What changed in this filing

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Item 1. Business

2025-03-14 compared with 2024-03-15 · 214 added, 201 removed, 163 unchanged (72% of the section changed)

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References to “Lollicup” refer to Lollicup USA Inc., a California corporation, our wholly-owned subsidiary.

We are a rapidly-growing specialty distributor and select manufacturer of disposable foodservice products and related items.

We are a nimble supplier of a wide range of products for the foodservice industry, including food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves and other products.

We are a rapidly-growing and nimble distributor and manufacturer of disposable foodservice products and related items, including food and take-out containers, bags, boxes, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, gloves, janitorial supplies, and other products.

Our products are available in plastic, paper, biopolymer-based, and other compostable forms.

Our Karat Earth® line provides environmentally friendly options to our customers, who are increasingly focused on sustainability.

We are a leader in product innovation, offering a growing line of environmentally-friendly products to our customers, who are increasingly focused on sustainability.

We also offer customized solutions to our customers, including new product development, design, printing and logistics services.

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We believe we have established ourselves as a differentiated provider of high-quality products relative to our competitors.

Our operating model entails generating the majority of our revenue from the distribution of our vendors' products, complemented by select manufacturing capabilities in the U.S., which allows us to provide customers with broad product choices and customized offerings with short lead times even during global supply chain disruptions.

This model provides us with the flexibility to adjust the mix of our product offering from import and manufacturing in evolving economic environment to drive operating efficiency and sustained margin expansion.

During 2023, in light of the rising domestic labor and other operating costs and dropping ocean freight rates, we executed a strategy to pivot into a more asset-light model by increasing imports and scaling back manufacturing in certain locations.

Our operating model entails generating the majority of our revenue from the distribution of products sourced from a diversified global network of over 140 vendors, complemented by select manufacturing capabilities in the U.S., which allows us to provide customers with broad product choices and customized offerings with short lead times.

This model provides us with the flexibility to adjust the mix of our product offering from import and manufacturing in evolving economic environments to drive operating efficiency and sustained margin expansion.

Starting in 2023 and continuing into 2024, in light of the rising domestic labor and other operating costs and dropping ocean freight rates, we executed a strategy to pivot into a more asset-light model by increasing imports and scaling back domestic manufacturing.

At the same time, we have expanded our vendor network by prioritizing strong partnerships with reliable and cost-efficient sources.

This has enabled us to diversify our supplier base, minimize reliance on individual suppliers, enhance the resilience of our supply chain, expand our margin and improve our operating cash flows.

While we largely maintained our manufacturing infrastructure, we disposed of certain production machinery and related raw materials and reduced our production workforce.

For the year ended December 31, 2023, distribution accounted for approximately 80% of our net sales, up from 74% in the prior year, while manufacturing accounted for approximately 20% of our net sales, down from 26% in the prior year.

While we expect manufacturing to remain a relatively small portion of our sales mix going forward, we plan to retain manufacturing capabilities domestically to continue to operate with a nimble business model.

Our customers include a wide variety of national and regional distributors, restaurant chains, retail establishments and online customers.

Our products are well suited to address our customers’ increased focus on take-out and delivery capabilities.

Our diverse and growing blue chip customer base includes well-known fast casual chains such as Applebee’s Neighborhood Grill + Bar, Chili’s Grill & Bar, PF Chang's, Texas Roadhouse, Chipotle Mexican Grill, Corner Bakery Cafe and TGI Fridays, as well as fast food chains including The Coffee Bean & Tea Leaf, El Pollo Loco, In-N-Out Burger, Jack in the Box, Popeyes, Panda Express, Raising Cane’s Chicken Fingers, and Torchy’s Tacos.

As our capabilities, product offering and footprint expand, we are also beginning to supply products to national and regional supermarket chains, airlines, entertainment venues and other non-restaurant customers.

Our strong brand recognition in the foodservice industry, nimble operations and rapidly increasing size and scope of our distribution and logistics network provide us with a significant advantage that enables us to acquire new customers as well as increase our business with existing customers.

For the years ended December 31, 2023 and December 31, 2022, no single customer represented more than 10% of our revenue.

We are an omni-channel provider and have recently made significant investments in e-commerce, technology, supply chain, distribution network, and customer initiatives, such as online ordering and same day pickup.

We operate our e-commerce channel through our company website, www.lollicupstore.com and upgraded the underlying e-commerce platform during 2023.

This upgrade not only enabled us to improve our storefront from an operational standpoint, but also allowed for the integration of multiple apps and extensions to enhance user experience.

In addition, we also operate third-party storefronts on Amazon, Walmart, eBay, and recently expanded to TikTok.

Our e-commerce platforms allow us to offer our entire range of products for online procurement and enable us to cross market other products to our customers.

These platforms also provide us with the opportunity to continue our expansion into the business-to-consumer ("B2C") market in addition to the business-to-business ("B2B") small retailer customers that we traditionally serve.

We have recently elevated our focus on servicing B2C market by sourcing products tailored for and geared toward these end-users.

We further expanded our e-commerce team and improved and scaled our online marketing efforts.

Our e-commerce channel significantly outperformed all other channels in year-over-year revenue growth in 2023, and we believe the e-commerce channel will continue to be a key growth driver in our business.

Although we expect manufacturing to remain a relatively small portion of our sales mix going forward, we plan to keep manufacturing capabilities domestically to retain our nimble business model.

For the year ended December 31, 2024, manufacturing accounted for approximately 11% of our net sales, down from 20% in the prior year.

Our customers include a wide variety of national and regional distributors, restaurant and supermarket chains, retail establishments and online customers.

Our products are well suited to address our customers’ needs towards take-out and food delivery orders.

Our diverse and growing blue chip customer base includes well-known fast casual chains such as Applebee’s Neighborhood Grill + Bar, Chili’s Grill & Bar, PF Chang's China Bistro, Chipotle Mexican Grill, and Corner Bakery Cafe, and fast food chains such as The Coffee Bean & Tea Leaf, El Pollo Loco, In-N-Out Burger, Jack in the Box, Panda Express, and Raising Cane’s Chicken Fingers.

Additionally, in 2024, we initiated a strategic emphasis on expanding into the supermarket segment.

We have gained prominent grocery chain customers such as Albertsons and H-E-B, and we expect this sector to be one of the most significant growth drivers for our business.

As our capabilities, product offering and footprint expand, we aim to broaden our reach to national and regional airlines, entertainment venues, and other non-restaurant customers.

Our increasingly strong brand recognition in the foodservice industry, nimble operations and scaled distribution position us strongly for new customer acquisition and continued wallet share expansion with existing customers.

For the years ended December 31, 2024 and 2023, no single customer represented more than 10% of our revenue.

We are an omni-channel provider and have made significant investments in e-commerce, distribution network, technology, supply chain, and customer initiatives, such as online ordering and same day pickup.

We operate our e-commerce channel through our company storefront at www.lollicupstore.com and through our mobile app, available for download on both Apple and Android platforms, as well as third-party storefronts on Amazon, Walmart, eBay, and TikTok.

Our e-commerce platforms allow us to offer our entire range of products for online procurement and cross market other products to our customers.

We have elevated our focus on servicing the B2C market by sourcing products tailored for and geared toward these end-users.

have continued to invest in expanding our e-commerce team and improving and scaling our online marketing efforts.

Our e-commerce channel, which typically carries a higher margin, significantly outperformed all other channels in year-over-year revenue growth in 2024, and we believe the e-commerce channel will continue to be a key growth driver in our business.

We classify our customers into four categories:

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• National and regional chains :

typically fast casual and fast food restaurants with locations across multiple states to which we supply specified products.

We enter into sales contracts with a subset of our national and regional chains customers, providing some visibility into future revenue.

primarily regional bubble tea shops, boutique coffee shops and frozen yogurt shops that often purchase our specialty beverage ingredients and related items.

typically fast casual, fast food restaurants, and supermarket chains with locations across multiple states to which we supply specified products.

We enter into floor stocking agreements with a subset of our national and regional chains customers, providing some visibility into future revenue.

primarily regional bubble tea shops, boutique coffee shops, frozen yogurt shops and small mom-and-pop restaurants that often purchase our specialty beverage ingredients and related items.

This channel also includes a small amount of revenue generated from logistic and transportation services provided to customers.

• E-commerce/Online :

small businesses, often with less than two locations, such as small restaurants, bubble tea shops, coffee shops, juice bars, smoothie shops and some customers who purchase for personal use.

In addition to product sales, we also generate a small amount of revenue from logistics services which is the transportation and delivery of shipping containers from ports to customers, primarily to retail customers.

small businesses, often with only one or two locations, as well as customers who purchase for personal use.

The diversity of our customer types allows us to maintain a broad product offering while providing us with the ability to source products efficiently, as we are able to sell many products across multiple customer segments.

We expect a large proportion of our future growth to come from national and regional chains as well as our higher margin online customers.

We believe that the current industry environment and regulatory landscape has accelerated the shift in consumer preferences towards food delivery, take-out ordering and eco-friendly sustainable products, which we expect to continue in the foreseeable future.

With our customer-centric approach, we have generated significant growth through the continued expansion of our customer base and increasing penetration into existing customers across all channels.

In addition, we have been able to grow our wallet share with many customers, in particular our national and regional chains, by supplying them a broader range of our foodservice disposables and related products.

As we broaden our reach, expand into new geographic areas, and continue to focus on customer engagement, we expanded our sales force in 2023 by bringing in new sales representatives and regional managers.

We also promoted from within our inaugural Chief Revenue Officer in 2023.

We expect a large proportion of our future growth to come from national and regional chains and distributors, as well as our higher margin online customers.

We believe that the current industry environment and regulatory landscape has accelerated the shift in consumer preferences towards take-out orders, food delivery, and eco-friendly sustainable products, which we expect to continue in the foreseeable future.

As we broaden our reach and expand into new geographic areas, we have taken significant steps to strengthen our sales force and to scale our distribution network.

We have added new sales representatives and regional managers to ensure localized expertise and better customer engagement in key markets.

Additionally, we recognize the value of internal growth and development within our organization, exemplified by the promotion of our inaugural Chief Revenue Officer in 2023 as well as regional sales directors.

These strategic appointments underscore our commitment to fostering leadership from within and aligning our sales strategy with long-term growth objectives.

Together, these efforts position us to drive sales performance and deepen our market presence.

We continued to significantly expand our distribution network, which we view as one of the key growth drivers of our business.

We currently operate manufacturing facilities and distribution centers in Chino, California, Rockwall, Texas and Kapolei, Hawaii.

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Kapolei, Hawaii;

City of Industry, California;

Sugar Land, Texas;

and Aurora, Illinois.

During 2023, we invested in the significant expansion of our distribution capabilities by adding 188,000 square feet in distribution space through the opening of two new warehouses in Sugar Land, Texas and Aurora, Illinois.

We also doubled our warehouse space in Washington as we moved our warehouse from Sumner to Puyallup.

Further, we racked up additional areas in existing warehouses, adding 40,000 square feet of new racked space in our warehouses.

Our distribution and fulfillment centers are strategically located in proximity to major population centers, including the Los Angeles, New York, Chicago, Dallas, Houston, Seattle, Atlanta and Honolulu metro areas.

As described in Note 22 — Subsequent Events in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, we entered into a lease agreement on February 12, 2024 for an additional distribution center in Mesa, Arizona and are currently in the process of setting up this location to be fully operational by the second quarter of 2024.

Aurora, Illinois;

and Mesa, Arizona.

In the past 24 months, we opened new warehouses in Mesa, Arizona, Sugar Land, Texas and Aurora, Illinois, adding over 232,000 square feet of distribution space.

Further, as described in Note 22 — Subsequent Events in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, on March 3, 2025, we entered into a lease agreement for an additional 187,000 square foot distribution center in Chino, California, to support our anticipated growth.

We are currently in the process of setting up this location to be fully operational by the second quarter of 2025.

Additionally, we also racked up more areas in existing warehouses, with over 50,000 square feet of new racked space added in 2024 and 2023 combined.

Our distribution and fulfillment centers are strategically located in proximity to major population centers, including the Los Angeles, New York, Chicago, Phoenix, Dallas, Houston, Seattle, Atlanta and Honolulu metro areas.

Competitive Strengths

We believe the following strengths fundamentally differentiate us from our competitors and drive our success:

One-stop shop with a diverse product offering for the foodservice market and highly nimble sourcing capabilities

We leverage our diversified global supplier network and offer customers a wide selection of single-use disposable foodservice products, with over 6,400 active SKUs (defined as active products available for purchase) across a broad range of product categories.

We have significantly grown our inventory sourcing network from only a handful of vendors initially to over 133 active vendors by the end of 2023.

Key offerings include food and take-out containers, bags, tableware, cups, lids, cutlery and straws primarily sourced through our diverse supplier base.

Our strong relationships with our suppliers allow us to offer customers products that both preserve the highest possible food quality and meet the unique needs of their business.

Furthermore, these supplier relationships allow us to offer custom-branded and custom-designed products with fast turnaround times and at competitive prices.

With increasing regulations around single use plastics, our Karat Earth® line provides environmentally friendly options that include food and take-out containers, bags, tableware, cups, lids, cutlery and straws.

This special catalog of sustainable products are made from renewable resources that are ethically sourced.

We intend to invest further in research and development for our Karat Earth® line to significantly expand our product offering to meet the needs of our customers and the evolving regulatory landscape.

We often are a key supply chain partner integral to the daily operations of our customers.

Our ability to quickly provide premium products at competitive prices has typically allowed us to become a trusted supplier to our customers.

Through an ongoing feedback loop, as customer demand varies and new needs emerge, we are able to act nimbly and qualify new suppliers quickly to augment our product offering.

Focus on distribution and advanced logistics network, complemented by flexible manufacturing capabilities

We consider our increasingly sophisticated distribution capabilities and related strength in logistics to be an important core competency and key differentiator from our competitors.

We opened two new warehouses in 2023 located in Sugar Land,

Texas, and Aurora, Illinois, and also racked up additional space within existing warehouses to allow for better management and fulfillment of products.

We own a fleet of 26 trucks (including some that are refrigerated to transport frozen food item), 44 trailers, 10 bobtails, 1 yard goat, and 38 chassis, and as of December 31, 2023, employed 40 drivers in our logistics division.

Our national distribution and logistics capacity has allowed us to reduce the need for reliance on third-party logistics providers and provide efficient and cost-effective distribution to customers.

We intend to continue to enhance our distribution productivity via opening additional distribution centers in strategic locations across the U.S., expanding our distribution fleet, and increasing the number of drivers.

Our California, Texas and Hawaii facilities have a portion of operational capacity dedicated to manufacturing capabilities.

For the year ended December 31, 2023, approximately 20% of our revenues were generated from the sale of products manufactured in-house.

We view distribution as our primary focus and growth driver while utilizing our manufacturing capabilities as a complement to the base distribution business.

This approach allows us to procure products at competitive prices by being able to compare procurement costs versus domestic manufacturing costs to help determine the more efficient option.

Diverse and growing blue-chip customer base

We sell and distribute a broad portfolio of single-use disposable foodservice products to customers nationwide including leading chain restaurants, distributors, convenience stores, retail establishments and online customers.

Our blue-chip customers include leading fast casual chains such as Chili’s Grill & Bar and Chipotle Mexican Grill, as well as fast food chains such as In-N-Out Burger, El Pollo Loco, and Panda Express, among others.

We intend to further expand our customer base by selling our products to non-traditional foodservice customers, including regional and national supermarket chains, airlines, entertainment venues and other non-restaurant customers.

Progress towards such expansion and diversification of our customer base is already underway.

Leader in eco-friendly products to address sustainability

Our commitment to pursuing environmental sustainability is exhibited in every aspect of our business.

Extensive portfolio of disposable foodservice products

We leverage our diversified global supplier network and domestic production capabilities to offer customers a wide selection of single-use disposable foodservice products and specialty food and beverage products with over 6,900 SKUs across a broad range of product categories.

Key offerings include food and take-out containers, bags, boxes, tableware, cups, lids,

cutlery and straws, boba tea supplies and coffee drinks.

Our strong relationships with our suppliers allow us to offer customers products that preserve the high food quality and meet the unique needs of their business.

Furthermore, these supplier relationships allow us to offer custom-branded and custom-designed products with fast turnaround times and at competitive prices, providing them with both breadth of products and flexibility.

Pioneering the way for sustainability with a growing focus on eco-friendly products

Our commitment to pursuing environmental sustainability is exhibited in many aspects of our business.

We believe we are amongst the leading companies in the supply of eco-friendly disposal foodservice products in the United States.

Since our inception, we have made the conscious choice to never use Styrofoam in any of our products.

In 2008, we established Karat Earth® as an eco-friendly line of foodservice products, including food and takeout containers, bags, tableware, cups, lids, cutlery and straws.

In 2008, we established Karat Earth® as an eco-friendly line of foodservice products, including food and take-out containers, bags, boxes, tableware, cups, lids, cutlery and straws.

This special catalog of products are largely made from renewable resources that are commercially compostable.

Karat Earth® supplements our eco-friendly offerings within our other product lines.

We continue to invest in research and development to expand our offering of sustainable products to meet the needs of our customers and the evolving regulatory landscape.

These efforts have allowed us to consistently grow our sales from eco-friendly products as a percentage of our total sales.

Our eco-friendly products made up 33% of total sales during the year ended December 31, 2023 compared to 27% during the prior year.

Customized solutions offering new product development, design, printing and logistics services

In recent years, we are seeing a growing trend towards takeout and at-home dining, and as a result the restaurant industry is becoming increasingly focused on receiving a customized, value-add, and customer oriented-experience when it comes to the packaging of their products.

In order to promote brand familiarity and loyalty, we collaborate closely with our customers to develop and deliver custom products that meet the unique branding, color and schematics requirements of their businesses.

Our in house domestic printing capability allows for fast turnaround times at competitive costs.

Experienced and growth-oriented management team

We have seen continued growth in our eco-friendly product line, with sales from these products increasing to 33.6% of our total sales for the year ended December 31, 2024, compared to 32.7% in the previous year.

Growing blue-chip customer base across various channels

We sell and distribute our products to a variety of customers nationwide including national and regional distributors, restaurant and supermarket chains, retail establishments and online customers.

We have a successful track record of winning new customers and significantly growing wallet shares with our customers.

Our diverse and growing blue chip customer base includes well-known fast casual chains such as Applebee’s Neighborhood Grill + Bar, Chili’s Grill & Bar, PF Chang's China Bistro, Chipotle Mexican Grill, and Corner Bakery Cafe, fast food chains such as The Coffee Bean & Tea Leaf, El Pollo Loco, In-N-Out Burger, Jack in the Box, Panda Express, and Raising Cane’s Chicken Fingers.

Compared to 2020 prior to our IPO, we have grown our chain accounts by more than 10 folds with revenue up 33%.

We have also recently added certain prominent supermarket chains such as Albertsons and H-E-B in our customer base, as our efforts to expand into this section started to come to fruition.

As our capabilities, product offering and footprint expand, we aim to continue to focus on the growth in the supermarket sector and broaden our reach to national and regional airlines, entertainment venues, and other non-restaurant customers.

Scaled distribution with diversified global sourcing and flexible domestic production capabilities

We leverage our diversified global supplier network to offer customers a wide selection of single-use disposable foodservice products.

These supplier relationships allow us to offer custom-branded and custom-designed products with fast turnaround times and at competitive prices.

Over time, we have strategically reduced our reliance on suppliers in China for imported goods to approximately 20% of our global purchases, diversifying our sourcing to countries with more favorable trade conditions and minimal tariffs, such as Taiwan, which accounted for more than 50% of our global sourcing for the year ended December 31, 2024.

This approach has allowed us to improve the cost-efficiency in our supply chain.

We have significantly grown our inventory sourcing network from only a handful of vendors initially to over 140 active vendors by the end of 2024.

Domestically, our California, Texas and Hawaii facilities have a portion of operational capacity dedicated to manufacturing capabilities.

For the year ended December 31, 2024, approximately 11% of our revenues were generated from the sale of products manufactured in-house.

We view distribution as our primary focus and growth driver while our manufacturing capabilities as a complement to the base distribution business.

This approach allows us to procure products at competitive prices, maintain disciplined cost management, and enhance supply chain resilience.

We consider our increasingly sophisticated logistics capabilities and expanded distribution network to be an important core competency and key differentiator from our competitors.

Among the total of ten distribution centers, three were newly opened in the past 24 months located in Mesa, Arizona, Sugar Land, Texas, and Aurora, Illinois.

We are also in the process of setting up an additional warehouse in Chino, California to be fully operational by the second quarter of 2025, as described in Note 22 — Subsequent Events in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Further, we racked up over 50,000 square feet of additional space within existing warehouses over the past two years to allow for better management and fulfillment of products.

We own a fleet of 41 trucks (including some that are refrigerated to transport frozen food item), 44 trailers, 13 bobtails, and 47 chassis, and as of December 31, 2024, employed 40 drivers in our logistics division.

Our national distribution and logistics capacity allows us to provide efficient and cost-

effective distribution to customers and reduce reliance on third-party logistics providers.

We intend to continue to enhance our distribution capabilities via opening of additional distribution centers in strategic locations across the U.S.

and expanding our distribution fleet and workforce.

Experienced and highly-driven management team with the focus on achieving attractive financial profile

We have assembled a strong executive management team to lead our company in its next phase of growth, supported by a deep bench of functional area leads across the organization.

Our co-founders Alan Yu and Marvin Cheng have worked together over the last 20 years to aggressively drive growth across the business.

Our co-founders Alan Yu and Marvin Cheng, have worked together for over 20 years to aggressively drive growth across the business.

Daniel Quire joined us in 2018 and was appointed Chief Revenue Officer in 2023, helping to provide leadership to our sales term, lead our customer acquisition and engagement initiatives, and expand our market presence.

Our Chief Financial Officer, Jian Guo, joined us in 2022, bringing years of public company experience to further bolster our finance and accounting functions.

Our Chief Financial Officer, Jian Guo, joined us in 2022, bringing years of public company experience to bolster our finance and accounting functions.

Under the leadership of our highly-driven management team, the Company has navigated various operational challenges in a dynamic global business environment and has demonstrated the ability to deliver industry-leading financial performance in recent periods, highlighted by strong gross margin expansion and robust cash flow generation.

Growth Strategy

Our goal is to become a leading single-source provider to a broad set of customers for all of their disposable foodservice products and related needs.

Our goal is to become a leading provider to a broad set of customers for all of their disposable foodservice products and related needs.

We plan to continue to grow our business and increase our profitability through the following key initiatives:

Disrupt the traditional foodservice supply chain

The traditional foodservice supply chain consists of manufacturers selling through a multi-layer distribution and logistics network before the product reaches the end customer.

As a full service distributor ourselves, we provide products directly to the end user, eliminating the need for the traditional multi-layer supply chain.

In recent years, we have committed to enhancing our operational efficiency and customer satisfaction by strategically opening new distribution centers near key metropolitan areas in the United States.

This initiative aims to optimize inventory distribution, reduce lead times for inter-warehouse transfers, expedite order fulfillment, and improved service reliability, all of which strengthen our competitive advantage.

Continue to build our e-commerce distribution channel

We believe there is an opportunity to continue to significantly grow our higher margin e-commerce business to a more meaningful percent of revenue by continuing our investments in people, distribution capabilities.

marketing and technology.

During 2023, we updated our company e-commerce platform, which not only enabled us to improve our storefront from an operational standpoint, but also allowed for the integration of multiple apps and extensions to enhance user experience.

In addition, we also operate third-party storefronts on Amazon, Walmart, eBay, and recently expanded to TikTok.

We believe there is an opportunity to continue to significantly grow our higher margin e-commerce business and we intend to do so by continuing to make investments in people, distribution capabilities, marketing, and technology.

In 2023, we upgraded our company e-commerce platform, which not only enabled us to improve our storefront from an operational standpoint, but also allowed for the integration of multiple applications and extensions to enhance user experience.

In 2024, we expanded our online presence to TikTok, adding to our existing list of third-party storefronts which already included Amazon, Walmart, and eBay.

Our e-commerce platforms allow us to offer our entire range of products for online procurement and enable us to cross market other products to our customers.

These platforms also provide us with the opportunity to continue our expansion into the B2C market in addition to the B2B small retailer customers that we traditionally serve.

We have recently elevated our focus on servicing B2C market by sourcing products tailored for and geared toward these end-users.

We further expanded our e-commerce team and improved and scaled our online marketing efforts.

These platforms also provide us with the opportunity to continue our expansion into the B2C market in addition to the B2B small retailer customers that we have traditionally served.

We have elevated our focus on servicing B2C market by sourcing products tailored for and geared toward these end users.

We also further expanded our e-commerce team and improved and scaled our online marketing efforts.

All of these initiatives allowed us to increase the number of online orders by approximately 48% in 2024 compared to prior year.

Our e-commerce channel also significantly outperformed all other channels in year-over-year revenue growth in 2024, and we believe the e-commerce channel will continue to be a key growth driver in our business.

Disrupt the traditional foodservice supply chain

The traditional foodservice supply chain consists of manufacturers selling through a multi-layer distribution and logistics network before the product reaches the end customer.

As a full service distributor ourselves, we are able to provide products directly to the end user, eliminating the need for the traditional multi-layer supply chain.

Environmental pressure on single-use disposable plastics is already causing a need for new sources of supply.

The Karat Earth® brand is a plant-based line of compostable products that meets the growing demand for renewable and ethically-sourced products.

Our nimble operating model can serve customers more quickly than the traditional supply chain, which allows us to react rapidly to customers’ changes in demand.

Grow our base business with incremental revenue from existing customers

We intend to continue to increase penetration within our existing customer base.

We have historically achieved tremendous success in gaining wallet-share with existing accounts once we won new customers.

We intend to continue to drive growth by increasing penetration within our existing customer base.

We believe there is an opportunity to offer additional product lines allowing us to become a true “one-stop” supplier.

Our unique ability to serve customers as a reliable supplier with strong customer service at competitive prices has positioned us to be a frequent recipient of requests for proposals from our existing customers as they look for new sources of supply.

Offering a larger range of products, coupled with our ability to provide custom specifications and configurations to existing products, allows us to better serve the needs of our customers and increase retention further.

We have historically experienced consistently high customer retention rates as a result of our dedication to our customers and our hands-on approach.

For the year ended December 31, 2023, our major customer retention rate, defined as year over year retention of our top 100 customers, was 99%.

Our reputation of being a reliable supplier with strong customer service and competitive prices has led to consistent requests for proposals from our existing customers as they look for new and innovative products and diversify their supplier base.

We have historically experienced consistently high customer retention rates as a result of our product offerings and dedication to our customers.

For the year ended December 31, 2024, revenue from our top 10 customers, as measured by the amount of revenue in the current year, increased 6.6% year-over-year, as we continued to expand wallet share with existing customers.

Our major customer retention rate, defined as year-over-year retention of our top 100 customers, was 100%.

Expand our customer base via new capabilities, geographies, products, services and end markets

We believe our addressable market continues to grow as emerging businesses like Grubhub, Uber Eats, DoorDash and others expand the need for foodservice disposable products, and takeout and at-home dining remain a constant even after the pandemic.

We believe our addressable market is substantial in size and continues to grow as food delivery businesses like Grubhub, Uber Eats, DoorDash and others expand the demand for take-out and at-home disposable foodservice products.

We plan to continue to add new experienced sales team members to broaden our reach, expand into new geographic areas, and continue to focus on customer engagement.

We also promoted from within our inaugural Chief Revenue Officer in 2023.

We have made solid strides towards expanding our distribution footprint and capabilities in the United States.

During 2023, we opened two new warehouses in Sugar Land, Texas and Aurora, Illinois, adding 188,000 square feet in distribution space.

We doubled our warehouse space in Washington as we moved our warehouse from Sumner to Puyallup.

Further, we also racked up additional areas in existing warehouses, adding 40,000 square feet of new racked space in our warehouses.

In addition, we are continuously evaluating and expanding our product and service offerings to respond to customer demand and penetrate into new markets, including supermarket chains, airlines, entertainment venues, and other non-traditional foodservice markets.

We see significant opportunity specifically with supermarkets to gain wallet share by providing fruit trays, vegetable containers, pizza boxes, compostable meat trays and other related items, all of which are higher margin products than some of our other products.

Our online platforms have provided us with the opportunity to continue our expansion into the business-to-consumer B2C market.

We are committed to continuously evaluating and expanding our product and service offerings to meet evolving customer needs and enter new markets.

For example, our strategic focus on penetrating the supermarket segment in 2024 yielded significant results, with the win of new supermarket business from customers such as Albertsons and H-E-B, which not only expanded our market reach but also provided valuable exposure to a large consumer base actively seeking convenient, sustainable, and often single-use food packaging solutions for use in their deli counters, prepared foods sections, bakery, and on-premise dining areas.

This success validates our capabilities and highlights the immense growth opportunity within supermarkets.

As we continue to build on this momentum, the supermarket segment will remain a key area of focus for ongoing expansion and development in the coming years.

We are also actively exploring opportunities to broaden our reach in additional sectors, including airlines, entertainment venues, and other non-traditional foodservice sectors.

These markets present significant potential to grow our business through the introduction of new products such as fruit and vegetable trays, food and snack containers, and other related items.

Expand distribution network to support growth

We have made solid strides towards expanding our distribution footprint and capabilities in the United States, which has enhanced our inventory management, improved customer service and positioned us for continued market penetration and growth.

In the past 24 months, we invested in the significant expansion of our distribution capabilities by adding over 232,000 square feet of distribution space through the opening of three new warehouses;

Mesa, Arizona in 2024 and Sugar Land, Texas and Aurora, Illinois in 2023.

We are currently in the process of setting up this location to be fully operational by the second quarter of 2025.

Additionally, we racked up additional areas in existing warehouses, with over 50,000 square feet of new racked space added in 2024 and 2023 combined.

We look to continue the expansion of our distribution footprint and capabilities to strategically support our planned growth across the United States.

Continue to develop new, innovative eco-friendly products

As part of our growth strategy, we are focused on significantly increasing our eco-friendly product sales in the years ahead.

Environmental sustainability is a top priority as we strengthen our position as a leading supplier of eco-friendly disposable foodservice products in the United States.

Our Karat Earth® line features products primarily made from renewable resources that are commercially compostable.

We are dedicated to continuous investment in research and development to broaden and enhance this product line.

As of December 31, 2024, our portfolio of eco-friendly products has grown to over 550 SKUs, up from approximately 500 the previous year.

Looking forward, we remain focused on further expanding this segment, including the upcoming launch of a new line of recycled PET cups and lids, made with more than 25% recycled resin material.

Additionally, we have also seen continued growth in our eco-friendly product sales, which now represent 33.6% of total sales for the year ended December 31, 2024, up from 32.7% the previous year.

Through these initiatives, we aim to support our customers’ sustainability goals while continuing to drive growth in our eco-friendly product offerings, making this an essential focus for us in the coming years.

Pursue strategic acquisitions

We evaluate and consider potential business acquisitions in order to expand the breadth of our existing infrastructure, product offerings, expertise, supply chain network, and operating efficiencies.

Management is constantly assessing and identifying businesses that align with our strategic goals, seeking opportunities to acquire companies that bring complementary technologies, innovative capabilities, or niche market expertise.

Additionally, the potential to acquire existing and new suppliers, particularly in the U.S., may further reduce our reliance on the Asian supply chain, creating more diversified sourcing options for our customers.

The disposable foodservice products industry is large and growing.

The primary categories of disposable foodservice products include food packaging, containers, tableware, cups, lids, cutlery, straws, napkins and bags.

The large breadth and scope of products is reflected in the diverse nature of the industry participants, which range from large international conglomerates to smaller regional and niche companies.

By acquiring businesses with scalable models, we aim to enhance our competitive position, drive long-term growth, and unlock synergies that benefit all stakeholders.

The disposable foodservice products industry is substantial in size and rapidly growing.

The primary categories of disposable foodservice products include food and take-out containers, bags, boxes, tableware, cups, lids, cutlery and straws.

The large breadth and scope of products is reflected in the diverse nature of the industry participants, which range from large international conglomerates to smaller regional and niche businesses.

As a result, the industry is represented by a large number of companies and remains highly fragmented.

Similarly, end customers of the disposable foodservice products industry are equally diverse in composition.

The restaurant and foodservice categories that are the primary purchasers of our products include quick service restaurants, fast casual, convenience stores, specialty drink establishments, casual dining and increasingly, premium casual and family dining restaurants.

We estimate our growth to significantly outpace the industry average given our increase in sales of high demand items like take-out containers and bags, our ability to continuously augment our product offering to address customer needs and our avoidance of product categories in decline, including materials in the process of being banned under various governmental regulations.

The industry is currently experiencing a period of both growth and transition as a result of several key factors that have emerged in recent years especially after the COVID-19 pandemic.

These include the growing market for food delivery and take-out dining;

new governmental regulations primarily resulting from an increasingly environmentally-conscious public;

and growing consolidation within the disposable foodservice products industry.

We believe that we will benefit from a continuation of these market trends due to our diverse product offering, customer-centric approach, commitment to environmentally-friendly products and the flexibility of our business model.

The primary purchasers of our products include fast casual restaurants, fast food chains, family dining restaurants, specialty drink establishments like bubble tea and coffee shops, convenience stores, and supermarkets.

In recent years, the industry has experienced several key trends, including the growing market for food delivery and take-out dining, new local and state regulations in light of an increasingly environmentally-conscious public, and growing consolidation within the disposable foodservice products industry.

We believe that our growth strategies, as discussed above, will position us to achieve accelerated growth as such market trends continue.

Food delivery and take-out

With the growing trend towards at-home dining and mobility-oriented e-commerce, food delivery and take-out dining are currently experiencing rapid growth.

As consumer preferences have evolved, foodservice establishments have realized that the at-home dining experience is closely linked to the quality of the packaging utilized.

In recent years, the surge in at-home dining and mobility-focused e-commerce has fueled rapid growth in food delivery and takeout services, transforming the foodservice landscape.

As consumer preferences have evolved, foodservice establishments have realized that the at-home dining experience hinges not just on food quality but also on the packaging that ensures freshness, presentation, and convenience.

Packaging plays an essential role in preserving the dining experience, with high-quality takeout containers, insulated bags, and other disposable products contributing significantly to customer satisfaction.

Data from the National Restaurant Association shows that operators are increasingly acknowledging the importance of off-premises dining and making it a strategic priority.

According to studies done by International Market Analysis Research and Consulting Group, the United States online food delivery market size reached $29.1 billion in 2023.

The same studies expect the market to reach $68.6 billion by 2032, exhibiting a growth rate (CAGR) of 9.8% during 2024-2032.

In order to benefit from this growing market trend, foodservice establishments are actively trying to provide a high quality at-home dining customer experience that is comparable to the in-restaurant experience.

Central to this effort is food quality and overall presentation where take-out containers and related products play a critical role.

According to studies done by International Market Analysis Research and Consulting Group, the United States online food delivery market is expected to reach $68.6 billion by 2032.

Foodservice establishments are increasingly prioritizing innovative, sustainable, and customized packaging solutions, aimed to replicate the in-restaurant dining experience at home while meeting rising consumer expectations for convenience, presentation, and environmental responsibility.

Governmental regulations

Environmental concerns regarding disposable products broadly have resulted in a number of significant changes that are specific to the foodservice industry, including regulations applicable to our customers.

Many cities, states and local governments have been actively enacting legislation that prohibits certain types of end-products as well as the use of certain raw materials used in manufacturing.

We expect this trend to continue on a national scale as foodservice establishments are looking to source alternative products made from biodegradable materials and other environmentally-friendly options.

We believe we are well positioned to benefit from increasing government regulation and environmental concerns given our strong portfolio of sustainable products, including our Karat Earth® line and our continued commitment and investment in our leadership position in providing eco-friendly products in the United States.

Additionally, evolving foreign trade policy by the U.S.

federal government has resulted in the imposition of tariffs on a number of imported foodservice disposable products, including those imported from China.

To avoid the resulting higher product costs, many domestic purchasers may seek to establish alternative distribution channels and source products from U.S.

based manufacturers or from other non-tariffed countries.

Environmental concerns regarding disposable products have resulted in a number of significant changes to the foodservice industry, impacting a wide range of our customers.

Many cities, states and local governments have enacted or are actively working towards legislation that require businesses to manage the lifecycle of their products and packaging with the goal to incentivize companies to shift toward recyclable, compostable, or reusable materials.

We expect this trend to continue on a national scale as foodservice establishments look to source alternative products that are considered more environmentally-friendly.

We believe we are well positioned to benefit from increasing government regulation and green-initiative concerns, given our strong portfolio of sustainable products, including our Karat Earth® line and our continued commitment towards and investment in expanding such product offerings in the United States.

Industry consolidation

Over the last several years, there has been significant consolidation within the industry, both in distribution and manufacturing.

This is due in part to larger and more established companies seeking to generate growth and maintain profitability through the expansion of their product offering.

As is common in the disposable foodservice products industry, larger companies typically broaden their product portfolio through the acquisition of established companies, rather than building out new product categories organically.

food packaging industry, mergers and acquisitions have been prominent, both in distribution and manufacturing.

Larger companies typically broaden their product portfolio through the acquisition of established companies, rather than building out new product categories organically.

As consolidation occurs, existing customers often find themselves facing challenges of changing product availability, discontinuations, increasing prices, support staff turnover and other potential transition-related challenges.

These challenges can be highly disruptive to a customer’s business and as a result, the customers often seek out other stable and more reliable channels for product sourcing.

We offer a wide selection of high-quality, cost effective food packaging products and disposables.

Our scaled distribution with diversified global sourcing capabilities complemented by select domestic productions allow us to offer a wide selection of high-quality disposable foodservice products at competitive prices.

We work in close collaboration with our customers to develop products to meet the needs unique to their individual businesses.

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Additionally, we are able to custom print or label many of our products, to help our customers brand the at home dining experience of their customers.

We supply a wide range of products for the foodservice industry, including:

Our range of products include but are not limited to:

• food and take-out containers;

• specialty beverage ingredients;

Karat Earth® is our specialty line of environmentally-friendly products that are plant-based and compostable and are made from renewable resources sourced ethnically.

This line includes food containers, tableware, cups, lids, utensils and straws.

Our Karat Earth® line provides our customers the option to make a powerful statement about their commitment to environmental and social sustainability.

Our Karat Earth® products are Cedar Grove Certified (CGC) and Biodegradable Products Institute (BPI) certified compostable.

Karat Earth® plastic products are made from polylactic acid (PLA) sourced from NatureWorks Ingeo PLA.

Ingeo PLA is a non-petroleum based, biopolymer that is manufactured from plant sugars.

Due to its material composition, Ingeo PLA is non-volatile, non-toxic and odorless if incinerated.

• janitorial and warehouse supplies;

• boba tea supplies and coffee drinks.

Our Karat Earth® product line represents a key component of our commitment to environmental sustainability and innovation.

This specialty line features environmentally-friendly foodservice packaging solutions, with most products being plant or bio-based.

These materials often align with stricter regulations and safety standards, minimizing chemical migration into food products and avoiding toxic substances like Bisphenol A (BPA) or phthalates, offering safer options for food contact.

The product offerings under Karat Earth® are largely Biodegradable Products Institute (BPI) certified, ensuring alignment with recognized industry standards for commercial compostability.

Many of the line’s plastic products are also made from polylactic acid (PLA), a biopolymer derived from plant sugars that is non-petroleum-based, non-volatile, non-toxic, and odorless upon incineration.

These attributes make Karat Earth® an effective option for customers seeking to demonstrate their dedication to environmental and social responsibility.

We continue to invest in research and development for our Karat Earth® line to expand our product offering to meet the needs of our customers and the evolving regulatory landscape.

Our Distribution and Logistics Network

We sell and distribute our products to customers across the United States through our growing distribution network.

We partner with foodservice establishments of every size, with our customers ranging from large multi-national restaurant chains to regional and smaller-chain establishments.

Our customers benefit from our broad product offering and efficient distribution which allows them to streamline their procurement process by purchasing all of their disposable goods from a single-source provider and effectively reduce inventory level and working capital requirements.

We also sell our products directly to leading restaurant supply companies that distribute products to a wide range of food-service establishments internationally.

Our growing sales force works closely with our customers to tailor the optimal mix of products to meet the unique needs of their businesses.

We continue to hire additional sales personnel nationally to expand our sales reach, geographic footprint and increase our penetration into the different market segments of the foodservice industry, specifically the South, Midwest, and Pacific Northwest regions of the U.S.

We work closely with our customers to develop an optimal logistics and supply chain solution customized to their businesses.

We have built a flexible distribution system which allows our customers to order and receive products on a timely basis based on the real-time needs of their businesses.

In addition to regularly scheduled delivery intervals, our customers can order and schedule delivery of products via telephone, facsimile, email or through our online e-commerce platform and our online storefronts on Amazon, Walmart, eBay, and TikTok.

Our regional warehouses and distribution centers allow us to deliver products on a timely basis to key population centers across the United States.

Depending on the needs of our customers, final product delivery to their stores or affiliated distribution centers occurs via courier package delivery or through our company-employed delivery drivers.

We effectively serve our customers across the United States through our growing distribution network.

Our customers range from large multi-national restaurant chains to regional and smaller establishments.

We also sell through restaurant supply companies that distribute products to a wide range of food-service establishments.

We collaborate closely with both our vendors and customers to create an optimized logistics and supply chain network tailored to meet the unique needs of our customers' businesses.

We have established a scaled and flexible distribution and logistics system, with distribution centers strategically located throughout the United States.

We offer multiple ordering channels, including telephone, email, electronic data interchange, Lollicup e-commerce store website and app, and storefronts on marketplaces such as Amazon, Walmart, eBay, and TikTok.

Our delivery options to customers range from courier package services to same-day delivery on our own fleet.

Our scaled and nimble logistics network has enabled our customers to place and receive orders based on their real-time business needs and effectively reduce inventory level and working capital requirements.

Our business does not experience high seasonality though certain food and food related products are moderately seasonal.

For example, during the hot weather of summer and fall months, we see an increase in the level of sales for items such as cold

drink cups and boba products.

For example, during the hot weather of summer and fall months, we see an increase in the level of sales for items such as cold drink cups and boba products.

Generally, we expect relatively more of our earnings and cash flows to be generated in the second and third quarter of the fiscal year.

Our Corporate Structure

Set forth below is an organizational chart which identifies the Company and its consolidated entities as of December 31, 2023:

Please see Note 2 — Summary of Significant Accounting Policies and Note 22 — Subsequent Events in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of the agreements between Global Wells and us as well as the change in our ownership percentage in Global Wells subsequent to December 31, 2023 resulting from one Global Wells' member's redemption of its membership interest.

Set forth below is an organizational chart for the Company and its consolidated entities as of December 31, 2024:

Please see Note 2 — Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of the agreements between Global Wells and us.

Intellectual Property

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They are easily wind-blown and ultimately end up in parks, forests, beaches, oceans and rivers.

In 2008, we established Karat Earth® as an eco-friendly line of foodservice products, including food and take out containers, bags, tableware, cups, lids, cutlery and straws.

Our Karat Earth® products are Cedar Grove Certified (CGC) and Biodegradable Products Institute (BPI) certified compostable.

Karat Earth® plastic products are made from polylactic acid (PLA) sourced from NatureWorks Ingeo PLA.

Ingeo PLA is a non-petroleum based, biopolymer that is manufactured from plant sugars.

Due to its material composition, Ingeo PLA is non-volatile, non-toxic and odorless if incinerated.

Karat Earth® supplements our eco-friendly offerings within our other product lines.

We continue to invest in research and development to expand our offering of sustainable products to meet the needs of our customers and the evolving regulatory landscape.

Our eco-friendly products made up 33% of total sales during the year ended December 31, 2023 compared to 27% during the prior year.

A recent peer-reviewed global study conducted by the American Association for the Advancement of Sciences found that less than 10 percent of plastics is recycled.

Other studies indicated approximately 23% of landfill waste in the United States is comprised of plastic containers and food ware.

A recent peer-reviewed global study conducted by the American Association for the Advancement of Sciences found that less than 10 percent of plastics is recycled, meaning the vast majority of plastic waste ends up in landfills or the environment.

Other studies indicated a large percentage of landfill waste in the United States is comprised of plastic containers and food-ware.

Such striking statistics have prompted many state and city governments to enact regulations to cut down on plastic pollution.

For example, California passed Bill 54 in June 2022, requiring all packaging in the state to be recyclable or compostable by 2032.

Rhode Island passed Bill 5090 in June 2023, banning restaurants and food service establishments from processing, preparing, selling or providing food or drinks in disposable food containers made from polystyrene foam.

Delaware passed Bill 51 in August 2023, prohibiting polystyrene foam containers, plastic beverage stirrers, and sandwich picks beginning July 1, 2025.

For example, in 2024, New Jersey introduced regulations focusing on increasing post-consumer recycled (PCR) content in packaging.

These mandates include gradual increases in PCR content for various materials, such as plastic beverage

bottles and rigid plastic containers, aligning with long-term sustainability goals.

In 2023, both Rhode Island and Delaware passed bills that prohibited food service establishments from using polystyrene foam in their food packaging.

In 2022, California passed legislation banning styrofoam starting January 1, 2025 and requiring all packaging in the state to be recyclable or compostable by 2032.

A variety of individual cities have also passed their own complimentary ordinances to limit single-use plastic products.

As more governments enact regulations to prevent and reduce waste that is harmful to the environment, and more consumers are actively taking steps towards being more sustainable, the demand for eco-friendly disposable products is on the rise.

In order to better position ourselves for this change in the industry landscape, we have significantly expanded our sourcing of eco-friendly products and increased the number of related product offerings.

While more governments enact regulations to prevent and reduce waste that is harmful to the environment, more consumers are also actively taking steps towards being more sustainable, accelerating the demand for eco-friendly disposable products.

We have long prided ourselves in our commitment to environmental sustainability and innovation.

As early as 2008, we established Karat Earth®, which is a specialty line featuring environmentally-friendly foodservice packaging solutions, with most products being plant or bio-based.

The product offerings under Karat Earth® are largely BPI certified, ensuring alignment with recognized industry standards for commercial compostability.

Many of the line’s plastic products are also made from PLA, a biopolymer derived from plant sugars that is non-petroleum-based, non-volatile, non-toxic, and odorless upon incineration.

We continue to invest in research and development to expand our Karat Earth® product line and meet the growing demand for sustainable packaging solutions.

As part of our broader sustainability initiatives, Karat Earth® supplements our other environmentally-friendly product lines, including paper items, strengthening our ability to deliver innovative, compliant, and market-responsive solutions.

Through these efforts, we aim to support waste reduction, reduce reliance on non-renewable resources, and help customers achieve their sustainability goals while addressing broader environmental challenges.

Our eco-friendly products made up 33.6% of total sales during the year ended December 31, 2024 compared to 32.7% during the prior year.

As of December 31, 2024, we had over 550 SKUs of eco-friendly products that our customers could choose from, up from approximately 500 as of the prior year end.

We are actively working on launching a new line of recycled PET cups and lids, which are made with more than 25% of recycled resin material.

Our Operations

In our manufacturing facilities in the United States, the production process involves intake of water, dischargement to water, recycling of waste and other disposal activities.

In our manufacturing facilities in the United States, the production process involves intake of water, dischargement and recycling of waste as well as other disposal activities.

As a Company, we place strong emphasis on water conservation and reducing water pollution.

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Reclamation is also a key consideration for us.

Any and all waste products from our production process is thoroughly inspected and checked for the potential of re-use or recyclability.

Waste products from our production process are thoroughly inspected and checked for the potential of re-use or recyclability.

Identified items are repackaged and sold or they are transferred to our local waste management facilities for proper disposal, thereby reducing waste and the use of landfill space.

Some of our raw materials are Biodegradable Products Institute (BPI) certified.

For over 20 years, the BPI certification has been the defining symbol of compostability due to its rigorous testing standards.

Some of our raw materials are also BPI certified.

For over 20 years, the BPI certification has been the defining symbol of commercial compostability due to its rigorous testing standards.

The BPI certification is the only third-party verification for compostable products in North America.

Even in products that do require the use of plastic, we ensure that the resin we source is both BPA (or bisphenol A) and PFA (or perfluoroalkyl and polyfluoroalkyl) free.

These substances are known for their extreme persistence in the environment upon discharge.

For products that require use of plastic, we try to ensure that the resin we source is both BPA and PFA (or perfluoroalkyl and polyfluoroalkyl) free as these substances are known for their extreme persistence in the environment upon discharge.

Our commitment to sustainability is also demonstrated in our focus on recycling and reusing.

For example, we utilize recycled resin material in our manufacturing process to reduce our reliance on virgin plastic.

After production, any resin waste is meticulously washed and cleaned to remove contaminants, ensuring the recycled resin meets the required quality standards for reuse in our facilities.

By using recycled resin, we reduce plastic waste, lower our carbon footprint, and contribute to the broader shift toward more sustainable solutions.

Our warehouse departments have implemented the practice of reusing paper cardboard boxes and wooden pallets for inventory storage and shipments.

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The utilization of trash compacting services has allowed us to minimize the frequency of waste pickups and also reduce landfill space.

We have installed LED bulbs in light fixtures within both the warehouse and office space that are more efficient than traditional fluorescent counterparts as well as with timers that automatically turn off lights after a period of time if no movement is detected.

We have installed LED bulbs in light fixtures within both the warehouse and office space that are more efficient than their traditional fluorescent counterparts, often with timers that automatically turn off lights after a period of time if no movement is detected.

We have also programmed our HVAC units at some of our locations to run on predetermined schedules to reduce our overall power consumption.

We are exploring options to improve the energy efficiency of our warehouses, such as through the installation of solar panels.

Additionally, we are transitioning our company fleet from being gas powered to those that run entirely on electricity.

To the extent possible, we have also switched over from single use batteries to rechargeable battery packs in our line up of tools and equipment.

Our Company as a whole has also made strides to reduce the need for paper and ink by embracing a more digital form of paperwork retention.

Our Company as a whole has also made strides to reduce the need for paper and ink by embracing a more digital form of

paperwork retention.

Through these various efforts, we play our part to reduce our carbon footprint and will continue to look into and implement further sustainable practices.

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We believe that effectively prioritizing and managing our ESG factors helps create long-term value for our investors.

Under the direction of our Chief Executive Officer and the board of directors, we are driving continuous improvements in bringing innovative eco-friendly products that meet the needs of our customers and our plant and enhancing our energy and waste management infrastructure in our sustainability journey.

Under the direction of our Chief Executive Officer and the board of directors, we are driving continuous improvements in bringing innovative environmentally-friendly products that meet the needs of our customers and enhancing our energy and waste management infrastructure in our sustainability journey.

Human Capital Management

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Diversity, equity and inclusion ("DE&I") are critical underpinnings of our corporate values.

DE&I helps foster innovation, cultivate an environment filled with unique perspectives and drive engagement, innovation and organizational growth.

DE&I helps foster innovation, cultivate an environment filled with unique perspectives and drive engagement and organizational growth.

Our focus to date has been increasing awareness amongst our employees on the importance of DE&I.

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We ensure that we leverage a diverse slate of candidates for all job vacancies, including senior leadership.

Good corporate governance and transparency are fundamental to achieving our vision of becoming a leading in all our markets.

Good corporate governance and transparency are fundamental to achieving our vision of becoming a leader in our industry.

Our engagement approach involves ongoing communication with our employees.

We strive to provide relevant market updates to our team members as well as to share important information regarding our revenue trends, inventory status, production, safety and other operating metrics as deemed necessary.

We have received several recognition oriented awards throughout our company’s history.

Our employees are expected to act with integrity and objectivity and to always strive to enhance our reputation and performance.

We maintain a Code of Ethics which is attested by every employee and provides our framework for ethical business.

We strive to provide relevant

market updates to our team members as well as to share important information regarding our revenue trends, inventory status, and other financial and operating metrics as deemed necessary.

At the same time, our employees are expected to act with integrity and objectivity and to always strive to enhance our reputation and performance.

We maintain a Code of Business Conduct and Ethics which is attested by every employee and provides our framework for ethical business.

As of December 31, 2024, we have the following gender and ethnicity breakout for our employees, C-suite executives, and Board of Directors members:

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Female 33% 33% 40%

Non-binary/Did not self-identify 1% — —

Hispanic 53% — —

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Employees, directors, and consultants are eligible to receive stock options and stock awards under the Plan.

Additionally, the firm makes annual contributions to support the retirement goals of each employee through a matching contribution to 401(k) retirement accounts.

Additionally, we make matching contributions to to our employees' 401(k) retirement accounts to support their retirement goals.

We also offer our employees’ healthcare, wellness, paid sick leave, flexible paid time off, and other benefits to support their quality of life and enable them to thrive in the workplace.

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We believe that high performance is an outcome of a person’s ability to change, adapt, and grow their capabilities throughout their career.

We emphasize real-life, real-time learning that enables a person to meet the demands of challenging and changing work and focuses on reinforcing key principles that are designed to support an individual’s effectiveness in his or her current job and in their future development.

We emphasize on-the-job learning that enables employees to meet the demands of challenging and changing work and focuses on reinforcing key principles that are designed to support employees' effectiveness in their current job and in their future development.

We provide technical and leadership training to employees, specifically our production and sales teams who work closely with our products and services.

In particular, our focus on employee development has been structured over the last several years through programs designed to embed essential skills and reinforce strategic goals that are aligned to our culture.

We continued to enhance our Sarbanes-Oxley (SOX) compliance and cybersecurity awareness training programs to key employees, underscoring our commitment to equipping our workforce with the knowledge to navigate regulatory and digital risks effectively.

This is evidenced by the fact that we promoted 110 and 166 employees during the years ended December 31, 2024, and 2023, respectively.

Other Information

As of December 31, 2023, we had employed approximately 806 employees, out of which 778 were full-time employees.

As of December 31, 2024, we employed approximately 721 employees, out of which 683 were full-time employees.

None of our employees are currently covered by a collective bargaining agreement.

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In order to ensure consistency across our stores, we expanded our focus in 2004 to include the distribution of supplies for the bubble tea industry.

In 2013, we sold the retail bubble tea business to certain of

Lollicup’s shareholders.

In 2014, as a result of a growing demand across the foodservice industry for our packaging goods, we began distributing and manufacturing products under our Karat brand in our California facility.

In 2013, we sold the retail bubble tea business to certain Lollicup’s shareholders.

In 2014, due to growing demand across the foodservice industry for our disposable food packaging products, we began distributing and manufacturing under the Karat brand out of our California facility.

In September 2018, we incorporated Karat Packaging Inc.

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Our principal executive and administrative offices are located at 6185 Kimball Avenue, Chino, CA 91708, and our telephone number is (626) 965-8882.

Our website address is www.karatpackaging.com.

Our corporate website address is www.karatpackaging.com.

For additional historical information about us, see Note 1 — Nature of Operations in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

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Available Information

Our Internet website is www.karatpackaging.com .

Our corporate website is www.karatpackaging.com.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act are available, free of charge, under the Investor Relations tab of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business