RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

In November 2015, the Company entered into a sales representation agreement with a third party, partially owned by an individual who was then a member of Holdings' Board of Managers. The individual was a Class B stockholder of the Company at December 31, 2022 and during the six month period ended June 30, 2023, however, was no longer a stockholder at June 30, 2023. Expenses relating to this sales representation agreement for the three months ended June 30, 2023 and 2022 amounted to $3,395 and $3,277, respectively, and amounted to $7,462 and $6,079, for the six months ended June 30, 2023 and 2022, respectively. The expenses are recorded as a component of selling, general and administrative expenses. In October 2019, Holdings terminated the sales representation agreement. Customers in place prior to the termination of the agreement are subject to the arrangement and are eligible for future commissions, which are payable and are being accrued and paid in accordance with the terms of the sales representation agreement. Amounts accrued as a component of accrued expenses as of June 30, 2023 and December 31, 2022 related to this agreement were $5,361 and $3,317.

As a result of the Business Combination, the Company entered into a tax receivable agreement with Holdings and holders of interests in Holdings. See Note 13. The Company is obligated to make certain payments under the tax receivable agreement to certain historical holders of units in Holdings. The Company made a total payment of $2,193 related to the tax receivable agreement liability in the quarter ended June 30, 2023.

Pursuant to the Holdings LLC agreement, the Company makes pro rata tax distributions to the holders of Holdings' units (i.e., non-controlling interest) in an amount sufficient to fund all or part of their tax obligations with respect to the taxable income of Holdings that is allocated to them. For the quarter ended June 30, 2023, Holdings distributed a total of $25,241 of tax distributions to its members, of which $5,947 was paid to CompoSecure, Inc. (the parent company), resulting in a net tax distribution to all other members of $19,294. For the six month ended June 30, 2023, Holdings distributed a total of $37,600 of tax distributions to its members, of which $8,592 was paid to CompoSecure, Inc. (the parent company), resulting in a net tax distribution to all other members of $29,008.