Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-262341
Prospectus Supplement No. 4
(to Prospectus dated March 23, 2022)
Up to 22,415,400 Shares of Class A Common Stock Issuable Upon Exercise of the Warrants
Up to 101,083,492 Shares of Class A Common Stock offered by the Selling Holders
10,837,400 Resale Warrants
This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated March 23, 2022 (the “Prospectus”) related to:
(A) the offer and sale from time to time by the selling securityholders named in the Prospectus (the “Selling Holders”) of up to 101,083,492 shares of Class A common stock, par value $0.0001 per share ("Class A Common Stock"), consisting of: (i) 3,356,078 shares of Class A Common Stock of CompoSecure, Inc. (the “Company”) issued in connection with the Common PIPE Investment (as defined in the Prospectus) (the “PIPE Shares”); (ii) up to 12,999,978 shares of Class A Common Stock (the “Exchangeable Note Shares”) issuable upon exchange of CompoSecure Holdings, L.L.C.’s exchangeable senior notes (“Exchangeable Notes”), which consists of 11,304,340 shares at the base conversion price of $11.50 per share, plus an additional aggregate amount of up to 1,695,638 shares to cover adjustments which are applicable in limited circumstances under the Note PIPE Subscription Agreements (as defined in the Prospectus); (iii) 61,136,800 shares of Class A Common Stock issuable upon exchange (on a one-for-one basis, subject to adjustment) of shares of Class B Common Units issued by CompoSecure Holdings, L.L.C. (the subsidiary of the Company), and cancellation of a corresponding number of shares of Class B Common Stock, par value $0.0001 per share (the “Class B Common Stock”), held by certain Selling Holders; (iv) up to 6,964,236 shares of Class A Common Stock (the “Earnout Shares”) issuable to certain Selling Holders in earn-out consideration based on the achievement by the Company of certain stock price thresholds; (v) 5,789,000 shares of Class A common stock issued to Roman DBDR Tech Sponsor LLC (“Sponsor”) upon conversion of 5,789,000 shares of Class B Common Stock originally issued to Sponsor in connection with the initial public offering of Roman DBDR Tech Acquisition Corp. (“Roman DBDR”); (vi) 10,837,400 shares of Class A Common Stock issuable upon exercise of the Resale Warrants (as defined below) prior to the public resale of the Resale Warrants; and (vii) warrants (“Resale Warrants”) to purchase up to 10,837,400 shares of Class A Common Stock of the Company originally issued in a private placement in connection with the initial public offering of Roman DBDR. We will not receive any proceeds from the sale of shares of Class A Common Stock or the Resale Warrants by the Selling Holders pursuant to this prospectus; and
(B) the issuance by the Company of up to an aggregate of 22,415,400 shares of Class A Common Stock, which consists of (i) 10,837,400 shares of Class A Common Stock that are issuable upon the exercise of the Resale Warrants following the public resale of the Resale Warrants; and (ii) 11,578,000 shares of Class A Common Stock that are issuable upon the exercise of a like number of outstanding registered warrants (the “Public Warrants” and, together with the Resale Warrants, the “Warrants”) originally issued in the initial public offering of Roman DBDR.
This prospectus supplement updates the Prospectus with the information contained in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the Securities and Exchange Commission (“SEC”) on August 9, 2022 (the “Form 10-Q”). Accordingly, we have attached the Form 10-Q to this prospectus supplement.
This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
The Class A Common Stock and the Public Warrants are listed on The Nasdaq Global Market (“Nasdaq”), under the symbols “CMPO” and “CMPOW,” respectively. On August 8, 2022, the closing price of a share of Class A Common Stock was $6.61 and the closing price for our Public Warrants was $0.79.
We are an “emerging growth company” under federal securities laws and are subject to reduced public company reporting requirements. Investing in our Class A Common Stock or Warrants involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 8 of the Prospectus and in any applicable prospectus supplement to read about factors you should consider before buying our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is August 9, 2022.
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 85-2749902 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol | Name of each exchange on which registered | |||||||||
Class A Common Stock, $0.0001 par value per share | CMPO | The Nasdaq Global Market | |||||||||
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock | CMPOW | The Nasdaq Global Market |
Large accelerated filer | ☐ | Accelerated filer | ☒ | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | ||||||||
Emerging growth company | ☒ |
Page | ||||||||
COMPOSECURE, INC. | ||
Consolidated Balance Sheets | ||
($ in thousands, except par value and share amounts) |
June 30, 2022 | December 31, 2021 | ||||||||||
Unaudited | |||||||||||
ASSETS | |||||||||||
CURRENT ASSETS | |||||||||||
Cash and cash equivalents | $ | 13,391 | $ | 21,944 | |||||||
Accounts receivable, net | 45,208 | 27,925 | |||||||||
Inventories | 28,743 | 25,806 | |||||||||
Prepaid expenses and other current assets | 3,740 | 2,596 | |||||||||
Total current assets | 91,082 | 78,271 | |||||||||
Property and equipment, net | 21,114 | 22,177 | |||||||||
Right of use asset, net | 9,286 | 5,246 | |||||||||
Deferred tax asset | 24,777 | 25,650 | |||||||||
Derivative asset - interest rate swap | 5,590 | — | |||||||||
Deposits and other assets | 10 | 10 | |||||||||
Total assets | $ | 151,859 | $ | 131,354 | |||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||||
CURRENT LIABILITIES | |||||||||||
Current portion of long-term debt | $ | 4,997 | $ | 12,500 | |||||||
Current portion of lease liabilities | 1,664 | 1,119 | |||||||||
Accounts payable | 6,857 | 7,058 | |||||||||
Accrued expenses | 23,482 | 13,220 | |||||||||
Issuance costs payable | — | 23,107 | |||||||||
Bonus payable | 2,676 | 3,512 | |||||||||
Total current liabilities | 39,676 | 60,516 | |||||||||
Long-term debt, net of deferred finance costs | 224,787 | 233,132 | |||||||||
Convertible notes | 127,119 | 126,897 | |||||||||
Derivative liability - convertible notes redemption make-whole provision | 613 | 552 | |||||||||
Warrant liability | 17,230 | 35,271 | |||||||||
Line of credit | 25,000 | 15,000 | |||||||||
Lease liabilities | 8,257 | 4,709 | |||||||||
Tax receivable agreement liability | 24,897 | 24,500 | |||||||||
Earnout consideration liability | 19,386 | 38,427 | |||||||||
Total liabilities | 486,965 | 539,004 | |||||||||
Commitments and contingencies (Note 14) | |||||||||||
Redeemable non-controlling interest | 606,818 | 608,311 | |||||||||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding | — | — | |||||||||
Class A common stock, $0.0001 par value; 250,000,000 shares authorized, 15,118,532 and 14,929,982 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 2 | 1 | |||||||||
Class B common stock, $0.0001 par value; 75,000,000 shares authorized, 60,986,800 and 61,136,800 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 6 | 6 | |||||||||
Additional paid-in capital | 17,610 | 12,261 | |||||||||
Accumulated other comprehensive income | 5,357 | — | |||||||||
Accumulated deficit | (964,899) | (1,028,229) | |||||||||
Total stockholders' deficit | (941,924) | (1,015,961) | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 151,859 | $ | 131,354 |
COMPOSECURE, INC. | ||
Consolidated Statements of Operations (Unaudited) | ||
($ in thousands, except per share amounts) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net sales | $ | 97,199 | $ | 62,743 | $ | 181,382 | $ | 126,465 | |||||||||||||||
Cost of sales | 38,347 | 27,633 | 73,771 | 57,039 | |||||||||||||||||||
Gross profit | 58,852 | 35,110 | 107,611 | 69,426 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
General and administrative expenses | 20,513 | 10,739 | 38,227 | 18,796 | |||||||||||||||||||
Selling expenses | 3,920 | — | 4,982 | — | |||||||||||||||||||
Income from operations | 34,419 | 24,371 | 64,402 | 50,630 | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Revaluation of warrant liability | 19,465 | — | 18,041 | — | |||||||||||||||||||
Revaluation of earnout consideration liability | 14,934 | — | 19,041 | — | |||||||||||||||||||
Change in fair value of derivative liability - convertible notes redemption make-whole provision | 187 | — | (61) | — | |||||||||||||||||||
Interest expense, net | (4,904) | (2,493) | (9,238) | (5,136) | |||||||||||||||||||
Amortization of deferred financing costs | (641) | (398) | (1,274) | (792) | |||||||||||||||||||
Total other income (expenses), net | 29,041 | (2,891) | 26,509 | (5,928) | |||||||||||||||||||
Income before income taxes | 63,460 | 21,480 | 90,911 | 44,702 | |||||||||||||||||||
Provision for income taxes | (2,802) | — | (3,345) | — | |||||||||||||||||||
Net income | $ | 60,658 | $ | 21,480 | $ | 87,566 | $ | 44,702 | |||||||||||||||
Net income attributable to redeemable non-controlling interests | $ | 52,184 | $ | — | $ | 75,628 | $ | — | |||||||||||||||
Net income attributable to CompoSecure, Inc. | $ | 8,474 | $ | 21,480 | $ | 11,938 | $ | 44,702 | |||||||||||||||
Net income per share attributable to Class A common stockholders - basic | $ | 0.56 | n/a | $ | 0.80 | n/a | |||||||||||||||||
Net income per share attributable to Class A common stockholders - diluted (1) | $ | 0.52 | n/a | $ | 0.75 | n/a | |||||||||||||||||
Weighted average shares used to compute net income per share attributable to Class A common stockholders - basic (in thousands) | 15,052 | n/a | 14,993 | n/a | |||||||||||||||||||
Weighted average shares used to compute net income per share attributable to Class A common stockholders - diluted (in thousands) | 32,363 | n/a | 32,341 | n/a | |||||||||||||||||||
COMPOSECURE, INC. | ||
Consolidated Statements of Comprehensive Income (Unaudited) | ||
($ in thousands) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 60,658 | $ | 21,480 | $ | 87,566 | $ | 44,702 | |||||||||||||||
Other comprehensive income, net: | |||||||||||||||||||||||
Unrealized gain on derivative - interest rate swap (net of tax) | 1,488 | — | 5,357 | — | |||||||||||||||||||
Total other comprehensive income, net | 1,488 | — | 5,357 | — | |||||||||||||||||||
Comprehensive income | $ | 62,146 | $ | 21,480 | $ | 92,923 | $ | 44,702 | |||||||||||||||
COMPOSECURE, INC. | ||
Consolidated Statements of Stockholders' Deficit (Unaudited) | ||
(in thousands, except share data) |
Class A Common Stock | Class B Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | Redeemable Non-Controlling | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Income | Deficit | Deficit | Interest | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 14,929,982 | $ | 1 | 61,136,800 | $ | 6 | $ | 12,261 | $ | — | $ | (1,028,229) | $ | (1,015,961) | $ | 608,311 | ||||||||||||||||||||||||||||||||||||||||
Issuance costs related to Business combination | — | — | — | — | (726) | — | — | (726) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,006 | — | — | 1,006 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 4,741 | 4,741 | 22,167 | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock units issued pursuant to equity-based plans | 25,000 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on derivative - interest rate swap, net of tax | — | — | — | — | — | 3,869 | — | 3,869 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | — | — | — | — | — | — | 22,167 | 22,167 | (22,167) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | 14,954,982 | $ | 1 | 61,136,800 | $ | 6 | $ | 12,541 | $ | 3,869 | $ | (1,001,321) | $ | (984,904) | $ | 608,311 | ||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | (25,729) | (25,729) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 3,014 | — | — | 3,014 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 8,474 | 8,474 | 52,184 | |||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock units issued pursuant to equity-based plans | 163,550 | 1 | (150,000) | — | — | — | — | 1 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on derivative - interest rate swap, net of tax | — | — | — | — | — | 1,488 | — | 1,488 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Tax receivable agreement liability | — | — | — | — | 2,055 | — | — | 2,055 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | — | — | — | — | — | — | 53,677 | 53,677 | (53,677) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2022 | 15,118,532 | $ | 2 | 60,986,800 | $ | 6 | $ | 17,610 | $ | 5,357 | $ | (964,899) | $ | (941,924) | 606,818 | |||||||||||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | Redeemable Non-Controlling | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Income | Deficit | Deficit | Interest | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | — | $ | — | 61,136,800 | $ | 6 | $ | 6,148 | $ | — | $ | (198,707) | $ | (192,553) | $ | — | ||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | (3,276) | (3,276) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 441 | — | — | 441 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 23,222 | 23,222 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 | — | $ | — | 61,136,800 | $ | 6 | $ | 6,589 | $ | — | $ | (178,761) | $ | (172,166) | $ | — | ||||||||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | — | — | (11,326) | (11,326) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 343 | — | — | 343 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 21,480 | 21,480 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2021 | — | $ | — | 61,136,800 | $ | 6 | $ | 6,932 | $ | — | $ | (168,607) | $ | (161,669) | $ | — |
COMPOSECURE, INC. | ||
Consolidated Statements of Cash Flows (Unaudited) | ||
($ in thousands) |
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 87,566 | $ | 44,702 | |||||||
Adjustments to reconcile net income to net cash provided | |||||||||||
by operating activities | |||||||||||
Depreciation and amortization | 4,567 | 5,173 | |||||||||
Stock-based compensation expense | 4,020 | 784 | |||||||||
Amortization of deferred finance costs | 1,252 | 774 | |||||||||
Change in fair value of earnout consideration liability | (19,041) | — | |||||||||
Revaluation of warrant liability | (18,041) | — | |||||||||
Change in fair value of derivative liability | 61 | — | |||||||||
Deferred tax expense | 3,094 | — | |||||||||
Changes in assets and liabilities | |||||||||||
Accounts receivable | (17,282) | (20,542) | |||||||||
Inventories | (2,938) | (192) | |||||||||
Prepaid expenses and other assets | (1,144) | (515) | |||||||||
Deposits and other assets | — | (3,681) | |||||||||
Accounts payable | (201) | (1,600) | |||||||||
Accrued expenses | 10,262 | 2,124 | |||||||||
Other liabilities | (784) | 180 | |||||||||
Net cash provided by operating activities | 51,391 | 27,207 | |||||||||
Cash flows from investing activities: | |||||||||||
Purchase of property and equipment | (3,504) | (1,251) | |||||||||
Net cash used in investing activities | (3,504) | (1,251) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from line of credit | 10,000 | — | |||||||||
Payment of line of credit | — | (5,000) | |||||||||
Payment of term loan | (16,878) | (12,000) | |||||||||
Distributions | (25,729) | (14,603) | |||||||||
Payment of issuance costs related to business combination | (23,833) | — | |||||||||
Net cash used in financing activities | (56,440) | (31,603) | |||||||||
Net decrease in cash and cash equivalents | (8,553) | (5,647) | |||||||||
Cash and cash equivalents, beginning of period | 21,944 | 13,422 | |||||||||
Cash and cash equivalents, end of period | $ | 13,391 | $ | 7,775 | |||||||
Supplementary disclosure of cash flow information: | |||||||||||
Cash paid for interest expense | $ | 9,638 | $ | 5,136 | |||||||
Supplemental disclosure of non-cash financing activities: | |||||||||||
Derivative asset - interest rate swap | $ | 5,590 | $ | — | |||||||
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
June 30, 2022 | December 31, 2021 | ||||||||||
Raw materials | $ | 29,577 | $ | 27,474 | |||||||
Work in process | 1,474 | 582 | |||||||||
Finished goods | 1,223 | 363 | |||||||||
Inventory reserve | (3,531) | (2,613) | |||||||||
$ | 28,743 | $ | 25,806 |
Useful Life | June 30, 2022 | December 31, 2021 | |||||||||||||||
Machinery and equipment | 5 - 10 years | $ | 61,109 | $ | 59,437 | ||||||||||||
Furniture and fixtures | 3 - 5 years | 987 | 955 | ||||||||||||||
Computer equipment | 3 - 5 years | 927 | 925 | ||||||||||||||
Leasehold improvements | Shorter of lease term or estimated useful life | 11,687 | 11,358 | ||||||||||||||
Vehicles | 5 years | 264 | 264 | ||||||||||||||
Software | 1 - 3 years | 2,889 | 2,889 | ||||||||||||||
Construction in progress | 2,453 | 985 | |||||||||||||||
Total | 80,316 | 76,813 | |||||||||||||||
Less: Accumulated depreciation and amortization | (59,202) | (54,636) | |||||||||||||||
Property and equipment, net | $ | 21,114 | $ | 22,177 |
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
June 30, 2022 | December 31, 2021 | ||||||||||
Total debt | $ | 363,122 | $ | 380,000 | |||||||
Less: current portion of term loan (scheduled payments) | (4,997) | (12,500) | |||||||||
Less: deferred financing costs, net | (6,219) | (7,471) | |||||||||
Total long-term debt | $ | 351,906 | $ | 360,029 | |||||||
Derivative liability - redemption with make-whole provision | $ | 613 | $ | 552 |
("$ in thousands" - except share data) |
Remainder of 2022 | $ | — | |||
2023 | 14,372 | ||||
2024 | 18,750 | ||||
2025 | 200,000 | ||||
2026 | 130,000 | ||||
Total debt | $ | 363,122 |
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
Balance Sheet Classification | June 30, 2022 | December 31, 2021 | |||||||||||||||
Right-of-use assets | Right of use assets | $ | 9,286 | $ | 5,246 | ||||||||||||
Current lease liabilities | Current portion of lease liabilities | 1,664 | 1,119 | ||||||||||||||
Non-current lease liabilities | Non-current portion of lease liabilities | 8,257 | 4,709 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Operating lease cost | $ | 446 | $ | 319 | $ | 765 | $ | 638 | |||||||||||||||
Variable lease cost | 159 | 74 | 298 | 199 | |||||||||||||||||||
Total lease cost | $ | 605 | $ | 393 | $ | 1,063 | $ | 837 |
2022 (excluding the six months ended June 30, 2022) | $ | 996 | |||
2023 | 2,001 | ||||
2024 | 1,993 | ||||
2025 | 2,059 | ||||
2026 | 1,882 | ||||
Later years | 2,117 | ||||
Total lease payments | 11,048 | ||||
Less: Imputed interest | (1,127) | ||||
Present value of lease liabilities | $ | 9,921 |
Six months ended June 30, 2022 | Six months ended June 30, 2021 | ||||||||||
Operating cash flow information: | |||||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | 764 | $ | 636 | |||||||
Non-cash activity: | |||||||||||
Right-of-use assets obtained in exchange for lease obligations | $ | 4,673 | $ | — |
("$ in thousands" - except share data) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Stock option expense | $ | 337 | $ | 314 | $ | 683 | $ | 649 | |||||||||||||||
Restricted stock unit expense | 2,667 | — | 3,298 | — | |||||||||||||||||||
Incentive units | 10 | 29 | 39 | 135 | |||||||||||||||||||
Total stock-based compensation expense | $ | 3,014 | $ | 343 | $ | 4,020 | $ | 784 |
("$ in thousands" - except share data) |
Number of Shares | Weighted Average Exercise Price Per Shares | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Outstanding at January 1, 2022 | 5,409,771 | $ | 1.27 | 4.1 | $ | 37,542 | |||||||||||||||||
Granted | — | — | |||||||||||||||||||||
Exercised | — | — | |||||||||||||||||||||
Forfeited | — | — | |||||||||||||||||||||
Outstanding at June 30, 2022 | 5,409,771 | $ | 1.27 | 5.3 | $ | 21,583 | |||||||||||||||||
Vested and expected to vest at June 30, 2022 | 5,409,771 | $ | 1.27 | 4.8 | $ | 21,583 | |||||||||||||||||
Exercisable at June 30, 2022 | 5,133,541 | $ | 1.04 | 3.4 | $ | 21,484 |
Number of Shares | |||||
Outstanding at January 1, 2022 | — | ||||
Granted | 5,554,133 | ||||
Vested | (46,204) | ||||
Forfeited | — | ||||
Nonvested at June 30, 2022 | 5,507,929 |
Number of Shares | |||||
Outstanding at January 1, 2022 | 657,160 | ||||
Granted | — | ||||
Vested | — | ||||
Forfeited | — | ||||
Nonvested at June 30, 2022 | 657,160 |
("$ in thousands" - except share data) |
("$ in thousands" - except share data) |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||
Assets Carried at Fair Value: | ||||||||||||||||||||||||||
Derivative asset - interest rate swap | $ | — | $ | — | $ | 5,590 | $ | 5,590 | ||||||||||||||||||
Liabilities Carried at Fair Value: | ||||||||||||||||||||||||||
Public warrants | 8,452 | — | — | 8,452 | ||||||||||||||||||||||
Private warrants | — | — | 8,778 | 8,778 | ||||||||||||||||||||||
Earnout consideration | — | — | 19,386 | 19,386 | ||||||||||||||||||||||
Derivative liability - redemption with make-whole provision | — | — | 613 | 613 | ||||||||||||||||||||||
December 31, 2021 | ||||||||||||||||||||||||||
Liabilities Carried at Fair Value: | ||||||||||||||||||||||||||
Public warrants | $ | 17,714 | $ | — | $ | — | 17,714 | |||||||||||||||||||
Private warrants | — | — | 17,557 | 17,557 | ||||||||||||||||||||||
Earnout consideration | — | — | 38,427 | 38,427 | ||||||||||||||||||||||
Derivative liability - redemption with make-whole provision | — | — | 552 | 552 |
("$ in thousands" - except share data) |
Warrant Liabilities | ||||||||
Estimated fair value at December 31, 2021 | $ | 35,271 | ||||||
Change in estimated fair value | (18,041) | |||||||
Estimated fair value at June 30, 2022 | $ | 17,230 |
June 30, 2022 | ||||||||
Exercise Price | $ | 11.50 | ||||||
Risk-free interest rate | 3.01 | % | ||||||
Expected volatility | 42 | % | ||||||
Expected dividends | 0 | % | ||||||
Expected term (years) | 4.5 | |||||||
Common Stock market value | $ | 5.20 |
Earnout Consideration Liability | ||||||||
Estimated fair value at December 31, 2021 | $ | 38,427 | ||||||
Change in estimated fair value | (19,041) | |||||||
Estimated fair value at June 30, 2022 | $ | 19,386 |
("$ in thousands" - except share data) |
June 30, 2022 | ||||||||
Valuation date share price | $ | 5.20 | ||||||
Risk-free interest rate | 2.95% - 2.99% | |||||||
Expected volatility | 75% - 82.5% | |||||||
Expected dividends | 0 | % | ||||||
Expected term (years) | 2.5 - 3.5 years |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net sales by region: | |||||||||||||||||||||||
Domestic | 70,112 | 46,858 | 132,493 | 102,726 | |||||||||||||||||||
International | 27,087 | 15,885 | 48,889 | 23,739 | |||||||||||||||||||
Total | $ | 97,199 | $ | 62,743 | $ | 181,382 | $ | 126,465 |
("$ in thousands" - except share data) |
Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||
Basic and diluted: | |||||||||||||||||||||||||||||||||||||||||
Net income | $ | 60,658 | $ | 87,566 | |||||||||||||||||||||||||||||||||||||
Less: Net income attributable to non-controlling interest | (52,184) | (75,628) | |||||||||||||||||||||||||||||||||||||||
Net income attributable to Class A Common Stockholders | $ | 8,474 | $ | 11,938 | |||||||||||||||||||||||||||||||||||||
Plus: adjustment due to net effect of stock options and exchangeable notes to net income | 8,236 | 12,267 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to Class A Common Stockholders after adjustment | $ | 16,710 | $ | 24,205 | |||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding used in computing net income per share - basic | 15,051,732 | 14,992,612 | |||||||||||||||||||||||||||||||||||||||
Plus: net effect of dilutive stock options and exchangeable notes | 17,311,560 | 17,348,682 | |||||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding used in computing net income per share—diluted | 32,363,292 | 32,341,294 | |||||||||||||||||||||||||||||||||||||||
Net income per share—basic | $ | 0.56 | $ | 0.80 | |||||||||||||||||||||||||||||||||||||
Net income per share—diluted | $ | 0.52 | $ | 0.75 |
("$ in thousands" - except share data) |
Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | |||||||||||||||||||||||||
Potentially dilutive securities: | ||||||||||||||||||||||||||
Warrants | 22,415,400 | 22,415,400 | ||||||||||||||||||||||||
Class B common shares | 60,986,800 | 60,986,800 | ||||||||||||||||||||||||
Earnout consideration shares | 7,500,000 | 7,500,000 | ||||||||||||||||||||||||
Stock options and restricted common shares | 3,897,048 | 3,597,048 | ||||||||||||||||||||||||
("$ in thousands" - except share data) |
Six-month period ended June 30, 2022 | Six-month period ended June 30, 2022 | |||||||||||||||||||
Income Statement Items: | Under No-allocation method | Adjustment | As reported | |||||||||||||||||
Provision for income taxes | $ | 948 | $ | 2,397 | $ | 3,345 | ||||||||||||||
Net income | 89,963 | (2,397) | 87,566 | |||||||||||||||||
Net income attributable to CompoSecure, Inc. | 44,050 | (32,112) | 11,938 | |||||||||||||||||
Net income attributable to redeemable non-controlling interests | 45,913 | 29,715 | 75,628 | |||||||||||||||||
Net income per share attributable to Class A common stockholders - basic | $ | 2.94 | $ | (2.14) | $ | 0.80 | ||||||||||||||
Net income per share attributable to Class A common stockholders - diluted | $ | 0.97 | $ | (0.22) | $ | 0.75 | ||||||||||||||
Three-month period ended June 30, 2022 | Three-month period ended June 30, 2022 | |||||||||||||||||||
Income Statement Items: | Under No-allocation method | Adjustment | As reported | |||||||||||||||||
Income tax expense | $ | 405 | $ | 2,397 | $ | 2,802 | ||||||||||||||
Net income | 63,055 | (2,397) | 60,658 | |||||||||||||||||
Net income attributable to CompoSecure, Inc. | 38,437 | (29,963) | 8,474 | |||||||||||||||||
Net income attributable to redeemable non-controlling interests | 24,619 | 27,565 | 52,184 | |||||||||||||||||
Net income per share attributable to Class A common stockholders - basic | $ | 2.55 | $ | (1.99) | $ | 0.56 | ||||||||||||||
Net income per share attributable to Class A common stockholders - diluted | $ | 0.68 | $ | (0.16) | $ | 0.52 | ||||||||||||||
June 30, 2022 | June 30, 2022 | |||||||||||||||||||
Balance Sheet Items: | Under No-allocation method | Adjustment | As reported | |||||||||||||||||
Deferred tax asset | $ | 25,098 | $ | (321) | $ | 24,777 | ||||||||||||||
Retained earnings | (962,502) | (2,397) | (964,899) |
("$ in thousands" - except share data) |
Three-month period ended March 31, 2022 | Three-month period ended March 31, 2022 | |||||||||||||||||||
Income Statement Items: | As reported | Adjustment | Under re-allocation method | |||||||||||||||||
Net income per share attributable to Class A common stockholders - basic | $ | 0.32 | $ | (0.09) | $ | 0.23 | ||||||||||||||
Net income per share attributable to Class A common stockholders - diluted | $ | 0.16 | $ | 0.07 | $ | 0.23 | ||||||||||||||
Net income attributable to CompoSecure, Inc. | 4,741 | (1,347) | 3,394 | |||||||||||||||||
Net income attributable to redeemable non-controlling interests | 22,167 | 1,347 | 23,514 |
Year ended December 31, 2021 | Year ended December 31, 2021 | |||||||||||||||||||
Income Statement Items: | As reported | Adjustment | Under re-allocation method | |||||||||||||||||
Net income per share attributable to Class A common stockholders - basic (1) | $ | 0.91 | $ | (0.70) | $ | 0.21 | ||||||||||||||
Net income per share attributable to Class A common stockholders - diluted (1) | $ | 0.14 | $ | (0.02) | $ | 0.12 | ||||||||||||||
Net income attributable to CompoSecure, Inc. (2) | 13,512 | (10,358) | 3,154 | |||||||||||||||||
Net income attributable to redeemable non-controlling interests | 69,902 | 10,358 | 80,260 |
("$ in thousands" - except share data) |
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net sales | $ | 97,199 | $ | 62,743 | $ | 34,456 | 55% | ||||||||||||||||
Cost of sales | 38,347 | 27,633 | 10,714 | 39% | |||||||||||||||||||
Gross profit | 58,852 | 35,110 | 23,742 | 68% | |||||||||||||||||||
Operating expenses | 24,433 | 10,739 | 13,694 | 128% | |||||||||||||||||||
Income from operations | 34,419 | 24,371 | 10,048 | 41% | |||||||||||||||||||
Other expenses, net | 29,041 | (2,891) | 31,932 | (1,105)% | |||||||||||||||||||
Income before income taxes | $ | 63,460 | $ | 21,480 | $ | 41,980 | 195% | ||||||||||||||||
Provision for income taxes | (2,802) | — | $ | (2,802) | 100% | ||||||||||||||||||
Net income | 60,658 | 21,480 | 39,178 | 182% | |||||||||||||||||||
Net income attributable to redeemable non-controlling interests | 52,184 | — | 52,184 | 100% | |||||||||||||||||||
Net income attributable to CompoSecure, Inc | 8,474 | 21,480 | (13,006) | (61)% |
Three Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Gross Margin | 61 | % | 56 | % | |||||||
Operating margin | 35 | % | 39 | % |
Three Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net sales by region | |||||||||||||||||||||||
Domestic | $ | 70,112 | $ | 46,858 | $ | 23,254 | 50 | % | |||||||||||||||
International | 27,087 | 15,884 | 11,203 | 71 | % | ||||||||||||||||||
Total | $ | 97,199 | $ | 62,743 | $ | 34,456 | 55 | % |
Three Months Ended | |||||||||||||||||||||||
June 30, 2022 | March 31, 2022 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net sales | $ | 97,199 | $ | 84,813 | $ | 12,386 | 15 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net sales | $ | 181,382 | $ | 126,465 | $ | 54,917 | 43% | ||||||||||||||||
Cost of sales | 73,771 | 57,039 | 16,732 | 29% | |||||||||||||||||||
Gross profit | 107,611 | 69,426 | 38,185 | 55% | |||||||||||||||||||
Operating expenses | 43,209 | 18,796 | 24,413 | 130% | |||||||||||||||||||
Income from operations | 64,402 | 50,630 | 13,772 | 27% | |||||||||||||||||||
Other expenses, net | 26,509 | (5,928) | 32,437 | (547)% | |||||||||||||||||||
Income before income taxes | 90,911 | 44,702 | 46,209 | 103% | |||||||||||||||||||
Provision for income taxes | (3,345) | — | (3,345) | 100% | |||||||||||||||||||
Net income | 87,566 | 44,702 | 42,864 | 96% | |||||||||||||||||||
Net income attributable to redeemable non-controlling interests | 75,628 | — | 75,628 | 100% | |||||||||||||||||||
Net income attributable to CompoSecure, Inc | $ | 11,938 | $ | 44,702 | $ | (32,764) | (73)% |
Six Months Ended June 30, | |||||||||||
2022 | 2021 | ||||||||||
Gross Margin | 59 | % | 55 | % | |||||||
Operating margin | 36 | % | 40 | % |
Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net sales by region | |||||||||||||||||||||||
Domestic | 132,493 | 102,725 | 29,768 | 29 | % | ||||||||||||||||||
International | 48,889 | 23,740 | 25,149 | 106 | % | ||||||||||||||||||
Total | 181,382 | 126,465 | 54,917 | 43 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||
Net income | $ | 60,658 | $ | 21,480 | $ | 87,566 | $ | 44,702 | |||||||||||||||||||||||||||
Add: | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | 2,217 | 2,587 | 4,567 | 5,173 | |||||||||||||||||||||||||||||||
Interest expense, net | 5,547 | 2,891 | 10,513 | 5,928 | |||||||||||||||||||||||||||||||
Taxes | 2,802 | — | 3,345 | — | |||||||||||||||||||||||||||||||
EBITDA | $ | 71,224 | $ | 26,958 | $ | 105,991 | $ | 55,803 | |||||||||||||||||||||||||||
Stock-based compensation expense | 3,014 | 343 | 4,020 | 784 | |||||||||||||||||||||||||||||||
Mark to market adjustments, net (1) | (34,586) | — | (37,021) | — | |||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 39,652 | $ | 27,301 | $ | 72,990 | $ | 56,587 | |||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2022 | 2022 | ||||||||||||||||||||||
(in thousands) except per share amounts | |||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | ||||||||||||||||||||
Net Income | $ | 60,658 | $ | 60,658 | $ | 87,566 | $ | 87,566 | |||||||||||||||
Add: provision for income taxes | 2,802 | 2,802 | 3,345 | 3,345 | |||||||||||||||||||
Income before Income taxes | 63,460 | 63,460 | 90,911 | 90911 | 90,911 | ||||||||||||||||||
Income tax expense (1) | (6,745) | (6,745) | (12,166) | (12,166) | |||||||||||||||||||
Adjusted net Income | 56,715 | 56,715 | 78,745 | 78,745 | |||||||||||||||||||
Less: mark-to-market adjustments (2) | (34,399) | (34,399) | (37,082) | (37,082) | |||||||||||||||||||
Add: stock-based compensation | 3,014 | 3,014 | 4,020 | 4,020 | |||||||||||||||||||
Adjusted net income | $ | 25,330 | $ | 25,330 | $ | 45,683 | $ | 45,683 | |||||||||||||||
Common shares outstanding used in computing net income per share, basic: | |||||||||||||||||||||||
Class A and Class B common shares (3) | 76,039 | 76,039 | 76,105 | 76,105 | |||||||||||||||||||
Common shares outstanding used in computing net income per share, diluted: | |||||||||||||||||||||||
Warrants (Public and Private) (4) | — | 8,094 | — | 8,094 | |||||||||||||||||||
Options and restricted common shares | — | 4,312 | — | 4,349 | |||||||||||||||||||
Total Shares outstanding used in computing net income per share | 76,039 | 88,445 | 76,105 | 88,548 | |||||||||||||||||||
Adjusted net income per share (5) | $ | 0.33 | $ | 0.29 | $ | 0.60 | $ | 0.52 |
Effective Dates | Notional Amount | Fixed Rate | ||||||||||||
($ in thousands) | ||||||||||||||
January 5, 2022 through December 5, 2023 | $ | 125,000 | 1.06 | % | ||||||||||
December 5, 2023 through December 22, 2025 | $ | 125,000 | 1.90 | % |
Exhibit No. | Description | |||||||
101 | The following materials from CompoSecure, Inc.'s Form 10-Q for the quarter ended June 30, 2022, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021, (ii) Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2022 and June 30, 2021, (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 30, 2022 and June 30, 2021 (iv) Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2022 and June 30, 2021, as well as the year ended December 31, 2021, (v) Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2022 and June 30, 2021, and (vi) Notes to Consolidated Financial Statements - Unaudited. | |||||||
104 | Cover Page Interactive Data File (embedded within the inline XBRL document) | |||||||
* Filed herewith | ||||||||
** In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed. |