Resolute Holdings Management, Inc.

Resolute Holdings Management, Inc. (“Resolute Holdings” or the “Company”) 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” or, solely for purposes of these financial statements, “Parent”), 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. The Company intends to earn management fees from CompoSecure Holdings pursuant to the CompoSecure Management Agreement that was executed in connection with the Spin-Off from CompoSecure on February 28, 2025. See footnote 11 for further details on the Spin-Off and CompoSecure Management Agreement.

Resolute Holdings intends to provide operating management services to generate recurring, long-duration management fees from CompoSecure Holdings and other companies it may manage in the future. The Company 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. The Company will also apply its M&A and capital markets expertise to drive inorganic growth of its managed businesses.

Basis of Presentation

The financial statements have been prepared in accordance with existing accounting principles generally accepted in the United States of America (“GAAP”), under the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The Company operates on a calendar year basis with the first day of the calendar year being January 1, and the last day of the year ending on December 31.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Expense Allocation

From the Inception Date to December 31, 2024, all expenses incurred by CompoSecure and CompoSecure Holdings for the benefit of and directly related to the ongoing operations of the Company are reflected in these financial statements. The expenses include:

Segment Reporting

The Company is managed and operated as one business as the entire business is managed by a single management team that reports to the Chief Executive Officer. The Company’s chief operating decision-maker is its Chief Executive Officer, who makes resource allocation decisions and assesses performance based on financial information presented on an aggregate basis. The Company does not operate separate lines of business and does not review discrete financial information to allocate resources to separate products or locations and accordingly, the Company views its business as one reportable segment.

Cash and Cash Equivalents

Cash and cash equivalents include cash and deposits with financial institutions with maturities of less than 90 days.

Income Tax

Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities (net of valuation allowances, if any) are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Loss Per Share

Basic and diluted net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of basic and diluted common stock outstanding during the period.

Fair Value Measurements

The Company determines fair value in accordance with ASC 820Fair Value Measurement (“ASC 820”). The Company’s financial assets and liabilities measured at fair value consisted of cash and cash equivalents and accrued expenses. As of December 31, 2024, the carrying values of cash and cash equivalents and accrued expenses approximate fair value because of the short-term maturity of these instruments.

CompoSecure has equity-based compensation plans which are described in more detail in Note 4. Compensation cost relating to equity-based awards as provided by the arrangements are recognized in the consolidated statements of operations over the requisite service period based on the grant date fair value of such awards. The Company determines the fair value of each award on the date of grant using the methodology commonly accepted for the respective award. See Note 4 for a discussion of the valuation of equity-based compensation.

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 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. For entities other than public business entities (“non-PBEs”), the requirements will be effective for annual periods beginning after December 15, 2025. 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 public business entities 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. The rate reconciliation disclosure requirements differ for PBEs as compared to non-PBEs. The income taxes paid disclosures are the same for all entities. The Company will adopt this ASU on January 1, 2025 and is still assessing the impact that the adoption of this ASU will have on the Company’s consolidated financial statements.

Stock Issuance

The Company issued and authorized 1,000 shares of $0.0001 par value common stock to CompoSecure Holdings on the Inception Date in exchange for $100 in cash.

Contribution by Parent

As of December 31, 2024, CompoSecure Holdings had paid operating expenses in the form of cash and CompoSecure equity on behalf of Resolute Holdings prior to the Spin-Off in the amount of $1,544,159. This amount is accounted for as an investment by the parent company and is reflected as additional paid-in capital on the Company’s balance sheet and statement of stockholders’ deficit.

**4.**EQUITY COMPENSATION

The following table summarizes equity-based compensation expenses included in the statement of operations arising from awards of CompoSecure equity to employees of CompoSecure Holdings, who were dedicated to the operations of Resolute Holdings from the Inception Date to December 31, 2024:

Restricted Stock Units

During the period from the Inception Date to December 31, 2024, CompoSecure granted Restricted stock units (“RSU”) to employees of CompoSecure Holdings, who were dedicated to the operations of Resolute Holdings. The RSUs were granted under the CompoSecure, Inc. 2021 Incentive Equity Plan (the “2021 Plan”) and vest inthree tranches at the third, fifth and seventh anniversary of the grant. The RSUs will generally be forfeited upon termination of the employee prior to vesting. The fair value of each RSU is based on the market value of CompoSecure’s common stock on the date of grant.

A summary of RSU activity during the period from the Inception Date to December 31, 2024 with respect to equity awards granted under the 2021 Plan to employees of CompoSecure Holdings, who were dedicated to the operations of Resolute Holdings is presented below

Unrecognized compensation expense for RSUs was approximately $9.5 million as of December 31, 2024 and is expected to be recognized over a remaining term of 6.8 years.

Stock Options

During the period from the Inception Date to December 31, 2024, CompoSecure granted stock options to employees of CompoSecure Holdings, who were dedicated to the operations of Resolute Holdings. These stock options were granted under the 2021 plan and vest over four years. The fair value of each option award was estimated at the date of grant using the Black-Scholes option valuation model. The expected term assumption reflected the period for which the options are expected to remain outstanding based upon the historical and expected behavior of these employees. Volatility is based on the historical volatility of comparable publicly held entities. The risk-free rate reflected the U.S. Treasury yield curve for a similar expected life instrument in effect at the time of the grant. The assumptions utilized to calculate the value of the options granted during the period from the Inception Date to December 31, 2024 are as follows:

A summary of option activity during the period from the Inception Date to December 31, 2024 with respect to equity awards granted under the 2021 Plan to employees of CompoSecure Holdings, who were dedicated to the operations of Resolute Holdings is presented below:

The weighted average grant date fair value of options granted during the period from the Inception Date to December 31, 2024 was $13.82. The Company recognized $747,627 of equity-based compensation expense for the options in the accompanying statements of operations for the period from the Inception Date to December 31, 2024.

The number of options that have vested and are exercisable as of December 31, 2024 were zero. The weighted average remaining contractual term (years) of options exercisable as of December 31, 2024 is 9.8. Total intrinsic value of options exercised is $0 for the period from the Inception Date to December 31, 2024. Unrecognized compensation expense for the options of approximately $11.3 million is expected to be recognized during the next 3.8 years.

Effective January 1, 2025, the number of shares of Composecure’s Class A Common Stock authorized under the 2021 Plan is 11,345,334 shares.

As of December 31, 2024, accrued expenses consists of the following:

Other operating expenses includes licenses and subscriptions, miscellaneous office expenses, and other general and administrative expenses.

The Company incurred a loss before income taxes of $2,358,173 and generated an income tax benefit of $24,555 from the Inception Date to December 31, 2024, which consisted of a deferred federal tax benefit of $14,347 and a deferred state tax benefit of $10,208.

The reconciliation of income taxes at the federal statutory rate to provision for income taxes from the Incpetion Date to December 31, 2024 is as follows:

The company had net deferred tax assets (deferred tax assets in excess of deferred tax liabilities) of $24,555 as of December 31, 2024. Management believes it is more likely than not that all of the deferred tax assets will be realized.

Temporary timing differences between the amounts reported in the financial statements and the tax bases of assets and liabilities result in deferred taxes. The table below summarizes significant components of our deferred tax assets as of December 31, 2024:

As of December 31, 2024, the company has net operating losses (“NOL”) of approximately $78,537 for federal purposes which do not expire; however, they are limited to 80% of taxable income. State and local NOL’s of approximately $157,054 will expire beginning in 2044. Realization of the NOL carryforwards and other deferred tax temporary differences is contingent on future taxable earnings.

The company will continue to assess and evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and have not recorded a valuation allowance as the “more likely than not” criteria to utilize the NOL’s is expected to be satisfied.

There were no significant uncertain tax positions taken, or expected to be taken, in a tax return that would be determined to be an unrecognized tax benefit taken or expected to be taken in a tax return that should have been recorded on the Company’s financial statements for the period from the Inception Date to December 31, 2024.

The following table sets forth the computation of basic and diluted net loss per share from Inception Date to December 31, 2024:

From time to time, the Company may be subject to threatened legal actions that arise out of the ordinary course of business. As of the date of this report, management is not aware of any matters that are expected, individually or in the aggregate, to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

As of December 31, 2024, Resolute Holdings was a wholly owned subsidiary of CompoSecure Holdings, which itself was a wholly owned subsidiary of CompoSecure. Prior to the completion of the Spin-Off and execution of the CompoSecure Management Agreement with CompoSecure Holdings, the Company was solely reliant on CompoSecure Holdings for the payment of its expenses. From the inception date of September 27, 2024, through December 31, 2024, payments of the Company’s expenses were made by CompoSecure Holdings. These payments are recorded as a contribution by CompoSecure Holdings and are classified as additional paid-in capital on the Company’s balance sheet and statement of stockholders’ deficit.

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 (“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, receivedone share of Resolute Holdings common stock for every twelve shares of CompoSecure common stock then held. On February 28, 2025, the Company started trading regular-way on The Nasdaq Stock Market LLC under the ticker symbol “RHLD”. As of March 25, 2025, there are approximately 8,525,994 shares of Resolute Holdings common stock outstanding.

Separation and Distribution 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 100% of the issued and outstanding shares of Resolute Holdings’ Common Stock to the distribution agent for the Spin-Off to effectuate the delivery of the shares of Resolute Holdings’ Common Stock to CompoSecure’s stockholders by means of a pro rata dividend. The Separation and Distribution Agreement also set out the principal actions to be taken in connection with the Spin-Off, including the transfer of assets and assumption of liabilities, and establishes certain rights and obligations between Resolute Holdings and CompoSecure Holdings following the Spin-Off, including procedures with respect to claims subject to indemnification, the exchange of information between Resolute Holdings and CompoSecure Holdings, and tax and other matters. Additionally, pursuant to the Separation and Distribution Agreement, since the Company’s inception date, CompoSecure Holdings has paid approximately $2.16 million in expenses in the form of cash and equity-based compensation on the Company’s behalf including $1,544,159 in 2024 described in footnote 3, and made cash contributions to the Company in 2025 totaling approximately $11.1 million.

CompoSecure Management Agreement

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. Pursuant to the CompoSecure Management Agreement, CompoSecure Holdings will pay Resolute Holdings a quarterly management fee (the “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 CompoSecure Management Agreement. 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 successiveten-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. CompoSecure Holdings has not paid any Management Fees to date, and Resolute Holdings expects that CompoSecure Holdings will commence paying Management Fees in the second quarter of the fiscal year ending December 31, 2025, pro rata for the first quarter of the 2025 fiscal year.

Letter Agreement with CompoSecure

In connection with the Spin-Off, Resolute Holdings entered into a Letter Agreement with CompoSecure, 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.

Registration Rights Agreement

In connection with the Spin-Off, Resolute Holdings entered into a Registration Rights Agreement with Resolute Compo Holdings LLC 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 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.

U.S. State and Local Tax Sharing 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 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 U.S. State and Local 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.

Board Adviser Agreement

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 12 months subject to automatic renewal for 12-month periods unless earlier terminated in accordance therewith. Pursuant to the Board Adviser Agreement, Mr. Fradin, as the representative of Fradin Consulting, will provide advisory services to the board of directors of CompoSecure in exchange for which Fradin Consulting will receive an annual cash retainer fee of $50,000, payable quarterly in arrears, and Mr. Fradin, on behalf of Fradin Consulting, will be granted an annual award of options to purchase shares of CompoSecure common stock with a fair market value, as defined in the Third Amended and Restated CompoSecure, Inc. Non-Employee Director Compensation Policy, of $150,000.

Office and Administrative Expenses

Resolute Holdings 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 $362,000 during the fiscal year ending December 31, 2025. Mr. John Cote is the managing member of SRM.

Credit Agreement

On February 28, 2025, the company entered into a credit agreement with JPMorgan Chase Bank, N.A., as lender (the “Credit Agreement”). The Credit Agreement provides for a $5 million loan through a senior secured revolving credit facility available to be used by the Company. 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 Company’s option, (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 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.

Director Grants

On February 28, 2025, in conjunction with the Spin-Off, each member of the Board of Directors (excluding David Cote and Thomas Knott), received an initial grant of stock options, each representing a right to buy a share of Resolute Holdings common stock with a grant date fair value of $50,000. The stock options have an exercise price of $46.82, vest 25% annually per year, and have aten-year term.

Bonus Payment

On March 4, 2025, performance bonuses in the amount of $564,722 were paid to current employees of Resolute Holdings by CompoSecure Holdings. Such bonuses were included in Accrued Expenses on the balance sheet as of December 31, 2024.