Resolute Holdings Management, Inc 10-Q for FY2025 Q1
Resolute Holdings Management, Inc. (RHLD)
About this 10-Q
Resolute Holdings Management, Inc filed this 10-Q on May 12, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $103.89M
- down 0.1% from $104.01M a year earlier
- Net loss
- $3.37M
- Diluted EPS
- -$0.39
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | | (I.R.S. Employer |
(
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol |
| Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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| Accelerated filer |
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| ☒ | | Smaller reporting company | | ||
| | | | Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of May 9, 2025, there were
RESOLUTE HOLDINGS MANAGEMENT, INC.
Table of Contents
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| | Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | | 4 |
| | Consolidated Statements of Stockholders Equity (Deficit) (Unaudited) | | 5 |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 28 | |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report, and the documents incorporated by reference herein, may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although Resolute Holdings Management, Inc. (“Resolute Holdings”, and together with CompoSecure Holdings, L.L.C., the “Company”) believes that its plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning the Company’s possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. In some instances, these statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or the negatives of these terms or variations of them or similar terminology.
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, among others, could affect the Company’s future results and could cause those results or other outcomes to differ materially from those expressed or implied in the Company’s forward-looking statements:
| ● | the competitive environment in which we currently or intend to operate; |
| ● | our strategy, outcomes and growth prospects; |
| ● | general economic trends and trends in the industry and markets in which we and our managed companies operate; |
| ● | our and our managed companies’ business dealings involving third-party partners in various markets; |
| ● | the risks from our entry into the CompoSecure Management Agreement (as defined herein) and management agreements with other managed companies, including risks relating to due diligence, negotiation, performance, the calculation and payment of management fees including the CompoSecure Management Fee (as defined herein) and termination; |
| ● | risks relating to our current reliance on CompoSecure Holdings L.L.C. (“CompoSecure Holdings”), including the presentation of CompoSecure Holdings’ financial information in our financial statements; |
| ● | the risk that our managed companies will fail to perform as we expect and the resulting impacts on the management fees we expect to receive; |
| ● | our ability to identify and successfully negotiate and integrate into CompoSecure Holdings or our other managed companies’ future business acquisitions and investment opportunities; |
| ● | our ability to develop and deploy the Resolute Operating System at CompoSecure Holdings and our other managed companies; |
| ● | our ability to attract and retain personnel, including key members of our management; |
| ● | the ability of CompoSecure Holdings to grow and manage growth profitably, maintain relationships with its customers, compete within its industry and retain its key employees; |
| ● | the possibility that CompoSecure Holdings may be adversely impacted by other economic, business and/or competitive factors; |
| ● | future exchange and interest rates; |
| ● | damage to our reputation; |
| ● | our ability to comply with extensive, complex and increasing legal and regulatory requirements; |
| ● | cybersecurity and privacy considerations; |
| ● | legal proceedings and investigatory risks, including the outcome of any legal proceedings that may be instituted against CompoSecure Holdings or others; |
| ● | tax matters; |
| ● | our failure to manage the transition to a stand-alone public company; |
| ● | the impact of global economic and political developments on our business, including inflationary pressures, volatile interest rates, variable tariff policies or intensified disruptions in the global financial markets, the change in the U.S. presidential administration, the conflict in Ukraine, the conflict in Israel and Gaza, disruptions in the banking industry, economic sanctions and economic slowdowns or recessions that may result from such developments; and |
| ● | certain factors discussed elsewhere in this Quarterly Report. |
These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Quarterly Report are more fully described in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC. The risks described in “Risk Factors” are not exhaustive. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can the Company assess the impact of all such risk factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. The Company undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Part I - Financial Statements
Item 1. Financial Statements
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Consolidated Balance Sheets |
($ in thousands, except par value and share amounts) |
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| March 31, |
| December 31, | ||
| | 2025 | | 2024 | ||
| | Unaudited | | | | |
ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents | | $ | | | $ | |
Accounts receivable | |
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Inventories, net | |
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Prepaid expenses and other current assets | |
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Deferred tax asset | | | | | | |
Total current assets | |
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Property and equipment, net | |
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Right of use assets, net | |
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Derivative asset - interest rate swap | |
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Deposits and other assets | |
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Total assets | | $ | | | $ | |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
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CURRENT LIABILITIES | |
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Accounts payable | | $ | | | $ | |
Accrued expenses | |
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Bonus payable | |
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Commission payable | |
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Current portion of long-term debt | |
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Current portion of lease liabilities – operating leases | |
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Total current liabilities | |
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Long-term debt, net of deferred financing costs | |
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Lease liabilities, operating leases | |
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Total liabilities | |
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Commitments and contingencies (Note 16) | |
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Preferred stock, $ | |
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Common stock, $ | |
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Additional paid-in capital | |
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Accumulated deficit | |
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Total stockholders' equity (deficit) | |
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Non-controlling interest | | | ( | | | ( |
Total equity (deficit) | | | ( | | | ( |
Total liabilities and stockholders' equity (deficit) | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Consolidated Statements of Operations (Unaudited) |
($ in thousands, except per share amounts) |
| | Three months ended | ||||
| | March 31, | ||||
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| 2025 |
| 2024 | ||
Net sales | | $ | | | $ | |
Cost of sales | |
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Gross profit | |
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Operating expenses: | |
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Selling, general and administrative expenses | |
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Income from operations | |
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Other income (expense): | |
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Change in fair value of derivative liability - convertible notes redemption make-whole provision | |
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Interest income | |
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Interest expense | |
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Amortization of deferred financing costs | |
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Total other expense, net | |
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Income (loss) before income taxes | |
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Income tax (expense) | |
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| — |
Net income (loss) | | $ | | | $ | |
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Net income (loss) attributable to non-controlling interest | | | | | | |
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Net income (loss) attributable to common stockholders | | $ | ( | | $ | — |
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Net income (loss) per share attributable to common stockholders - basic & diluted | | $ | ( | | $ | — |
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Weighted average shares used to compute net income (loss) per share attributable to common stockholders - basic & diluted (in thousands) | |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) |
($ in thousands) |
| | Three months ended March 31, | ||||
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| 2025 |
| 2024 | ||
Net income (loss) including non-controlling interests | | $ | | | $ | |
Other comprehensive income (loss): | |
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Unrealized gain (loss) on derivative - interest rate swap | |
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Total other comprehensive income (loss) | |
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Comprehensive income (loss) including non-controlling interests | | | | | | |
Less: comprehensive income (loss) attributable to non-controlling interests | | | | | | |
Comprehensive income (loss) attributable to common stockholders | | $ | ( | | $ | — |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Consolidated Statements of Stockholders Equity (Deficit) (Unaudited) |
($ in thousands) |
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| | | | | | | Additional | | | | | Total | | | | Total | ||||
| | Common Stock | | Paid-in | | Accumulated | | Stockholders' | | Non-controlling | | Equity | ||||||||
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| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) |
| Interest |
| (Deficit) | ||||||
Balance as of December 31, 2024 |
| | | $ | — | | $ | | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Equity-based compensation |
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Contribution by CompoSecure Holdings | | — | | | — | | | | | | — | | | | | | — | | | |
Contribution to Resolute Holdings | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Net income (loss) |
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| ( | |
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Payments for taxes related to net settlement of CompoSecure equity awards |
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| — | | | ( | |
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Unrealized gain (loss) on derivative - interest rate swap |
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| — | |
| — | | | ( | |
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Balance as of March 31, 2025 |
| | | $ | — | | $ | | | $ | ( | | $ | | | $ | ( | | $ | ( |
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| | | | | | | Additional | | | | | Total | | | | Total | ||||
| | Common Stock | | Paid-in | | Accumulated | | Stockholders' | | Non-controlling | | Equity | ||||||||
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| Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) |
| Interest | | (Deficit) | ||||||
Balance as of December 31, 2023 |
| | | $ | — | | $ | — | | $ | — | | $ | — | | $ | ( | | $ | ( |
Distributions to CompoSecure Holdings members |
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Transfer to CompoSecure | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Equity-based compensation |
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Net income (loss) |
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Payments for taxes related to net settlement of CompoSecure equity awards |
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| ( | |
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Unrealized gain (loss) on derivative - interest rate swap |
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Balance as of March 31, 2024 |
| | | $ | — | | $ | — | | $ | — | | $ | — | | $ | ( | | $ | ( |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Consolidated Statements of Cash Flows (Unaudited) |
($ in thousands) |
| | Three months ended March 31, | ||||
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| 2025 |
| 2024 | ||
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Cash flows from operating activities: |
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Net income (loss) | | $ | | | $ | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | |
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Depreciation and amortization | |
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Equity-based compensation expense | |
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Amortization of deferred financing costs | |
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Non-cash operating lease expense | |
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Change in fair value of derivative liability – convertible notes redemption make-whole provisions | |
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Changes in assets and liabilities | |
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Accounts receivable | |
| ( | |
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Inventories | |
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Prepaid expenses and other assets | |
| ( | |
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Accounts payable | |
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Accrued expenses | |
| ( | |
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Lease liabilities | | | ( | | | ( |
Other liabilities | |
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Net cash provided by operating activities | |
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Cash flows from investing activities: | |
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Purchase of property and equipment | |
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Capitalized software costs | |
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Net cash used in investing activities | |
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Cash flows from financing activities: | |
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Payment of term loan | |
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Distributions to CompoSecure Holdings members | |
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Contribution by CompoSecure Holdings | | | | | | — |
Contribution to Resolute Holdings | | | ( | | | — |
Payments for taxes related to net share settlement of CompoSecure equity awards | |
| ( | |
| ( |
Transfer to CompoSecure | |
| — | |
| ( |
Net cash used in financing activities | |
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Net increase (decrease) in cash and cash equivalents | |
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Cash and cash equivalents, beginning of period | |
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Cash and cash equivalents, end of period | | $ | | | $ | |
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Supplementary disclosure of cash flow information: | |
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Cash paid for interest expense | | $ | | | $ | |
Supplemental disclosure of non-cash financing activities: | |
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Consolidation of CompoSecure Holdings net assets (liabilities), excluding cash, from execution of CompoSecure Management Agreement | | $ | ( | | $ | — |
Derivative asset - interest rate swap | | $ | ( | | $ | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Resolute Holdings Management, Inc. (“Resolute Holdings”) is a Delaware corporation formed on September 27, 2024 (“Inception Date”). It is organized to provide operating management services to CompoSecure Holdings, L.L.C. (“CompoSecure Holdings”), a direct, wholly owned subsidiary of CompoSecure, Inc. (“CompoSecure”) and other companies it may manage in the future, both in the United States and internationally, to generate recurring, long-duration management fees. Resolute Holdings will apply a differentiated approach of value creation through the systematic deployment of the Resolute Operating System to drive performance at businesses it manages with the intention of creating value at both the underlying managed businesses, including CompoSecure Holdings, and at Resolute Holdings. Resolute Holdings will also apply its M&A and capital markets expertise to drive inorganic growth of its managed businesses.
CompoSecure Holdings, located in Somerset, New Jersey, is a manufacturer and designer of complex metal, composite and proprietary financial transaction cards. CompoSecure Holdings was founded and commenced operations in 2000 and provides products and services primarily to global financial institutions, plastic card manufacturers, system integrators, and security specialists. Since its inception, CompoSecure Holdings has established itself as a technology partner to market leaders, fintechs and consumers enabling trust for millions of people around the globe. CompoSecure Holdings combines elegance, simplicity and security to deliver exceptional experiences and peace of mind in the physical and digital world. Its innovative payment card technology and metal cards with Arculus secure authentication and digital asset storage capabilities deliver unique, premium branded experiences, enable people to access and use their financial and digital assets, and ensure trust at the point of a transaction.
CompoSecure Holdings creates newly innovated, highly differentiated and customized quality financial payment products for banks and other payment card issuers to support and increase their customer acquisition, customer retention and organic customer spend. Its customers consist primarily of leading international and domestic banks and other payment card issuers primarily within the United States (“U.S.”), with additional direct and indirect customers in Europe, Asia, Latin America, Canada, and the Middle East. CompoSecure Holdings is a platform for next generation payment technology, security, and authentication solutions. CompoSecure Holdings maintains trusted, highly-embedded and long-term customer relationships with an expanding set of global issuers. It has established a niche position in the financial payment card market with over 20 years of innovation and experience and is focused primarily on this attractive subsector of the financial technology market. CompoSecure Holdings serves a diverse set of direct customers and indirect customers, including some of the largest issuers of credit cards in the U.S.
On February 28, 2025, CompoSecure distributed all shares of common stock of its wholly owned subsidiary, Resolute Holdings, on a pro rata basis to the holders of CompoSecure’s Class A Common Stock as of the February 20, 2025 record date (“Spin-Off”). Each stockholder of record who held shares of CompoSecure Class A Common Stock as of the close of business on February 20, 2025, received share of Resolute Holdings common stock for every twelve shares of CompoSecure common stock then held. On February 28, 2025, Resolute Holdings started trading regular-way on The Nasdaq Stock Market LLC under the ticker symbol “RHLD”.
In connection with the completion of the Spin-Off, Resolute Holdings entered into a management agreement with CompoSecure Holdings (the “CompoSecure Management Agreement”), pursuant to which Resolute Holdings is responsible for managing the day-to-day business and operations and overseeing the strategy of CompoSecure Holdings and its controlled affiliates. In accordance with ASC 810 and due to the terms of the CompoSecure Management Agreement, Resolute Holdings (together with CompoSecure Holdings, the “Company”) is required to consolidate CompoSecure Holdings because it is a variable interest entity (“VIE”) in which Resolute Holdings is deemed to be the primary beneficiary (see Notes 2, 9, and 14). Resolute Holdings does not own any equity interests or common stock in CompoSecure Holdings or CompoSecure.
Pursuant to the CompoSecure Management Agreement, CompoSecure Holdings will pay Resolute Holdings a quarterly management fee (the “CompoSecure Management Fee”), payable in arrears, in a cash amount equal to
7
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
and expenses incurred on behalf of CompoSecure Holdings other than those expenses related to Resolute Holdings’ or its affiliates’ personnel who provide services to CompoSecure Holdings under the CompoSecure Management Agreement. Resolute Holdings will determine, in its sole and absolute discretion, whether a cost or expense will be borne by Resolute Holdings or by CompoSecure Holdings.
The CompoSecure Management Agreement has an initial term of
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are presented in conformity with Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). All dollar amounts are in thousands, unless otherwise noted. Share and per share amounts are adjusted retroactively for all periods presented to reflect the change in the Company’s capital structure on a post-Spin-Off basis, unless otherwise noted.
Following the execution of the Management Agreement on February 28, 2025, Resolute Holdings determined that CompoSecure Holdings is a VIE in which Resolute Holdings is deemed the primary beneficiary and as a result, CompoSecure Holdings is consolidated pursuant to ASC 810, Consolidation (“ASC 810”). The assets, liabilities and non-controlling interests of CompoSecure Holdings were initially measured at the amounts in which they were carried in the accounting records of CompoSecure, the reporting entity that formerly controlled CompoSecure Holdings, with no adjustment to current fair values, and no recognition of gain or loss because Resolute Holdings and CompoSecure were both under common control. See Note 9 for the non-controlling interest recorded related to CompoSecure Holdings.
The Company’s financial statements are presented on a consolidated basis and include the results of operations and financial position of CompoSecure Holdings for the period in which control of CompoSecure Holdings occurred as though such control had occurred at the beginning of the period. The results of operations for the quarter ended March 31, 2025 comprise those of the separate operations of Resolute Holdings and CompoSecure Holdings combined from January 1, 2025 to February 27, 2025 and those of the combined operations from February 28, 2025 to March 31, 2025. All intercompany accounts and transactions have been eliminated in consolidation.
In accordance with ASC 850-50, the Company’s financial statements for the prior periods were retrospectively adjusted in the periods in which Resolute Holdings and CompoSecure Holdings were under common control. For periods in which Resolute Holdings and CompoSecure Holdings were not under common control, the financial statements presented are those of CompoSecure Holdings as it is the entity that was first controlled by the common parent and is considered the predecessor entity. Thus, only the results of operations and cash flows of CompoSecure Holdings are presented for the three months ended March 31, 2024.
The Company’s significant accounting policies are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC.
8
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
Interim Financial Statements
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and Article 10 of Regulation S-X of the SEC for interim financial information and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The financial statements presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management, the financial statements reflect all adjustments, consisting solely of normal, recurring adjustments, necessary for the fair presentation of the financial statements for the periods presented. The results disclosed in the Consolidated Statements of Operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
The preparation of the consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. The Company bases its estimates on historical experience, current business factors and various other assumptions believed to be reasonable under the circumstances, all of which are necessary in order to form a basis for determining the carrying values of assets and liabilities. Actual results may differ from those estimates and assumptions. The Company evaluates the adequacy of its reserves and the estimates used in calculations on an on-going basis. Significant areas requiring management to make estimates include the valuation of equity instruments and estimates of derivative liability associated with the Exchangeable Notes (as defined below), which were marked to market each quarter based on a Lattice model approach, derivative asset for the interest rate swap, reserve for excess and obsolete inventory, estimated useful lives and impairment of property and equipment, and lease term, discount rates and other inputs used to measure right of use assets and lease liabilities.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606 when the performance obligations under the terms of the Company’s contracts with its customers have been satisfied. This occurs at the point in time when control of the specific goods or services as specified by each purchase order are transferred to customers. Specific goods refers to the products offered by the Company, including metal cards, high security documents, and pre-laminated materials. Transfer of control passes to customers upon shipment or upon receipt, depending on the agreement with the specific customers. ASC 606 requires entities to record a contract asset when a performance obligation has been satisfied or partially satisfied, but the amount of consideration has not yet been received because the receipt of the consideration is conditioned on something other than the passage of time. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g. receivable), before the entity transfers a good or service to the customer. The Company did not have any contract assets or liabilities as of March 31, 2025 or December 31, 2024.
The Company invoices its customers at the time at which control is transferred, with payment terms ranging between
The majority of the Company’s contracts with its customers have the same performance obligation of manufacturing and transferring the specified number of cards to the customer. Each individual card included within an order constitutes a separate performance obligation, which is satisfied upon the transfer of goods to the customer. The contract term as defined by ASC 606 is the length of time it takes to deliver the goods or services promised under the purchase order or statement of work. As such, the Company’s contracts are generally short-term in nature.
Revenue is measured in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue is recognized net of variable consideration such as discounts, rebates, and returns which is measured based on the expected value or most likely amount of variable consideration, as applicable.
9
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
The Company’s products do not include an unmitigated right of return unless the product is non-conforming or defective. If the goods are non-conforming or defective, the defective goods are replaced or reworked or, in certain instances, a credit is issued for the portion of the order that was non-conforming or defective. A provision for sales returns and allowances is recorded based on experience with goods being returned. Most returned goods are re-worked and subsequently re-shipped to the customer and recognized as revenue. Historically, returns have not been material to the Company.
Additionally, the Company has a rebate program with certain customers allowing for a rebate based on achieving a certain level of shipped sales during the calendar year. This rebate is estimated and updated throughout the year and recorded against revenues and the related accounts receivable.
On occasion, the Company receives requests from customers to hold purchased products. The Company evaluates these requests as bill and hold arrangements. The Company recognizes revenue from such bill and hold arrangements in accordance with the guidance provided in ASC 606 which indicates that for a customer to have obtained control of a product in a bill and hold arrangement, all of the following criteria must be met: (a) the reason for the bill and hold is substantive, (b) the product has separately been identified as belonging to the customer, (c) the product is currently ready for physical transfer to the customer, and (d) the Company does not have the ability to use the product or direct it to another customer. During the three months ended March 31, 2025 and March 31, 2024 the Company recognized $
Segment Information
The Company is managed and operated as
Characteristics of the consolidated organization which were relied upon in making the determination that the Company operates
Software Development Costs
The Company applies the principles of ASC 350-40, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use (“ASC 350-40”). ASC 350-40 requires that software development costs incurred before the preliminary project stage be expensed as incurred. The Company capitalizes development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the functions intended. The Company capitalized $
Investments
In November 2024, the Company invested $
10
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
Net Income (Loss) Per Share
The Company complies with accounting and disclosure requirements of ASC Topic 260, Earnings Per Share. Net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period. The weighted-average number of common shares outstanding during the period includes the Company’s common stock as if the common stock distributed in the Spin-Off were outstanding from January 1, 2024 until the date of the Spin-Off.
Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the basic weighted-average number of common shares outstanding during the period, adjusted for the potentially dilutive shares of common stock equivalents only if the effect is not anti-dilutive.
Recent Accounting Pronouncements
On November 4, 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities (PBEs). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is still assessing the impact that the adoption of this ASU will have on the Company’s consolidated financial statements.
On November 27, 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which applies to all public entities that are required to report segment information in accordance with Topic 280, Segment Reporting. The guidance will be applied retrospectively and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The guidance improves financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analysis. The Company adopted ASU 2023-07 and has reflected updates to its segment reporting in the Company’s consolidated financial statements.
On December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which applies to all entities subject to income taxes. For PBEs, the new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The amendments in this update require that PBEs on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. The new guidance focuses on two specific disclosure areas: rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company’s annual financial statements as of December 31, 2025 and for the year then ended. The Company believes that ASU 2023-09 will not have a material impact on the Company’s financial statements or disclosures.
3. EQUITY-BASED COMPENSATION
The following table summarizes equity-based compensation expense included in selling, general and administrative expenses within the consolidated statements of operations under the Resolute Holdings Management, Inc. 2025 Omnibus Incentive Plan (the “Resolute Equity Plan”) and the CompoSecure, Inc. 2021 Incentive Equity Plan (the “CompoSecure Equity Plan”). The Company is required to expense equity-based compensation granted under the CompoSecure Equity Plan due to the consolidation of CompoSecure Holdings and because CompoSecure and Resolute Holdings are under common control. Equity granted under the CompoSecure Equity Plan relates to CompoSecure Class A common stock and has no impact on Resolute Holdings’ common stock outstanding. In accordance with the CompoSecure Equity Plan, outstanding awards at the time of the Spin-Off were adjusted to maintain the aggregate intrinsic value of the awards (“Spin-Off Adjustment”) before and after the Spin-Off.
11
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
| | Three months ended March 31, | ||||
|
| 2025 |
| 2024 | ||
Stock option expense | | $ | | | $ | |
Restricted stock unit expense | |
| | |
| |
Performance stock unit expense | |
| | |
| |
Employee stock purchase plan | |
| — | |
| |
Total equity-based compensation expense | | $ | | | $ | |
| | | | | | |
Resolute Equity Plan | | $ | | | $ | — |
CompoSecure Equity Plan | |
| | |
| |
Total equity-based compensation expense | | $ | | | $ | |
The following table sets forth the activity related to the Resolute Equity Plan for the period January 1, 2025 to March 31, 2025:
Resolute Equity Plan Stock Option Activity
|
| |
| | |
| Weighted Average |
| | |
| | | | Weighted | | Remaining | | Aggregate | ||
| | Number of | | Average Exercise | | Contractual Term | | Intrinsic Value | ||
| | Shares | | Price Per Shares | | (years) | | (in thousands) | ||
Outstanding at January 1, 2025 |
| — | | $ | — |
| — | | $ | — |
Granted |
| | | $ | |
| |
| — | |
Exercised |
| — | | $ | — |
| — | | $ | — |
Outstanding at March 31, 2025 |
| | | $ | |
| | $ | — | |
Vested and exercisable at March 31, 2025 |
| — | | $ | — |
| — | | $ | — |
Unrecognized compensation cost for stock options under the Resolute Equity Plan totaled $
The following tables set forth the activity related to the CompoSecure Equity Plan for the period January 1, 2025 to March 31, 2025:
CompoSecure Equity Plan Restricted Stock Unit Activity
|
| Number of Shares |
Outstanding at January 1, 2025 |
| |
Granted |
| |
Spin-Off Adjustment |
| |
Vested |
| ( |
Forfeited |
| ( |
Nonvested at March 31, 2025 |
| |
Unrecognized compensation cost for restricted stock units under the CompoSecure Equity Plan totaled $
12
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
CompoSecure Equity Plan Stock Option Activity
|
| |
| | |
| Weighted Average |
| | |
| | | | Weighted | | Remaining | | Aggregate | ||
| | Number of | | Average Exercise | | Contractual Term | | Intrinsic Value | ||
| | Shares | | Price Per Shares | | (years) | | (in thousands) | ||
Outstanding at January 1, 2025 |
| | | $ | |
| | $ | | |
Granted | | — | | $ | — | | — | | $ | — |
Spin-Off Adjustment |
| | | $ | |
| | $ | | |
Exercised |
| ( | | $ | |
| | $ | | |
Outstanding at March 31, 2025 |
| | | $ | |
| | $ | | |
Vested and exercisable at March 31, 2025 |
| | | $ | |
| | $ | | |
Unrecognized compensation cost for stock options under the CompoSecure Equity Plan totaled $
CompoSecure Holdings Performance and Market based Stock Unit Activity
|
| Number of Shares |
Outstanding at January 1, 2025 |
| |
Granted |
| — |
Spin-Off Adjustment | | |
Vested |
| — |
Nonvested at March 31, 2025 |
| |
Unrecognized compensation cost for performance and market-based stock units as of March 31, 2025 under the CompoSecure Equity Plan totaled $
4. INCOME TAXES
The Company recorded income tax provision of $
In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon currently known facts and circumstances and applies that rate to its year-to-date earnings or losses. The Company’s effective tax rate is based on expected income and statutory tax rates and takes into consideration permanent differences between financial statement and tax return income applicable to the Company in the various jurisdictions in which the Company operates. The effect of discrete items, such as changes in estimates, changes in enacted tax laws or rates or tax status, and unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the result of new judicial interpretations or regulatory or tax law changes.
The Company’s effective tax rate was
13
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
5. EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of net income (loss) used to compute basic and diluted net earnings per share attributable to common stockholders for the three months ended March 31, 2025 and March 31, 2024, respectively.
| | Three months ended March 31, | ||||
|
| 2025 |
| 2024 | ||
Basic and diluted: |
| |
|
| |
|
Net income (loss) | | $ | | | $ | |
Less: Net (income) loss attributable to non-controlling interest | |
| ( | |
| ( |
Net income (loss) attributable to common stockholders | | $ | ( | | $ | — |
Weighted average common shares outstanding used in computing attributable net income (loss) per share | |
| | |
| |
Net income (loss) per share attributable to common stockholders - basic & diluted | | $ | ( | | $ | — |
Basic net income (loss) per share attributable to common stockholders for the three months ended March 31, 2025 was calculated by dividing net loss attributable to common stockholders of $
Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when the exercise price exceeds the average closing price of the Company’s common stock during the period, because their inclusion would result in an antidilutive effect on per share amounts.
The following amounts were not included in the calculation of net income (loss) per diluted share attributable to common stockholders because their effects were anti-dilutive:
| | Three months ended March 31, | ||
|
| 2025 |
| 2024 |
Potentially dilutive securities: |
|
|
|
|
Resolute Equity Plan awards |
| |
| — |
6. INVENTORIES
The Company’s major classes of inventories at CompoSecure Holdings were as follows:
|
| March 31, 2025 |
| December 31, 2024 | ||
Raw materials | | $ | | | $ | |
Work in process | |
| | |
| |
Finished goods | |
| | |
| |
Inventory reserve | |
| ( | |
| ( |
| | $ | | | $ | |
The Company reviews inventory for slow moving or obsolete amounts based on expected product sales volume and provides reserves against the carrying amount of inventory as appropriate.
14
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
7. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
|
| Useful Life |
| March 31, 2025 |
| December 31, 2024 | ||
Machinery and equipment |
| | $ | | | $ | | |
Furniture and fixtures |
| |
| | |
| | |
Computer equipment |
| |
| | |
| | |
Leasehold improvements |
| Shorter of lease term or estimated useful life | |
| | |
| |
Vehicles | | | | | | | | |
Software |
| |
| | |
| | |
Construction in progress |
|
| |
| | |
| |
Total |
|
| |
| | |
| |
Less: Accumulated depreciation and amortization |
|
| |
| ( | |
| ( |
Property and equipment, net |
|
| | $ | | | $ | |
Depreciation and amortization expense for property and equipment was $
8. DEBT
Resolute Credit Agreement
On February 28, 2025, Resolute Holdings entered into a credit agreement with JPMorgan Chase Bank, N.A., as lender (the “Resolute Credit Agreement”). The Resolute Credit Agreement provides for a $
As of March 31, 2025 and December 31, 2024, there was
CompoSecure Holdings Credit Facility
On July 26, 2016, CompoSecure Holdings, together with CompoSecure and its operating subsidiary, entered into a $
15
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
participate in the 2021 CompoSecure Holdings Credit Facility, and (iii) to allow CompoSecure to repurchase outstanding shares of its common stock, common stock warrants and Exchangeable Notes in an aggregate amount not to exceed $
On August 7, 2024, the CompoSecure Holdings, together with its operating subsidiaries, and CompoSecure, entered into a Fourth Amended and Restated Credit Agreement with JPMC (the “2024 CompoSecure Holdings Credit Facility” and collectively with the 2021 CompoSecure Holdings Credit Facility, the “CompoSecure Holdings Credit Facilities”) and the lenders party thereto to refinance the 2021 CompoSecure Holdings Credit Facility. The 2024 CompoSecure Holdings Credit Facility amended and restated the 2021 CompoSecure Holdings Credit Facility in its entirety. In conjunction with the 2024 CompoSecure Holdings Credit Facility, the maximum borrowing capacity of the overall credit facility was increased to $
In conjunction with the 2024 CompoSecure Holdings Credit Facility, the Company incurred approximately $
On December 30, 2024, CompoSecure Holdings, together with its operating subsidiaries, and CompoSecure, executed Amendment No. 1 to the 2024 CompoSecure Holdings Credit Facility (the “December 2024 Amendment”) to allow CompoSecure to facilitate the Spin-Off. There were no changes to the lenders as a result of the December 2024 Amendment and the December 2024 Amendment was accounted for as a debt modification. In connection with the December 2024 Amendment, the Company incurred $
The 2024 CompoSecure Holdings Credit Facility requires the Company to make quarterly principal payments until maturity, at which point a balloon principal payment is due for the outstanding principal. The 2024 CompoSecure Holdings Credit Facility also require the Company to make monthly interest payments as well as pay a quarterly unused commitment fee of
Interest on the revolving credit facility and the term loan are based on outstanding principal amount during the interest period multiplied by the quoted SOFR rate plus the applicable margin of
The Company recognized $
16
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
The CompoSecure Holdings Credit Facilities contain certain financial covenants including a minimum interest coverage ratio, a maximum total debt to EBITDA ratio and a minimum fixed charge coverage ratio related to financial performance solely at CompoSecure Holdings. As of March 31, 2025 and December 31, 2024, CompoSecure Holdings was in compliance with all financial covenants. The fair value of the CompoSecure Holdings Credit Facilities approximate the carrying value for all periods presented. Creditors of the CompoSecure Holdings Credit Facilities have no recourse to any assets or liabilities of Resolute Holdings.
As of March 31, 2025 and December 31, 2024, there were
The balances payable under all CompoSecure Holdings borrowing facilities are as follows:
|
| | 2025 | | | 2024 |
| | | | | | |
| | Term Loan | | Term Loan | ||
Loan Balance | | $ | | | $ | |
Less: current portion of term loan (scheduled payments) | |
| ( | |
| ( |
Less: net deferred financing costs | |
| ( | |
| ( |
Total Long Term debt | | $ | | | $ | |
The maturity of all the CompoSecure Holdings borrowings facilities is as follows:
Remainder of 2025 |
| $ | |
2026 | |
| |
2027 | | | |
2028 | | | |
2029 | |
| |
Total | | $ | |
In order to hedge CompoSecure Holdings’ exposure to variable interest rate fluctuations related to the $
The Company determined the fair value of the Interest Rate Swap Agreements to be
CompoSecure Holdings Exchangeable Senior Notes
On April 19, 2021 , CompoSecure and CompoSecure Holdings entered into subscription agreements (the “Note Subscription Agreements”) with certain investors (“Notes Investors”) pursuant to which such Notes Investors, severally and not jointly, purchased
17
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
on December 27, 2021, the Exchangeable Notes issued by CompoSecure Holdings and guaranteed by its operating subsidiaries, CompoSecure, L.L.C. and Arculus Holdings, L.L.C., in an aggregate principal amount of up to $
All Exchangeable Notes were exchanged prior to November 29, 2024. An aggregate of $
The Company assessed all terms and features of the Exchangeable Notes in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the Exchangeable Notes, including the conversion, put and call features. In consideration of these provisions, the Company determined that the optional redemption with a make-whole provision feature required bifurcation as a derivative liability. The fair value of the optional redemption with a make-whole provision feature was determined based on the difference between the fair value of the Exchangeable Notes with the redemption with a make-whole provision feature and the fair value of the Exchangeable Notes without the redemption with a make-whole provision feature. The Company employed a Lattice model to determine the fair value of the derivative liability upon issuance of the Exchangeable Notes and at the end of each reporting period when the derivative liability was remeasured to its fair value. The Company recorded a favorable (unfavorable) change in fair value of $
During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $
9. EQUITY STRUCTURE
Shares Authorized
As of March 31, 2025, the Company had authorized a total of
Spin-Off
On February 28, 2025, CompoSecure distributed all shares of common stock of Resolute Holdings on a pro rata basis to the holders of CompoSecure’s Class A Common Stock as of the February 20, 2025 record date. Each stockholder of record who held shares of CompoSecure Class A Common Stock as of the close of business on February 20, 2025, received share of Resolute Holdings common stock for every twelve shares of CompoSecure common stock then held. There were
Non-controlling Interest
Non-controlling interest represents direct interests held in CompoSecure Holdings other than by Resolute Holdings. Resolute Holdings has no direct ownership interest in CompoSecure Holdings as CompoSecure Holdings is a wholly owned subsidiary of CompoSecure. In accordance with ASC 810 and due to the terms of the CompoSecure Management Agreement, Resolute Holdings must consolidate CompoSecure Holdings because it is a VIE in which Resolute Holdings is deemed to be the primary beneficiary. In accordance with ASC 810, the Company is required to reflect the equity interests in CompoSecure Holdings that are held by CompoSecure as a non-controlling interest in the Company’s consolidated financial statements. The Company’s net income (loss) is allocated to non-controlling interest and is removed from the consolidated net income (loss) on the Consolidated Statements of
18
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
Operations to derive net income or loss attributable to common stockholders. Refer to Note 13 for segment financial information of the Company.
10. LEASES
The Company leases certain office space and manufacturing space under arrangements currently classified as leases under ASC 842, Leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal options ranging from to years. The exercise of lease renewal options is at the Company’s sole discretion.
The Company’s leases have remaining lease terms of to years. The Company does not include any renewal options in lease terms when calculating lease liabilities as the Company is not reasonably certain that it will exercise these options.
The weighted-average remaining lease term for the Company’s leases is
The Company has lease agreements that contain both lease and non-lease components. The Company accounts for lease components together with non-lease components (e.g., common-area maintenance). Variable lease costs are based on day to day common-area maintenance costs related to the lease agreements and are recognized as incurred.
The components of lease costs were as follows:
| | Three months ended March 31, | ||||
|
| 2025 |
| 2024 | ||
Operating lease cost | | $ | | | $ | |
Variable lease cost | |
| | |
| |
Total lease cost | | $ | | | $ | |
Future minimum commitments under all non-cancelable operating leases are as follows:
| | | |
Remainder of 2025 | | $ | |
2026 | |
| |
2027 | |
| |
2028 | |
| |
2029 | | | |
Later years | | | |
Total lease payments | |
| |
Less: Imputed interest | |
| ( |
Present value of lease liabilities | | $ | |
19
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
Supplemental cash flow information and non-cash activity related to our operating leases are as follows:
| | Three months ended March 31, | ||||
|
| 2025 |
| 2024 | ||
Operating cash flow information: |
| |
|
| |
|
Cash paid for amounts included in the measurement of lease liabilities | | $ | | | $ | |
Non-cash activity: | |
|
| |
|
|
Right-of-use assets obtained in exchange for lease obligations | | $ | | | $ | — |
11. RETIREMENT PLANS
Defined Contribution Plan
Resolute Holdings has a 401(k) profit sharing plan for all full-time employees. Resolute Holdings matches contributions based on
Retirement plan expense for the three months ended March 31, 2025 and March 31, 2024 was approximately $
12. FAIR VALUE MEASUREMENTS
In accordance with ASC 820-10, the Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. This determination requires significant judgments to be made by the Company.
The Company’s financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as of the following dates:
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
March 31, 2025 |
| |
|
| |
|
| |
|
| |
|
Assets Carried at Fair Value: |
| |
|
| |
|
| |
|
| |
|
Derivative asset - interest rate swap | | $ | — | | $ | | | $ | — | | $ | |
December 31, 2024 | |
|
| |
|
| |
|
| |
| |
Assets Carried at Fair Value: | |
|
| |
|
| |
|
| |
| |
Derivative asset - interest rate swap | | $ | — | | $ | | | $ | — | | $ | |
Additional information is provided below about assets and liabilities remeasured at fair value on a recurring basis.
Derivative asset - interest rate swap
The Company is exposed to interest rate risk on variable interest rate debt obligations. To manage interest rate risk, the Company entered into an interest rate swap agreement on January 5, 2022. See Note 8.
20
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
13. SEGMENTS
The Company is managed and operated as
The Company’s CODM is its Chief Executive Officer who makes resource allocation decisions and assesses performance based on income from operations of each business. Characteristics of the consolidated organization which were relied upon in making the determination that the Company operates
The following tables present each reportable segment’s statements of operations for the three months ended March 31, 2025 and March 31, 2024:
|
| Three months ended | ||||||||||
| | March 31, 2025 | ||||||||||
| | ($ in thousands) | ||||||||||
|
| Resolute |
| CompoSecure |
| Intercompany/ |
| | | |||
| | Holdings | | Holdings | | Eliminations | | Consolidated | ||||
Management fees | | $ | | | $ | — | | $ | ( | | $ | — |
Product sales | | | — | | | | | | — | | | |
Net sales | | | | | | | | | ( | | | |
Cost of sales | | | — | | | | | | — | | | |
Gross profit | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
Salaries and benefits | | | | | | | | | ( | | | |
Equity-based compensation | | | | | | | | | ( | | | |
Professional fees | | | | | | | | | ( | | | |
Marketing | | | — | | | | | | — | | | |
Subscriptions | | | | | | — | | | — | | | |
Other operating expenses | | | | | | | | | — | | | |
Management fees | | | | | | | | | ( | | | — |
Total selling, general and administrative expenses | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
Income from operations | | | ( | | | | | | | | | |
| | | | | | | | | | | | |
Interest income | | | — | | | | | | — | | | |
Interest (expense) | | | ( | | | ( | | | — | | | ( |
Other | | | — | | | ( | | | — | | | ( |
Total other income (expense) | | | ( | | | ( | | | — | | | ( |
| | | | | | | | | | | | |
Income (loss) before income taxes | | | ( | | | | | | | | | |
Income tax (expense) | | | ( | | | — | | | — | | | ( |
Net income (loss) | | $ | ( | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Depreciation and amortization | | $ | — | | | | | | — | | | |
Capital expenditures | | $ | — | | | | | | — | | | |
21
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
| | Three months ended | ||||||||||
| | March 31, 2024 | ||||||||||
| | ($ in thousands) | ||||||||||
| | Resolute |
| CompoSecure |
| Intercompany/ |
| | | |||
| | Holdings | | Holdings | | Eliminations | | Consolidated | ||||
Management fees | | $ | — | | $ | — | | $ | — | | $ | — |
Product sales | | | — | | | | | | — | | | |
Net sales | | | — | | | | | | — | | | |
Cost of sales | | | — | | | | | | — | | | |
Gross profit | | | — | | | | | | — | | | |
| | | | | | | | | | | | |
Salaries and benefits | | | — | | | | | | — | | | |
Equity-based compensation | | | — | | | | | | — | | | |
Professional fees | | | — | | | | | | — | | | |
Marketing | | | — | | | | | | — | | | |
Subscriptions | | | — | | | — | | | — | | | — |
Other operating expenses | | | — | | | | | | — | | | |
Management fees | | | — | | | — | | | — | | | — |
Total selling, general and administrative expenses | | | — | | | | | | — | | | |
| | | | | | | | | | | | |
Income from operations | | | — | | | | | | — | | | |
| | | | | | | | | | | | |
Interest income | | | — | | | | | | — | | | |
Interest (expense) | | | — | | | ( | | | — | | | ( |
Other | | | — | | | ( | | | — | | | ( |
Total other income (expense) | | | — | | | ( | | | — | | | ( |
| | | | | | | | | | | | |
Income (loss) before income taxes | | | — | | | | | | — | | | |
Income tax (expense) | | | — | | | — | | | — | | | — |
Net income (loss) | | $ | — | | $ | | | $ | — | | $ | |
| | | | | | | | | | | | |
Depreciation and amortization | | $ | — | | | | | | — | | | |
Capital expenditures | | $ | — | | | | | | — | | | |
22
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
The following tables present each reportable segment’s balance sheet as of March 31, 2025 and December 31, 2024:
| | March 31, 2025 | ||||||||||
| | ($ in thousands) | ||||||||||
|
| Resolute |
| CompoSecure |
| Intercompany/ |
| | | |||
| | Holdings | | Holdings | | Eliminations | | Consolidated | ||||
ASSETS | | | | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | | | | |
Cash and cash equivalents | | $ | | | $ | | | $ | — | | $ | |
Accounts receivable | | | | | | | | | ( | | | |
Inventories, net | | | — | | | | | | — | | | |
Prepaid expenses and other current assets | | | | | | | | | — | | | |
Deferred tax asset | | | | | | — | | | — | | | |
Total current assets | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
Property and equipment, net | | | — | | | | | | — | | | |
Right of use assets, net | | | | | | | | | — | | | |
Derivative asset - interest rate swap | | | — | | | | | | — | | | |
Deposits and other assets | | | — | | | | | | — | | | |
Total assets | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | | | |
Accounts payable | | | | | | | | | | | | |
Accrued expenses | | | | | | | | | ( | | | |
Bonus payable | | | — | | | | | | — | | | |
Commission payable | | | — | | | | | | — | | | |
Current portion of long-term debt | | | — | | | | | | — | | | |
Current portion of lease liabilities – operating leases | | | | | | | | | — | | | |
Total current liabilities | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
Long-term debt, net of deferred financing costs | | | — | | | | | | — | | | |
Lease liabilities, operating leases | | | | | | | | | — | | | |
Total liabilities | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
Additional paid-in capital | | | | | | — | | | — | | | |
Accumulated deficit | | | ( | | | — | | | — | | | ( |
Total stockholders' equity (deficit) | | | | | | — | | | — | | | |
Non-controlling interest | | | — | | | ( | | | ( | | | ( |
Total equity (deficit) | | | | | | ( | | | ( | | | ( |
Total liabilities and stockholders' equity (deficit) | | $ | | | $ | | | $ | ( | | $ | |
23
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
| | December 31, 2024 | ||||||||||
| | ($ in thousands) | ||||||||||
|
| Resolute |
| CompoSecure |
| Intercompany/ |
| | | |||
| | Holdings | | Holdings | | Eliminations | | Consolidated | ||||
ASSETS | | | | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | | | | |
Cash and cash equivalents | | $ | — | | $ | | | $ | — | | $ | |
Accounts receivable | | | — | | | | | | — | | | |
Inventories, net | | | — | | | | | | — | | | |
Prepaid expenses and other current assets | | | — | | | | | | — | | | |
Deferred tax asset | | | | | | — | | | — | | | |
Total current assets | | | | | | | | | — | | | |
| | | | | | | | | | | | |
Property and equipment, net | | | — | | | | | | — | | | |
Right of use assets, net | | | — | | | | | | — | | | |
Derivative asset - interest rate swap | | | — | | | | | | — | | | |
Deposits and other assets | | | — | | | | | | — | | | |
Total assets | | | | | | | | | — | | | |
| | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | | | |
Accounts payable | | | — | | | | | | — | | | |
Accrued expenses | | | | | | | | | ( | | | |
Bonus payable | | | — | | | | | | — | | | |
Commission payable | | | — | | | | | | — | | | |
Current portion of long-term debt | | | — | | | | | | — | | | |
Current portion of lease liabilities – operating leases | | | — | | | | | | — | | | |
Total current liabilities | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
Long-term debt, net of deferred financing costs | | | — | | | | | | — | | | |
Lease liabilities, operating leases | | | — | | | | | | — | | | |
Total liabilities | | | | | | | | | ( | | | |
| | | | | | | | | | | | |
Additional paid-in capital | | | | | | — | | | — | | | |
Accumulated deficit | | | ( | | | — | | | — | | | ( |
Total stockholders' equity (deficit) | | | ( | | | — | | | — | | | ( |
Non-controlling interest | | | — | | | ( | | | | | | ( |
Total equity (deficit) | | | ( | | | ( | | | | | | ( |
Total liabilities and stockholders' equity (deficit) | | $ | | | $ | | | $ | — | | $ | |
14. VARIABLE INTEREST ENTITIES
The Company evaluates its contractual, ownership, and other interests in entities to determine if it has any variable interest in a VIE. These evaluations are complex and involve judgment. If the Company determines that an entity in which it holds a contractual or ownership interest is a VIE and that the Company is the primary beneficiary, the Company consolidates such entity in its consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.
24
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
Following the execution of the Management Agreement on February 28, 2025, CompoSecure Holdings is deemed to be a VIE in which Resolute Holdings is the primary beneficiary and CompoSecure Holdings is consolidated due to the terms of the CompoSecure Management Agreement pursuant to which Resolute Holdings is responsible for managing the day-to-day business and operations and overseeing the strategy of CompoSecure Holdings and its controlled affiliates in exchange for the CompoSecure Management Fee. The nature of Resolute Holdings’ involvement in CompoSecure Holdings’ activities is outlined in the CompoSecure Management Agreement. Creditors of Resolute Holdings have no recourse to the assets or liabilities of CompoSecure Holdings, and creditors of CompoSecure Holdings have no recourse to the assets or liabilities of Resolute Holdings. Resolute Holdings has no obligation to provide any financial support to CompoSecure Holdings. See Note 13 for details of CompoSecure Holdings’ assets and liabilities.
15. GEOGRAPHIC INFORMATION AND CONCENTRATIONS
The Company’s headquarters and substantially all of its operations, including its long-lived assets, are located in the United States. Geographical sales information based on the location of the customer was as follows:
| | Three months ended March 31, | ||||
|
| 2025 |
| 2024 | ||
Net sales by region: |
| |
|
| |
|
Domestic | | $ | |
| $ | |
International | | | |
| | |
Total | | $ | | | $ | |
Resolute Holdings’ sole customer and source of revenue is CompoSecure Holdings. Resolute Holdings generates management fee revenue from the CompoSecure Management Agreement. Pursuant to the CompoSecure Management Agreement, CompoSecure Holdings shall pay Resolute Holdings the CompoSecure Management Fee in a cash amount equal to
|
| March 31, 2025 |
| December 31, 2024 |
| September 30, 2024 |
| June 30, 2024 | ||||
CompoSecure Management Agreement Adjusted EBITDA | | $ | | | $ | | | $ | | | $ | |
LTM Management Agreement Adjusted EBITDA | | | | | | | | | | | | |
Fee rate | | | | | | | | | | | | |
CompoSecure Management Fee from Feb 28, 2025 to Mar 31, 2025 | | $ | | | | | | | | | | |
CompoSecure Holdings’ principal direct customers as of March 31, 2025 consist primarily of leading international and domestic banks and other payment card issuers primarily within the U.S., with additional direct and indirect customers in Europe, Asia, Latin America, Canada, and the Middle East. The Company periodically assesses the financial strength of these customers and establishes allowances for anticipated losses, if necessary.
The Company primarily relied on
25
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
16. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company is a party to non-cancelable operating leases with $
Litigation
The Company may be, from time to time, party to various disputes and claims arising from normal business activities. The Company accrues for amounts related to legal matters if it is probable that a liability has been incurred and the amount is reasonably estimable. Litigation costs are expensed as incurred.
17. RELATED PARTY TRANSACTIONS
After the Spin-Off and execution of the CompoSecure Management Agreement, the Company and CompoSecure are under common control by Tungsten 2024 LLC and its affiliates including Resolute Compo Holdings, LLC and Resolute ManCo Holdings LLC (“Tungsten 2024”). See Note 1 for further details on the CompoSecure Management Agreement.
In connection with the completion of the Spin-Off, Resolute Holdings entered into a Separation and Distribution Agreement with CompoSecure, pursuant to which CompoSecure delivered
In connection with the Spin-Off, Resolute Holdings entered into a Letter Agreement with CompoSecure (“Letter Agreement”), pursuant to which CompoSecure will (i) delegate by resolution of the CompoSecure board of directors the authority to Resolute Holdings to approve issuances of CompoSecure equity for M&A and equity awards, (ii) issue CompoSecure equity pursuant to those delegations, (iii) make customary representations, warranties and covenants in connection with any acquisition, business combination transaction or other transaction that is intended to qualify in whole or in part as a tax-free for U.S. federal income tax purposes, and is entered into, in each case, in accordance with the CompoSecure Management Agreement and (iv) make filings and deliver notices in connection with the performance of Resolute Holdings’ duties and obligations under the CompoSecure Management Agreement. The Letter Agreement is coterminous with the CompoSecure Management Agreement.
Certain employees of the Company (“Contractors”) have entered into Independent Contractor Agreements with CompoSecure (“Contractor Agreements”) pursuant to which CompoSecure wishes for the Contractors to provide certain consulting and advisory services with respect to executing strategic corporate transactions and related activities, and such other similar services as reasonably requested by CompoSecure (“Contractor Services”). The Contractor Agreements shall continue until terminated by either party in accordance with the Contractor Agreements. In exchange for the Contractor Services, the Contractors shall be eligible to receive grants of restricted stock units or other equity incentive awards as determined by CompoSecure and shall remain eligible to vest in any equity incentive awards previously granted to Contractor by CompoSecure. Grants made under the Contractor Agreements are included in the disclosures in Note 3.
In connection with the Spin-Off, Resolute Holdings entered into a Registration Rights Agreement with Resolute Compo Holdings LLC (“Registration Rights Agreement”) pursuant to which Resolute Holdings agreed that, upon the request of Resolute Compo Holdings LLC and its permitted transferees including Resolute ManCo Holdings LLC (collectively, the “Holder”), subject to certain limitations, Resolute Holdings will use its reasonable best efforts to effect the registration under applicable federal or state securities laws of any shares of Resolute Holdings’ Common Stock held by Holder. If Resolute Holdings intends to file on its behalf
26
RESOLUTE HOLDINGS MANAGEMENT, INC. |
Notes to Consolidated Financial Statements - Unaudited |
(“$ in thousands” - except share data) |
or on behalf of any of its other security holders a registration statement in connection with a public offering of any of its securities in a manner that would permit the registration for offer and sale of its common stock held by Holder, Holder has the right to include its shares of Resolute Holdings’ common stock in that offering. Resolute Holdings is generally responsible for all registration expenses in connection with the performance of its obligations under the registration rights provisions in the agreement, and Holder will be responsible for its own internal fees and expenses, any applicable underwriting discounts or commissions and any stock transfer taxes. The agreement also contains customary indemnification and contribution provisions by Resolute Holdings for the benefit of Holder and, in limited situations, by Holder for the benefit of Resolute Holdings with respect to the information provided by Holder included in any registration statement, prospectus or related document. Holder may transfer the benefits of the Registration Rights Agreement to transferees of the shares covered by the Registration Rights Agreement, provided that each transferee agrees to be bound by the terms of the Registration Rights Agreement.
In connection with the completion of the Spin-Off, Resolute Holdings entered into a U.S. State and Local Tax Sharing Agreement with CompoSecure (“Tax Sharing Agreement”) that governs the respective rights, responsibilities, and obligations of CompoSecure and Resolute Holdings after the Spin-Off with respect to certain state and local tax matters in jurisdictions and for taxable periods in which Resolute Holdings is required to file tax returns on a consolidated, combined, unitary or other group basis with CompoSecure (“Combined Returns”). Among other things, the Tax Sharing Agreement (i) allocates responsibility for the preparation and filing of Combined Returns and the payment of taxes due in connection therewith, (ii) determines the appropriate allocation of any such tax liability between Resolute Holdings and CompoSecure, (iii) requires compensation to be paid by CompoSecure to Resolute Holdings to the extent CompoSecure uses any tax attributes properly allocable to Resolute Holdings to offset taxes otherwise allocable to CompoSecure, and vice versa, (iv) allocates responsibility for the conduct of tax contests arising with respect to Combined Return, and (v) ensures that the parties are aligned on cooperating and coordinating with respect to Combined Returns.
On February 28, 2025, upon the completion of the Spin-Off, Roger Fradin resigned from the board of directors of CompoSecure for personal reasons and not as a result of any disagreement with management or any matter relating to CompoSecure’s operations, policies or practices. In connection with Mr. Fradin’s resignation, CompoSecure entered into a Board Adviser Agreement with Fradin Consulting LLC (“Fradin Consulting”) and Resolute Holdings (the “Board Adviser Agreement”), effective as of the date of Mr. Fradin’s resignation, for a period of
The Company has entered into an agreement with SRM Equity Partners, LLC (“SRM”) pursuant to which SRM provides certain services to the Company, including executive administration services and office space for use by Mr. David Cote, for approximately $
CompoSecure is the sole member of CompoSecure Holdings. In accordance with the Third Amended and Restated Limited Liability Company Agreement of CompoSecure Holdings, CompoSecure from time to time receives distributions from CompoSecure Holdings and CompoSecure Holdings from time to time will pay expenses on behalf of CompoSecure. There were
18. SUBSEQUENT EVENTS
None.
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC. The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere particularly in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included in this Quarterly Report on Form 10-Q.
Overview
Resolute Holdings Management, Inc. (“Resolute Holdings”) intends to provide operating management services to generate recurring, long-duration management fees from CompoSecure Holdings L.L.C. (“CompoSecure Holdings”) and other companies it may manage in the future. Resolute Holdings will apply a differentiated approach of value creation through the systematic deployment of the Resolute Operating System to drive performance at businesses it manages with the intention of creating value at both the underlying managed businesses, including CompoSecure Holdings, and at Resolute Holdings. Resolute Holdings will also apply its M&A and capital markets expertise to drive inorganic growth of its managed businesses.
In accordance with ASC 810 and due to the terms of the CompoSecure Management Agreement, as defined below, Resolute Holdings (together with CompoSecure Holdings, the “Company”) is required to consolidate CompoSecure Holdings because it is a variable interest entity (“VIE”) in which Resolute Holdings is deemed to be the primary beneficiary. Resolute Holdings does not own any equity interests or common stock in CompoSecure Holdings or CompoSecure.
CompoSecure Holdings, a wholly owned subsidiary of CompoSecure, Inc. (“CompoSecure”), creates innovative, highly differentiated and customized financial payment card products for banks and other payment card issuers to support and increase their customer acquisition, customer retention and organic customer spend. CompoSecure Holdings’ customers consist primarily of leading international and domestic banks and other payment card issuers primarily within the United States (“U.S.”), with additional direct and indirect customers in Europe, Asia, Latin America, Canada, and the Middle East. CompoSecure Holdings is a platform for next generation payment technology, security, and authentication solutions. CompoSecure Holdings maintains trusted, highly-embedded and long-term customer relationships with an expanding set of global issuers. CompoSecure Holdings has established a niche position in the financial payment card market through over 20 years of innovation and experience and is focused primarily on this attractive subsector of the financial technology market. CompoSecure Holdings serves a diverse set of direct customers and indirect customers, including some of the largest issuers of credit cards in the U.S.
Recent Developments
On February 28, 2025, CompoSecure distributed all shares of common stock of its wholly owned subsidiary, Resolute Holdings, on a pro rata basis to the holders of CompoSecure’s Class A Common Stock as of the February 20, 2025 record date (“Spin-Off”). Each stockholder of record who held shares of CompoSecure Class A Common Stock as of the close of business on February 20, 2025, received one share of Resolute Holdings common stock for every twelve shares of CompoSecure common stock then held. On February 28, 2025, Resolute Holdings started trading regular-way on The Nasdaq Stock Market LLC under the ticker symbol “RHLD”.
In connection with the completion of the Spin-Off, Resolute Holdings entered into a management agreement with CompoSecure Holdings (the “CompoSecure Management Agreement”), pursuant to which Resolute Holdings is responsible for managing the day-to-day business and operations and overseeing the strategy of CompoSecure Holdings and its controlled affiliates. Due to the execution of and the terms of the CompoSecure Management Agreement, Resolute Holdings (and together with CompoSecure Holdings, the “Company”) is required to consolidate CompoSecure Holdings for financial reporting purposes. Resolute Holdings does not own any equity interests or common stock in CompoSecure Holdings or CompoSecure.
Pursuant to the CompoSecure Management Agreement, CompoSecure Holdings will pay Resolute Holdings a quarterly management fee (the “CompoSecure Management Fee”), payable in arrears, in a cash amount equal to 2.5% of CompoSecure Holdings’ last 12 months’ Adjusted EBITDA, measured for the period ending on the fiscal quarter then ended, as defined in the
28
CompoSecure Management Agreement (“Management Agreement Adjusted EBITDA”). CompoSecure Holdings is also required to reimburse Resolute Holdings and its affiliates for Resolute Holdings’ documented costs and expenses incurred on behalf of CompoSecure Holdings other than those expenses related to Resolute Holdings’ or its affiliates’ personnel who provide services to CompoSecure Holdings under the CompoSecure Management Agreement. Resolute Holdings will determine, in its sole and absolute discretion, whether a cost or expense will be borne by Resolute Holdings or by CompoSecure Holdings.
The CompoSecure Management Agreement has an initial term of 10 years and shall automatically renew for successive ten-year terms unless terminated in accordance with its terms. Resolute Holdings and CompoSecure Holdings may each terminate the CompoSecure Management Agreement upon the occurrence of certain other limited events, and in connection with certain of these limited events, Resolute Holdings has the right to require CompoSecure Holdings to pay a termination fee, which may be paid in cash, shares of common stock of CompoSecure or a combination of cash and stock. The CompoSecure Management Agreement also provides for certain indemnification rights in Resolute Holdings’ favor, as well as certain additional covenants, representations and warranties.
Economic Conditions - Globally and in the Digital Asset Marketplace
As a result of the consolidation of CompoSecure Holdings, the Company’s business, financial condition and results of operations are subject to impacts from trends and developments impacting the business of CompoSecure Holdings, including but not limited to, market cycles that have created uncertainty in the timing of CompoSecure Holdings’ planned ramp-up of its Arculus offering.
Key Components of Results of Operations
Net Sales
Net sales reflect the Company’s revenue generated from the sale of CompoSecure Holdings’ products as management fee revenue at Resolute Holdings is eliminated in consolidation. Product sales at CompoSecure Holdings primarily include the design and manufacturing of metal cards, including contact and dual interface cards. CompoSecure Holdings also generates revenue from the sale of Prelams (which refers to pre-laminated, sub-assemblies consisting of a composite of material layers which are partially laminated to be used as a component in the multiple layers of a final payment card or other card construction). Net sales include the effect of discounts and allowances which consist primarily of volume-based rebates.
Cost of Sales
The Company’s cost of sales comprises CompoSecure Holdings’ direct and indirect costs related to manufacturing products and providing related services. Product costs include the cost of raw materials and supplies, including various metals, EMV® chips, holograms, adhesives, magnetic stripes, and NFC assemblies; the cost of labor; equipment and facilities; operational overhead; depreciation and amortization; leases and rental charges; shipping and handling; and freight and insurance costs. Cost of sales can be impacted by many factors, including volume, operational efficiencies, procurement costs, and promotional activity.
Gross Profit and Gross Margin
The Company’s gross profit comprises CompoSecure Holdings’ net sales less cost of sales, and its gross margin represents gross profit as a percentage of its net sales.
Operating Expenses
The Company’s operating expenses are primarily comprised of selling, general, and administrative expenses at Resolute Holdings and CompoSecure Holdings, which generally consist of personnel-related expenses for its corporate, executive, finance, information technology, and other administrative functions, and expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, depreciation, amortization, travel, sales and marketing.
29
Income from Operations and Operating Margin
Income from operations consists of the Company’s gross profit less its operating expenses. Operating margin is income from the Company’s operations as a percentage of its net sales.
Other Income (Expense)
Other income (expense) primarily consist of interest expense net of any interest income and deferred financing costs.
Net (Loss) Income
Net (loss) income consists of the Company’s income from operations, less other expenses and income tax provision or benefit.
Results of Operations
Three months ended March 31, 2025 vs. three months ended March 31, 2024
The following table presents the Company’s results of operations for the periods indicated:
| | Three months ended March 31, |
| |||||||||
|
| 2025 |
| 2024 |
| $ Change |
| % Change |
| |||
| | (in thousands) |
| |||||||||
Net sales | | $ | 103,889 | | $ | 104,010 | | $ | (121) |
| (0) | % |
Cost of sales | |
| 49,342 | |
| 48,797 | |
| 545 |
| 1 | % |
Gross profit | |
| 54,547 | |
| 55,213 | |
| (666) |
| (1) | % |
Operating expenses | | | | | | | | | | | | |
Selling, general and administrative expenses | |
| 28,926 | |
| 22,770 | |
| 6,156 |
| 27 | % |
Income from operations | |
| 25,621 | |
| 32,443 | |
| (6,822) |
| (21) | % |
Other (expense) income, net | |
| (2,438) | |
| (6,057) | |
| 3,619 |
| (60) | % |
(Loss) income before income taxes | |
| 23,183 | |
| 26,386 | |
| (3,203) |
| (12) | % |
Income tax (expense) | |
| (568) | |
| — | |
| (568) |
| n/a | % |
Net (loss) income | |
| 22,615 | |
| 26,386 | |
| (3,771) |
| (14) | % |
Net income (loss) attributable to non-controlling interests | |
| 25,981 | |
| 26,386 | |
| (405) |
| (2) | % |
Net income (loss) attributable to common stockholders | | $ | (3,366) | | $ | — | | $ | (3,366) |
| n/a | % |
30
| | Three months ended March 31, |
| ||
| | 30, |
| ||
|
| 2025 |
| 2024 | |
Gross Margin |
| 53 | % | 53 | % |
Operating margin |
| 26 | % | 31 | % |
Net Sales
| | Three months ended March 31, |
| |||||||||
|
| 2025 |
| 2024 |
| $ Change |
| % Change |
| |||
| | (in thousands) |
| |||||||||
Net sales by region |
| |
|
| |
|
| |
|
|
| |
Domestic | | $ | 89,533 | | $ | 92,790 | | $ | (3,257) |
| (4) | % |
International | |
| 14,356 | |
| 11,220 | |
| 3,136 |
| 28 | % |
Total | | $ | 103,889 | | $ | 104,010 | | $ | (121) |
| (0) | % |
The Company’s net sales for the quarter ended March 31, 2025 decreased $0.1 million to $103.9 million compared to $104.0 million for the quarter ended March 31, 2024. The decrease was driven by a decline in domestic sales in CompoSecure Holdings’ premium payment card business, which was down 4%, offset by international sales which were up 28%.
Domestic: The Company’s domestic net sales for the quarter ended March 31, 2025 decreased $3.3 million, or 4%, to $89.5 million compared to $92.8 million for the quarter ended March 31, 2024. The decrease was primarily due to lower customer acquisition by CompoSecure Holdings’ clients as they continued to experience lower demand during the quarter ended March 31, 2025.
International: The Company’s international net sales for the quarter ended March 31, 2025 increased $3.1 million, or 28%, to $14.4 million compared to $11.2 million for the quarter ended March 31, 2024. CompoSecure Holdings’ international customer base is comprised of a larger population of smaller customers compared to the domestic customer base. There were increased sales across the customer base driving growth in net sales during the quarter ended March 31, 2025.
Gross Profit and Gross Margin
The Company’s gross profit for the quarter ended March 31, 2025 decreased $0.7 million, or 1%, to $54.5 million compared to $55.2 million for the quarter ended March 31, 2024, while the gross profit margin remained constant at 53%.
Operating Expenses
The Company’s operating expenses increased $6.2 million, or 27%, to $28.9 million for the quarter ended March 31, 2025 compared to $22.8 million for the quarter ended March 31, 2024. The increase was primarily due to incremental salaries and equity based compensation expense from hiring employees at Resolute Holdings.
Income from Operations and Operating Margin
Income from operations for the quarter ended March 31, 2025 decreased $6.8 million, or 21%, to $25.6 million compared to $32.4 million for the quarter ended March 31, 2024. The decrease was primarily attributable to an increase in operating expenses. Operating margin for the quarter ended March 31, 2025 decreased by 5%, to 26%, compared to 31% for the quarter ended March 31, 2024. The decrease in operating margin was primarily attributable to the increase in operating expenses described above.
Other Income (Expense)
Other expense for the quarter ended March 31, 2025 decreased $3.6 million, to $2.4 million, compared to $6.1 million for the quarter ended March 31, 2024. The decrease in other expense was primarily due to lower interest expense as a result of the Exchangeable Notes being exchanged and extinguished.
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Income Tax Expense
The Company’s income tax expense for the quarter ended March 31, 2025 was $0.6 million compared to $0.0 million for the quarter ended March 31, 2024 due to Resolute Holdings being taxed as a corporation compared to CompoSecure Holdings as a pass-through entity in the prior period.
Segments
The following table presents the Company’s results of operations by reportable segment for the three months ended March 31, 2025:
|
| Three months ended | ||||||||||
| | March 31, 2025 | ||||||||||
| | ($ in thousands) | ||||||||||
|
| Resolute |
| CompoSecure |
| Intercompany/ |
| | | |||
| | Holdings | | Holdings | | Eliminations | | Consolidated | ||||
Management fees | | $ | 1,129 | | $ | — | | $ | (1,129) | | $ | — |
Product sales | | | — | | | 103,889 | | | — | | | 103,889 |
Net sales | | | 1,129 | | | 103,889 | | | (1,129) | | | 103,889 |
Cost of sales | | | — | | | 49,342 | | | — | | | 49,342 |
Gross profit | | | 1,129 | | | 54,547 | | | (1,129) | | | 54,547 |
| | | | | | | | | | | | |
Salaries and benefits | | | 1,816 | | | 11,224 | | | (948) | | | 12,092 |
Equity-based compensation | | | 1,156 | | | 5,613 | | | (723) | | | 6,046 |
Professional fees | | | 456 | | | 4,535 | | | (139) | | | 4,852 |
Marketing | | | — | | | 871 | | | — | | | 871 |
Subscriptions | | | 325 | | | — | | | — | | | 325 |
Other operating expenses | | | 173 | | | 4,567 | | | — | | | 4,740 |
Management fees | | | | | | 1,129 | | | (1,129) | | | — |
Total selling, general and administrative expenses | | | 3,926 | | | 27,939 | | | (2,939) | | | 28,926 |
| | | | | | | | | | | | |
Income from operations | | | (2,797) | | | 26,608 | | | 1,810 | | | 25,621 |
| | | | | | | | | | | | |
Interest income | | | — | | | 1,077 | | | — | | | 1,077 |
Interest (expense) | | | (1) | | | (3,383) | | | — | | | (3,384) |
Other | | | — | | | (131) | | | — | | | (131) |
Total other income (expense) | | | (1) | | | (2,437) | | | — | | | (2,438) |
| | | | | | | | | | | | |
Income (loss) before income taxes | | | (2,798) | | | 24,171 | | | 1,810 | | | 23,183 |
Income tax (expense) | | | (568) | | | — | | | — | | | (568) |
Net income (loss) | | $ | (3,366) | | $ | 24,171 | | $ | 1,810 | | $ | 22,615 |
| | | | | | | | | | | | |
Depreciation and amortization | | $ | — | | | 2,273 | | | — | | | 2,273 |
Capital expenditures | | $ | — | | | 1,156 | | | — | | | 1,156 |
Use of Non-GAAP Financial Measures
This Quarterly Report on Form 10-Q includes certain non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and that may be different from non-GAAP financial measures used by other companies. The Company believes Fee-Related Earnings and Fee-Related Earnings per share are useful to investors in evaluating the Company’s financial performance. Fee-Related Earnings is calculated based on net income (loss) attributable to common stockholders of Resolute Holdings, and adding back a) equity-based compensation under the CompoSecure Equity Plan, b) Management Fees for the period during which expenses were incurred from Jan 1, 2025 until February 27, 2025 but
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prior to execution of the Management Agreement, c) one-time Spin-Off related costs, less the net tax impact of such adjustments at Resolute Holdings’ expected tax rate of 31%. The Company believes that these non-GAAP financials represent the best presentation regarding the performance of the Company that is attributable to Resolute Holdings common stockholders. Fee-Related Earnings and Fee-Related Earnings per share should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from Fee-Related Earnings and Fee-Related Earnings per share are significant components in understanding and assessing the Company’s financial performance. Accordingly, these key business metrics have limitations as an analytical tool. They should not be considered as an alternative to net income or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flows from operating activities as a measure of the Company’s liquidity, and may be different from similarly titled non-GAAP measures used by other companies.
The following unaudited table presents the reconciliation of U.S. GAAP net income attributable to common stockholders to non-GAAP Fee-Related Earnings and Fee-Related Earnings per share for the three months ended March 31, 2025:
|
| Three months ended | ||||||||||
| | March 31, 2025 | ||||||||||
| | ($ in thousands except per share figures) | ||||||||||
|
| Resolute |
| CompoSecure |
| Intercompany/ |
| | | |||
| | Holdings | | Holdings | | Eliminations | | Consolidated | ||||
Net income (loss) attributable to common stockholders | | | (3,366) | | | — | | | — | | | (3,366) |
Net income (loss) per share attributable to common stockholders - diluted | | $ | (0.39) | | | 0.00 | | | 0.00 | | $ | (0.39) |
| | | | | | | | | | | | |
Adjustments to reconcile Fee-Related Earnings to net income (loss) attributable to common stockholders: | | | | | | | | | | | | |
Add: Equity-based compensation expensed at Resolute Holdings under CompoSecure Equity Plan (1) | | | 1,148 | | | | | | | | | 1,148 |
Add: Pro forma management fees from Jan 1, 2025 to Feb 27, 2025 (2) | | | 2,046 | | | | | | | | | 2,046 |
Add: Spin-Off costs (3) | | | 290 | | | | | | | | | 290 |
Net tax impact of adjustments (4) | | | (724) | | | | | | | | | (724) |
Fee-Related Earnings | | | (606) | | | | | | | | | (606) |
Fee-Related Earnings per share | | $ | (0.07) | | | | | | | | $ | (0.07) |
| | | | | | | | | | | | |
Weighted average shares used to compute net income (loss) per share attributable to common stockholders and Fee-Related Earnings per share - diluted (in thousands) | | | 8,526 | | | | | | | | | 8,526 |
| (1) | Equity-based compensation required to be reported by the Company related to awards issued under the CompoSecure Equity Plan. Equity granted under the CompoSecure Equity Plan relates to CompoSecure Class A common stock and has no impact on Resolute Holdings’ common stock outstanding. |
| (2) | Incremental management fees as if the CompoSecure Management Agreement was executed on January 1, 2025. |
| (3) | One-time costs associated with the Spin-Off from CompoSecure. |
| (4) | Tax-effect of adjustments at a 31% effective tax rate. Only applied to those adjustments that would impact Resolute Holdings’ taxes. Equity-based compensation expense under the CompoSecure Equity Plan is expensed for tax purposes at CompoSecure and not Resolute Holdings. |
Critical Accounting Policies and Estimates
Critical accounting policies are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and reference is made to Note 2 of Notes to Financial Statements – unaudited in Item 1, “Financial Statements”.
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New Accounting Pronouncements
Reference is made to Note 2 of Notes to Financial Statements - unaudited in Item 1, “Financial Statements,” for information concerning recent accounting pronouncements since the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Liquidity and Capital Resources
Resolute Holdings’ primary sources of liquidity are its existing cash and cash equivalents balances, cash flows from operations and borrowings on the Resolute revolving credit facility. CompoSecure Holdings’ primary sources of liquidity are its existing cash and cash equivalents, cash flows from operations, and borrowings on the CompoSecure Holdings term loan and revolving credit facility as detailed in Note 8 of Notes to Financial Statements – unaudited in Item 1, “Financial Statements”. The Company’s primary cash requirements at Resolute Holdings and CompoSecure Holdings include operating expenses, debt service payments (principal and interest), and capital expenditures (including property and equipment and software).
As of March 31, 2025, the Company had cash and cash equivalents of $71.0 million, consisting of $8.8 million at Resolute Holdings and $62.2 million at CompoSecure Holdings. The Company had debt principal outstanding of $195.0 million at CompoSecure Holdings. As of December 31, 2024, the Company had cash and cash equivalents of $71.6 million and total debt principal outstanding of $197.5 million, all at CompoSecure Holdings.
Resolute Holdings and CompoSecure Holdings are distinct legal entities and operating businesses that must separately maintain sufficient liquidity independent of each other. Debt at each entity is non-recourse to the other. Resolute Holdings is dependent on payment of the CompoSecure Management Fee from CompoSecure Holdings to maintain sufficient liquidity. The Company believes that the cash flows from operations and available cash and cash equivalents, as well as the availability of a $5.0 million revolving credit facility at Resolute Holdings, are sufficient to meet the liquidity needs of Resolute Holdings for at least the next 12 months from the date of filing of this Form 10-Q. The Company believes that the cash flows from operations and available cash and cash equivalents, as well as the availability of a $130.0 million revolving credit facility at CompoSecure Holdings, are sufficient to meet the liquidity needs of CompoSecure Holdings, including the repayment of its outstanding debt, for at least the next 12 months from the date of filing of this Form 10-Q.
The Company anticipates that to the extent Resolute Holdings requires additional liquidity, it shall do so through borrowings on its revolving credit facility, the incurrence of other indebtedness, or a combination thereof and offering of its shares in capital markets. The Company anticipates that to the extent CompoSecure Holdings requires additional liquidity, it shall do so through borrowings on its revolving credit facility, the incurrence of other indebtedness, or a combination thereof and offering of CompoSecure shares in capital markets. The Company cannot be assured that each of Resolute Holdings and CompoSecure Holdings will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, the liquidity of Resolute Holdings and CompoSecure Holdings and their ability to meet their respective obligations and fund their capital requirements are also dependent on their respective future financial performance, which is subject to general economic, financial and other factors that are beyond its control. Accordingly, the Company cannot be assured that its business will generate sufficient cash flows from operations or that future borrowings will be available from additional indebtedness or otherwise to meet its liquidity needs. Although the Company has no specific current plans to do so, if the Company decides to pursue one or more significant acquisitions, the Company may incur additional debt to finance such acquisitions.
On February 28, 2025, Resolute Holdings entered into a credit agreement with JPMorgan Chase Bank, N.A (“JPMC”)., as lender (the “Resolute Credit Agreement”). The Resolute Credit Agreement provides for a $5.0 million loan through a senior secured revolving credit facility available to be used by Resolute Holdings. The revolving credit facility matures on May 31, 2026. Borrowings of the revolving loans shall bear interest at a fluctuating rate per annum equal to, at the option of Resolute Holdings, (i) a rate equal to the higher of (a) the rate of interest last quoted by the Wall Street Journal as the prime rate in the U.S. or (b) 2.5% or (ii) a Term SOFR based benchmark rate for the applicable interest period (provided that in no event shall such Term SOFR rate be less than 0.00% per annum) plus an applicable margin of 2.25%. The terms of the revolving credit facility impose financial covenants, measured at the Resolute Holdings legal entity level, including a minimum liquidity ratio, a minimum revenue requirement and, beginning with the fiscal quarter ending March 31, 2026, a minimum leverage ratio which shall not be greater than 1.50 to 1.00 on the last day of any fiscal quarter. No amounts were drawn on the Resolute Holdings revolving credit facility as of March 31, 2025. As of March 31, 2025, Resolute Holdings met the covenants of the Resolute Credit Agreement.
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On August 7, 2024, the CompoSecure Holdings, together with its operating subsidiaries, and CompoSecure, entered into a Fourth Amended and Restated Credit Agreement with JPMC (the “2024 CompoSecure Holdings Credit Facility” and collectively with the 2021 CompoSecure Holdings Credit Facility, the “CompoSecure Holdings Credit Facilities”) and the lenders party thereto to refinance the 2021 CompoSecure Holdings Credit Facility. The 2024 CompoSecure Holdings Credit Facility amended and restated the 2021 CompoSecure Holdings Credit Facility in its entirety. In conjunction with the 2024 CompoSecure Holdings Credit Facility, the maximum borrowing capacity of the overall credit facility was increased to $330,000 and comprised of a term loan of $200,000 (the “2024 CompoSecure Holdings Term Loan”) and a revolving credit facility of $130,000 (the “2024 CompoSecure Holdings Revolver”). At March 31, 2025, there was $195 million of total debt outstanding under the CompoSecure Holdings Credit Facilities. No amounts were drawn on the CompoSecure Holdings revolving credit facility as of March 31, 2025. Additional amounts may be available for borrowing during the term of the revolving loan, up to the full $130 million, as long as CompoSecure Holdings maintains a net leverage ratio as stipulated in the credit facility agreement. As of March 31, 2025, the CompoSecure Holdings’ net leverage ratio met the requirement for the available borrowing as defined in the terms of the credit facility agreement. The 2024 Credit Facility will mature on August 7, 2029.
CompoSecure Holdings’ Credit Facilities, including the 2024 CompoSecure Holdings Credit Facility, require CompoSecure Holdings to make quarterly principal payments until maturity, at which point a balloon principal payment is due for the outstanding principal. The CompoSecure Holdings Credit Facilities also require CompoSecure Holdings to make monthly interest payments as well as pay a quarterly unused commitment fee of 0.35% for any unused portion of the revolving credit facilities. The 2024 CompoSecure Holdings Credit Facility provides for CompoSecure Holdings to prepay the term loans without penalty or premium. The CompoSecure Holdings Credit Facilities are secured by substantially all assets of CompoSecure Holdings.
Interest on the CompoSecure Holdings revolving credit facilities and the term loans are based on the outstanding principal amount during the interest period multiplied by the quoted SOFR rate plus the which can range from 1.75% to 2.75% based on CompoSecure Holdings leverage ratio. The CompoSecure Holdings Credit Facilities also require the Company to make monthly interest payments as well as pay a quarterly unused commitment fee of 0.35% for any unused portion of the revolving credit facilities. The 2024 CompoSecure Holdings Credit Facility contains customary covenants, including among other things, certain restrictions or limitations on indebtedness, issuance of liens, investments, asset sales, certain mergers or consolidations, sales, transfers, leases or dispositions of substantially all of CompoSecure Holdings assets, and affiliate transactions. CompoSecure Holdings may also be required to make repayments in advance of the maturity date based on a calculation of excess cash flows, as defined in the agreement, with any required payments to be made after the issuance of CompoSecure Holdings annual financial statements. CompoSecure Holdings was in compliance with all covenants as of March 31, 2025. See Note 8 in Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Net Cash Provided by Operations
Cash provided by the Company’s operating activities for the three months ended March 31, 2025 was $18.4 million compared to cash provided by operating activities of $35.7 million during the three months ended March 31, 2024. The decrease in cash provided by operating activities of $17.3 million was primarily attributable to higher operating expenses, an increase in receivables, and a decrease in accrued expenses.
Net Cash Used in Investing Activities
Cash used in the Company’s investing activities for the three months ended March 31, 2025 was $1.2 million primarily relating to capital expenditures of $0.6 million and capitalized software expenditures of $0.6 million, compared to cash used in investing activities for the three months ended March 31, 2024 of $1.6 million.
Net Cash Used in Financing Activities
Cash used in the Company’s financing activities for the three months ended March 31, 2025 was $17.8 million compared to cash used in the Company’s financing activities for the three months ended March 31, 2024 of $22.0 million. Cash used in financing activities for the three months ended March 31, 2025 primarily related to payments for taxes related to net share settlement of CompoSecure equity awards of $15.3 million and repayment of scheduled principal payments of the term loan of $2.5 million. Cash used in financing activities for the three months ended March 31, 2024 primarily related to distributions to non-controlling interests,
35
repayment of scheduled term loan principal payments, and payments for taxes related to net share settlement of CompoSecure equity awards.
Contractual Obligations
A summary of our minimum contractual obligations related to our material outstanding contractual commitments is included in our Annual report on Form 10-K for the year ended December 31, 2024 as filed with the SEC. Our long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. As of March 31, 2025, the Company has purchase commitments with a supplier of approximately $8.8 million for the remainder of 2025 and $2.0 million for 2026.
Financing
Resolute Holdings is a party to the Resolute Credit Facility and CompoSecure Holdings is a party to the 2024 CompoSecure Holdings Credit Facility with various banks. For a more complete description of the Company’s debt obligations, see Note 8 of Notes to Consolidated Financial Statements in the Consolidated Financial Statements of the Company in this Quarterly Report on Form 10-Q.
Item 3. Quantitative Disclosures About Market Risk
Interest Rate Risk
In addition to existing cash balances and cash provided by operating activities, the Company uses variable rate debt to finance its operations. The Company is exposed to interest rate risk on these debt obligations and a related interest rate swap agreement. As of March 31, 2025, the Company had $195.0 million in debt outstanding under the 2024 CompoSecure Holdings Credit Facility, all of which was variable rate debt.
The Company performed a sensitivity analysis based on the principal amount of debt outstanding as of March 31, 2025, as well as the effect of its interest rate swap agreement. In this sensitivity analysis, the change in interest rates is assumed to be applicable for an entire year. An increase or decrease of 100 basis points in the applicable interest rate would cause an increase or decrease in interest expense of approximately $4.0 million on an annual basis.
On January 11, 2022, CompoSecure Holdings entered into an interest rate swap agreement to hedge forecasted interest rate payments on its variable rate debt. As of March 31, 2025, CompoSecure Holdings had the following interest rate swap agreements (in thousands):
Effective Dates |
| Notional Amount |
| Fixed Rate |
| |
|
| ($ in thousands) | | |||
December 5, 2023 through December 22, 2025 | | $ | 125,000 |
| 1.90 | % |
Under the terms of the interest rate swap agreement, CompoSecure Holdings receives payments based on the greater of 1-month SOFR rate, as amended in February 2023, or a minimum of 1.00%. On February 28, 2023, CompoSecure Holdings amended the 2021 CompoSecure Holdings Credit Facility to, among other things, transition from bearing interest based on LIBOR to SOFR or the Alternate Base Rate (as defined in the 2021 CompoSecure Holdings Credit Facility), at the election of CompoSecure Holdings, plus an applicable margin. The existing swap converted to SOFR from LIBOR at the same time as the 2021 CompoSecure Holdings Credit Facility.
The Company has designated the interest rate swap as a cash flow hedge that was determined to be effective for accounting purposes. The Company determined the fair value of the interest rate swap to be zero at the inception of the agreement and $2.0 million at March 31, 2025. The Company reflects the realized gains and losses of the actual monthly settlement activity of the interest rate swap in its consolidated statements of operations. The Company reflects the unrealized changes in fair value of the interest rate swap at each reporting period in other comprehensive income and a derivative asset or liability is recognized at each reporting period in the Company’s financial statements.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We designed our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures as of March 31, 2025. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures as of March 31, 2025 were functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosures.
A control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. We do not expect that our disclosure controls and procedures or our internal control over financial reporting are able to prevent with certainty all errors and all fraud.
Changes in Internal Control Over Financial Reporting
During the quarter ended March 31, 2025, the Company commenced the implementation of new corporate and governance functions in order to meet the regulatory requirements of a standalone public company, such as external reporting, treasury, and stock administration, following the completion of the Spin-Off on February 28, 2025. Other than those discussed in the preceding sentences, there have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II. Other Information
Item 1. Legal Proceedings
As of May 12, 2025, the Company was not a party to, nor were any of its properties the subject of, any material pending legal proceedings, other than ordinary routine claims incidental to the CompoSecure Holdings business.
Item 1A. Risk Factors
Summary of Risk Factors
There have been no material changes in our risk factors as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities.
There were no unregistered sales of equity securities in the three months ended March 31, 2025.
Repurchases of Equity Securities.
On February 8, 2025, our Board authorized a stock repurchase program under which we may repurchase shares of our common stock. Repurchases may be made on the open market, in privately negotiated transactions, in tender offers, or by other methods at our discretion. The timing and amount of share repurchases may be based on market conditions, the availability of alternative opportunities, available liquidity, and other factors we deem appropriate from time to time. The repurchase program does not obligate us to repurchase any dollar amount or number of shares and may be extended, modified, suspended or discontinued at any time. During the three months ended March 31, 2025, no repurchases were made pursuant to the program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans.
During the quarter ended March 31, 2025,
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Item 6. Exhibits
EXHIBIT INDEX
Exhibit No. |
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2.1 | | |
| | |
3.1 | | |
| | |
3.2 | | |
| | |
10.1 | | |
| | |
10.2 | | |
| | |
10.3 | | |
| | |
10.4 | | |
| | |
10.5 | | |
| | |
10.6 | | |
| | |
10.7 | | |
| | |
10.8 | ||
| | |
10.9 | | |
| | |
10.10 | | |
| | |
10.11 | | |
| | |
31.1* | | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
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31.2* | | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
32.1** | | |
| | |
| | |
101 | | The following materials from Resolute Holdings Management, Inc.’s Form 10-Q for the quarter ended March 31, 2025, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024, (ii) Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2025 and March 31, 2024, (iii) Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended March 31, 2025 and March 31, 2024 (iv) Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited) for the three months ended March 31, 2025 and March 31, 2024, (v) Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2025 and March 31, 2024, 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. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Resolute Holdings Management, Inc. | |
| | |
Date: May 12, 2025 | By: | /s/ Thomas Knott |
| | Name: Thomas Knott |
| | Title: Chief Executive Officer |
| | (Principal Executive Officer) |
| | |
Date: May 12, 2025 | By: | /s/ Kurt Schoen |
| | Name: Kurt Schoen |
| | Title: Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |
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Exhibit 31.1
Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended
I, Thomas R. Knott, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Resolute Holdings Management, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 12, 2025 |
|
/s/ Thomas R. Knott |
Thomas R. Knott |
Chief Executive Officer |
Exhibit 31.2
Certification Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Amended
I, Kurt Schoen, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Resolute Holdings Management, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 12, 2025 |
|
/s/ Kurt Schoen |
Kurt Schoen |
Chief Financial Officer |
Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350
In connection with the Quarterly Report of Resolute Holdings Management, Inc. (the “registrant”) on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “report”), we, Thomas R. Knott and Kurt Schoen, Chief Executive Officer and Chief Financial Officer, respectively, of the registrant, certify, pursuant to 18 U.S.C. § 1350, that to our knowledge:
(1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
May 12, 2025 |
|
/s/ Thomas R. Knott |
Thomas R. Knott |
Chief Executive Officer |
|
/s/ Kurt Schoen |
Kurt Schoen |
Chief Financial Officer |