequent Event | Term Loan, Maturing September 30, 2026 | |||
Subsequent Event [Line Items] | |||
Term loan, accordion feature | $ 6,900 | ||
Subsequent Event | Term Loan, Maturing September 30, 2026 | Lollicup Franchising, LLC | |||
Subsequent Event [Line Items] | |||
Repayments of related party debt | $ 2,100 |