[Form 4] Karat Packaging Inc. Insider Trading Activity

Rhea-AI Filing Summary

Form 4 filing overview: Karat Packaging Inc. (KRT) reports that insider Marvin Cheng—Director, 10% owner, VP-Manufacturing and Secretary—sold 112,500 common shares on 06/27/2025. The transaction represents the full exercise of the underwriters’ 30-day option related to Cheng’s earlier secondary offering disclosed in March-June 2025.

Key transaction terms

• Sale price: $27.00 per share (gross). Net to seller after underwriting discount: $25.5825, per explanatory note.
• Total proceeds (gross): ≈ $3.04 million.
• Post-sale ownership: 5,257,272 shares held directly.
• Ownership filing made by a single reporting person; no derivative securities reported.

The sale follows Cheng’s earlier divestiture of 750,000 shares in the same underwritten secondary offering. While the additional 112,500-share greenshoe exercise modestly reduces his stake, he retains a multi-million-share position, signalling continued alignment yet highlighting ongoing liquidity events.

Positive

• Transparent and timely disclosure of the greenshoe sale under Rule 10b5-1 with Form 4 filed within the SEC deadline.
• Insider retains 5.26 million shares, indicating continued significant ownership alignment.

Negative

• Another insider sale of 112,500 shares following a recent 750 k-share offering may create perceived supply overhang.
• Sale price of $27 is near the offering price, suggesting limited near-term upside expectations from the insider’s perspective.

Insights

Portfolio Manager

TL;DR – Insider trims stake again; modest negative sentiment but ownership still large.

The incremental 112.5 k-share sale adds ~4 % to Cheng’s previously disclosed 750 k-share secondary disposal. Aggregate gross proceeds exceed $24 m, suggesting deliberate diversification rather than capitulation. Nonetheless, serial selling by a 10 % owner within three months can pressure near-term sentiment and limit upside until the market digests supply. Cheng retains >5.25 m shares, so long-term alignment remains. Impact: mildly negative headline, yet not thesis-changing absent further sales.

Corporate Governance Expert

TL;DR – Routine greenshoe exercise, disclosure transparent; governance risk low.

The transaction fulfills contractual greenshoe obligations tied to the March 2025 S-3 registration and June underwriting agreement. Proper 10b5-1 language is referenced, and Form 4 is filed within two business days, showing compliance. Because the sale was pre-arranged and publicly disclosed in the prospectus, governance concerns are limited. Investors should monitor future filings to gauge any acceleration of disposals.

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

Check this box to indicate that a transaction was made pursuant to a contract, instruction or written plan for the purchase or sale of equity securities of the issuer that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). See Instruction 10.

1. Name and Address of Reporting Person^*

Cheng Marvin

(Last) (First) (Middle)

6185 KIMBALL STREET

(Street)

CHINO CA 91708

(City) (State) (Zip)

2. Issuer Name and Ticker or Trading Symbol
Karat Packaging Inc. [ KRT ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

	Director	X	10% Owner
X	Officer (give title below)		Other (specify below)
	VP-Manufacturing, Secy

3. Date of Earliest Transaction (Month/Day/Year)
06/27/2025

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
			Code	V	Amount	(A) or (D)	Price
Common Stock	06/27/2025		S		112,500(1)	D	$27(1)	5,257,272	D

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
				Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares

Explanation of Responses:

1. Pursuant to a Registration Statement on Form S-3 that became effective on March 28, 2025 and an underwriting agreement dated June 10, 2025, Mr. Cheng sold 750,000 shares of common stock of the Issuer in an underwritten secondary public offering. The shares were sold at a public offering price of $27.00 per share, and Mr. Cheng paid an underwriting discount and commission of $1.4175 per share, resulting in a net price of $25.5825 per share. Mr. Cheng also granted the underwriters a 30-day option to purchase 112,500 additional shares of common stock at the same price and at the same underwriting discount and commission. On June 27, 2025, Mr. Cheng sold such shares pursuant to an exercise in full by the underwriters of such option.

	/s/ Marvin Cheng	07/01/2025
	** Signature of Reporting Person	Date
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FAQ

How many Karat Packaging (KRT) shares did Marvin Cheng sell on 06/27/2025?

He sold 112,500 common shares pursuant to the underwriters’ option exercise.

At what price were the KRT shares sold?

The shares were sold at a public offering price of $27.00 per share; net to Cheng after discount was $25.5825.

How many KRT shares does Cheng own after the transaction?

Post-sale, Cheng directly owns 5,257,272 common shares.

Was the sale part of a 10b5-1 trading plan?

Yes. The filing cites a transaction made pursuant to a Rule 10b5-1(c) plan tied to the secondary offering.

Does this Form 4 report any derivative securities?

No. Table II shows no derivative positions acquired or disposed.