Subsequent Events

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Joint Venture Agreement

On April 6, 2022, Lollicup entered into a definitive joint venture agreement (the “JV Agreement”) with Happiness Moon Co., Ltd., a Taiwanese company (“Happiness Moon”), whereby Lollicup and Happiness Moon will jointly establish

Green Earth Technology (“Green Earth”) a new Taiwanese corporation. Green Earth will build and operate an approximately 180,000 square foot manufacturing facility (the “Facility”) in Taiwan that will manufacture compostable foodservice products from bagasse.

Lollicup will invest approximately $6.0 million for a 49% interest in Green Earth, which capital shall be contributed to Green Earth in three tranches as follows:

a.approximately $2.0 million within two weeks of signing of the JV Agreement;

b.approximately $2.0 million upon the completion of the Facility and installation of manufacturing machinery and equipment in the Facility; and

c.approximately $2.0 million upon the commencement of mass production in the Facility.

The JV Agreement stipulates a 20% investment return guarantee for Lollicup and provides that Company may, in certain circumstances as described in the JV Agreement, elect to terminate the JV Agreement and withdraw the amount then invested. Depending on the amount contributed by Lollicup in the three tranches set forth above, upon notice of termination, Happiness Moon shall be obligated to return such investment amount to Lollicup plus 5% per annum within one, two or three years respectively of such notice.

Lollicup and Happiness Moon shall each appoint one member to the three-member board of directors, with the third member being an attorney in Taiwan to be designated. There shall also be a board observer.

Lease Agreements

On April 27, 2022, the Company entered into a 60-month lease agreement commencing on May 1, 2022 for a 70,000 square-foot distribution facility in the City of Industry, California. The term of the lease expires on April 30, 2027 and requires monthly base rent payments ranging from $137,000 to $160,000.

On April 29, 2022, the Company entered into a 60-month lease agreement commencing on May 1, 2022 for a 23,000-square-foot distribution facility in Kapolei, Hawaii. The term of the lease expires on April 30, 2027 and requires monthly base rent payments ranging from $33,000 to $38,000.

Repayment on Line of Credit

From April 1, 2022 through May 6, 2022, the Company repaid $2.0 million and drew additional $4.3 million on its Line of Credit, increasing its outstanding borrowing under the Line of Credit to $12.5 million.