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United States securities and exchange commission logo
June 25, 2021
Donald G. Basile
Co-Chief Executive Officer
Roman DBDR Tech Acquisition Corp.
2877 Paradise Rd. #702
Las Vegas, NV 89109
Re: Roman DBDR Tech
Acquisition Corp.
Preliminary Proxy
Statement on Schedule 14A
Filed May 28, 2021
File No. 001-39687
Dear Dr. Basile:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Preliminary Proxy Statement on Schedule 14A
General
1. We note that
CompoSecure plans to provide payment technology solutions to allow the
average person to buy,
sell and store Digital Assets. Please identify the particular Digital
Assets that can be
bought, sold and stored using your wallets and platform and how you
determine or limit
which Digital Assets are eligible for inclusion. Please also tell us how
you determine whether
or not such Digital Assets are securities under the federal
securities laws. In
addition, please include appropriate risk factor disclosure addressing
the risks associated
with the Arculus Platform facilitating the purchase and sale of Digital
Assets that may be
securities under the federal securities laws.
2. We note your disclosure
on page xi that the "Earnout Recipients" will receive the right to
receive additional
consideration based on the performance of CompoSecure and its
affiliates. Please
disclose who the earnout recipients are and quantify the additional
consideration they will
be entitled to receive.
Donald G. Basile
FirstName LastNameDonald G. Basile
Roman DBDR Tech Acquisition Corp.
Comapany
June NameRoman DBDR Tech Acquisition Corp.
25, 2021
June 25,
Page 2 2021 Page 2
FirstName LastName
3. We note that Roman DBDR hired financial advisors in connection with
the merger
transaction, but did not obtain a fairness opinion. Please disclose
the fees the financial
advisors will receive upon completion of the business combination and
any amount that is
contingent upon completion of the transaction. In addition, include a
clear description of
any additional services the financial advisors or their affiliates
provided in connection
with the transaction (such as any PIPE transaction related to the
merger transaction), the
related fees, and whether those fees are conditioned on the completion
of the transaction.
4. We note that Section 9.16 of CompoSecure's Second Amended and Restated
Bylaws identifies the Court of Chancery of the State of Delaware as
the exclusive forum
for certain litigation, including any derivative action. Please
describe the exclusive
forum provision in the proxy statement and disclose whether this
provision applies to
actions arising under Exchange Act. Because the provision applies to
Securities Act
claims, please also disclose that there is uncertainty as to whether a
court would enforce
such provision and that investors cannot waive compliance with the
federal securities laws
and the rules and regulations thereunder.
5. We note that in the Related Agreements section on page 77 you refer to
various Annexes
to the merger agreement, such as Annex A, Annex B, Annex C, Annex D,
Annex F,
Annex G, Annex H-1, Annex H-2, and Annex J and state that the summary
of
CompoSecure's agreements is "qualified in tis entirety by reference to
the complete text of
each of the agreements." However, these Annexes appear to be omitted
from the proxy
statement. Please include the referenced Annexes or advise.
6. It appears that the deferred underwriting fees remain constant and are
not adjusted based
on redemptions. If applicable, please revise your disclosure to
quantify the effective
underwriting fee on a percentage basis for shares at the minimum and
maximum
redemption levels.
Organizational Structure, page xv
7. Please disclose the sponsor and its affiliates' total potential
ownership interest in the
combined entity, assuming exercise and conversion of all securities.
Profitable Unit Economics, page xix
8. Please define the term "blended ASP" and provide us with the basis for
the statement that
the board believes the Digital Asset and Cryptocurrency markets
currently have ASP of
approximately ninety dollars.
Projected Financial Information, page xxxv
9. We note the statements in the first and third paragraph of this
section and elsewhere in the
proxy statement cautioning investors not to rely on the CompoSecure
projected financial
information in making a decision regarding the Business Combination.
While it may be
appropriate to caution investors not to place undue reliance upon the
financial forecasts,
Donald G. Basile
Roman DBDR Tech Acquisition Corp.
June 25, 2021
Page 3
you should not tell readers not to rely upon them. Please revise your
disclosures
accordingly.
Questions and Answers about the Business Combination, page 1
10. Please add a separate question and answer disclosing compensation to
be paid to named
executive officers of CompoSecure in connection with the merger
transaction as described
on pages 168-169.
How do I exercise my redemption rights, page 9
11. Please clarify in the answer to this question that a stockholder must
vote in order to
redeem shares, consistent with your disclosure elsewhere in the proxy
statement.
Risk Factors, page 15
12. Disclose the material risks to unaffiliated investors presented by
taking CompoSecure
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
Regulatory changes or actions may restrict the use of the Arculus Wallet or
Digital Assets, page
20
13. Please explain in greater detail how the characterization of a digital
asset as a commodity
or security could affect your business. Please also explain to us the
operational policies
and/or procedures you have implemented (if any) to address such risks,
including whether
you conduct any assessment of the characterization of particular
digital assets.
CompoSecure's international sales subject CompoSecure to additional risks, page
23
14. We note your disclosure that in 2020 CompoSecure derived 21% of its
revenue from sales
to customers located outside the U.S. We also note your reference to
China in this risk
factor. Please clarify the extent to which these international
revenues are attributable to
CompoSecure's sales in China. In addition, in a risk factor on page 44
you state that you
must comply with laws and regulations in the United States and other
countries. Revise to
clarify what countries you are referring to and, if necessary, add
appropriate disclosure in
the government regulation section on page 160.
Our initial stockholders and certain other stockholders have agreed to vote in
favor, page 32
FirstName LastNameDonald G. Basile
15. Please disclose what percentage of public shareholders need to vote in
favor of the
Comapany NameRoman
business DBDR
combination Tech
for it Acquisition
to be approved. Corp.
Please also include this
information in your
question and
June 25, 2021 Page 3answer section.
FirstName LastName
Donald G. Basile
FirstName LastNameDonald G. Basile
Roman DBDR Tech Acquisition Corp.
Comapany
June NameRoman DBDR Tech Acquisition Corp.
25, 2021
June 25,
Page 4 2021 Page 4
FirstName LastName
Unaudited Pro Forma Condensed Combined Financial Information, page 54
16. It appears to us that you evaluated CompoSecure Holdings LLC as a
corporation rather
than a partnership under ASC 810 in connection with the Up-C
organization. Please
confirm our understanding, and if correct, explain to us your basis
for this evaluation.
Include in your response how the board of managers is substantive and
not the functional
equivalent of a managing member.
17. We note from disclosure on page 4 that the Class A members of
CompoSecure Holdings
LLC receive ten votes per unit, whereas Class B members receive one
vote per unit.
Please explain to us who will hold the Class A units and whether any
incremental value
related to the higher-vote units issued to individuals who are both
employees and
shareholders represents compensation to be accounted for within the
scope of ASC 718.
Notes to Unaudited Pro Forma Condensed Combined Financial Information
2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information,
page 62
18. Please revise your next amendment to provide a description of the
transaction costs
included in adjustment F related to the CompoSecure anticipated
transaction costs and
Shared transaction costs reported in the table on page 63. Tell us us
how these
adjustments meet the criteria to be presented as a Transaction
Accounting Adjustment
under Rule 11-02(a)(6) of Regulation S-X.
19. Please revise your next amendment to explain your rationale for pro
forma recognition of
non-controlling interests in adjustment H to the balance sheet and
adjustment C to the
statement of operations.
20. We note you applied a pro forma effective tax rate of 9.58% to record
the pro forma
income tax expense in adjustment B to the statement of operations, but
assumed a constant
21% federal income tax rate in calculating pro forma deferred taxes in
adjustment G to the
balance sheet. Please revise your next amendment to explain your
calculation of the pro
forma effective tax rate of 9.58%, and tell us why a different tax
rate was used in
determining pro forma deferred taxes.
21. Given the uncertainty surrounding pro forma adjustment I, and the fact
that no value was
ascribed to the potential pro forma adjustment, please tell us why you
included as a pro
forma adjustment, or remove from your next amendment.
Proposal No. 1: The Business Combination Proposal, page 66
22. We note your disclosure on page 31 that your Sponsor, officers and
directors have agreed
to waive their redemption rights with respect to the sponsor shares
and public shares in
connection with the business combination. Please describe any
consideration provided in
exchange for this agreement.
Donald G. Basile
FirstName LastNameDonald G. Basile
Roman DBDR Tech Acquisition Corp.
Comapany
June NameRoman DBDR Tech Acquisition Corp.
25, 2021
June 25,
Page 5 2021 Page 5
FirstName LastName
PIPE Investment, page 80
23. Please highlight any material differences in the terms and price of
securities issued at the
time of the IPO as compared to private placements contemplated at the
time of the
business combination. Also disclose if the sponsor, directors,
officers or their affiliates
will participate in the private placement.
Note Subscription Agreements, page 81
24. We note that you will issue exchangeable notes pursuant to the Note
PIPE Investment.
Revise the disclosure to disclose the potential impact of those
securities on non-redeeming
shareholders.
Roman DBDR Board of Directors' Reasons for the Business Combination, page 91
25. We note various positive and negative factors discussed in this
section that the Roman
DBDR's board considered in making a recommendation to shareholders to
approve the
merger. Please expand on your disclosure in the fifth bullet point on
page 95 to discuss in
greater detail how the board considered the consideration to be paid
for CompoSecure as
one of the factors to take into account in recommending the
transaction.
Certain Projected Financial Information, page 95
26. Please tell us, and revise your next amendment as applicable here and
on page xxxv, to
disclose the following related to your projected financial
information:
Disclose the material assumptions used in preparing your projected
financial
information. In this regard, we note that the Arculus Crypto &
Digital Assets
Ecosystem has not been launched as of the filing date, and that
the sales growth
assumptions for your Metal Payment Card Solutions disclosed on
page 97 may
exceed the growth in net sales reported in your financial
statements;
Disclose the specific assumptions regarding the size of the
market, pricing,
competition, and the expected share of the market to be achieved
as it relates to the
Arculus revenue stream;
Given that your projections extend five years into the future,
tell us your basis of the
projections and growth rates beyond year three; and
Tell us the process undertaken to formulate the projections, the
parties who
participated in the preparation of the projections, when the
projections were
completed, and how they were used.
Interests of Roman's Directors and Executive Officers in the Business
Combination, page 98
27. Your charter waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
28. Please clarify if the sponsor and its affiliates can earn a positive
rate of return on their
investment, even if other stockholders experience a negative rate of
return in the post-
Donald G. Basile
Roman DBDR Tech Acquisition Corp.
June 25, 2021
Page 6
business combination company.
Summary of CompoSecure's Business, page 147
29. We note your disclosure that CompoSecure is "an emergent provider of
Cryptocurrency
and Digital Asset storage and security solutions." Please revise this
statement and similar
disclosure elsewhere by clarifying that CompoSecure has not yet
started offering
cryptocurrency and digital assets storage and security solutions.
Please also clarify your
disclosure on page 147, if true, that you do not currently have any
partners for your
Arculus products.
30. Please revise your disclosure in the second full paragraph on page 148
to clarify what you
mean by the "top 200 Cryptocurrencies" and the "value of the
Cryptocurrency market" so
that readers can clearly understand the scope and components of the
market you are
describing. In that regard, please consider expanding upon your
definition of
Cryptocurrency to more clearly identify the particular digital assets
that are "in the form of
a currency" and therefore meet your definition of that term. Please
also identify the
sources of the historical and projected trading volume and market size
information
included in this paragraph.
31. We note your disclosure on page 20 that CompoSecure partners with
third-party
development partners and exchanges to offer customers an option to
trade fiat currency
and cryptocurrencies using the Arculus Wallet and companion phone App.
Please revise
your disclosure in this section to describe these partnerships,
including the names of
these partners and how your products and services interact with these
third parties to
facilitate trading of digital assets. Please also clarify whether
trading activity will take
place solely through these partners or if your platform will provide a
means for trading
or exchanging digital assets. In addition, please explain to us and
revise your risk factor
disclosure to clarify whether and to what extent you could be liable
for the activities of
your partners.
32. Please include a more detailed discussion of how you intend to
generate revenue from
both the storage and trading activities on your platform.
Key Products, page 150
33. Please provide us with support for your statement that the features of
the Arculus Cold
Storage Wallet described on page 151 are all "unique." Please also
explain what you
mean when you refer to a "CC EAL 6 secure element."
34. Please revise to explain more clearly how each of the elements of your
three-factor
authentication works to secure your Cold Storage Wallet. Please also
explain how "tap-
FirstName LastNameDonald G. Basile
to-transact" works, including the types of transactions covered and what
information is
Comapany NameRoman
transmitted betweenDBDR Tech
the key Acquisition
card and mobileCorp.
wallet app using that
feature. In each case,
consider
June 25, including
2021 Page 6 illustrative examples as appropriate.
FirstName LastName
Donald G. Basile
FirstName LastNameDonald G. Basile
Roman DBDR Tech Acquisition Corp.
Comapany
June NameRoman DBDR Tech Acquisition Corp.
25, 2021
June 25,
Page 7 2021 Page 7
FirstName LastName
Arculus, page 154
35. Please revise to include an estimate of the development costs
associated with the products
and services you intend to launch on the Arculus Platform in the next
few years as
described on page 155.
Clients, page 155
36. We note your disclosure on page 156 that your largest clients,
American Express and JP
Morgan Chase, accounted for over 71% of your net revenues in 2020.
Please disclose
separately the percentage of revenue American Express and JP Morgan
Chase accounted
for.
Management's Discussion and Analysis and Results of Operations of CompoSecure
Use of Non-GAAP Financial Measures, page 185
37. Your reconciliation for Adjusted EBITDA includes an adjustment for
"other," which you
disclose primarily includes non-recurring transaction expenses
relating to the
proposed business combination. Please explain to us why there are
adjustments related to
the business combination during the years ended December 31, 2019 and
2020, but not in
the quarter ended March 31, 2021.
Description of Securities After the Business Combination
Warrants, page 193
38. Clearly explain the steps, if any, the company will take to notify all
shareholders,
including beneficial owners, regarding when the warrants become
eligible for
redemption.
Financial Statements of CompoSecure Holdings, LLC
Report of Independent Registered Public Accounting Firm, page F-47
39. Please revise your next amendment to have the auditors address their
audit report not only
to the board of directors but also to the members. Refer to PCAOB AS
3101.
Donald G. Basile
FirstName LastNameDonald G. Basile
Roman DBDR Tech Acquisition Corp.
Comapany
June NameRoman DBDR Tech Acquisition Corp.
25, 2021
June 25,
Page 8 2021 Page 8
FirstName LastName
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Rolf Sundwall at (202) 551-3105 or David Irving at (202)
551-3321 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Tonya K. Aldave at (202) 551-3601 or Justin Dobbie, Legal Branch Chief,
at (202) 551-
3469 with any other questions.
Sincerely,
Division of
Corporation Finance
Office of Finance
cc: Anthony J. McCusker, Esq.