SecProbe.io

November 5, 2024
Timothy Fitzsimmons
Chief Financial Officer
CompoSecure, Inc.
309 Pierce St.
Somerset, NJ 08873
Re:CompoSecure, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2023
File No. 001-39687
Dear Timothy Fitzsimmons:
            We have limited our review of your filing to the financial statements and related
disclosures and have the following comments.
            Please respond to this letter 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 a
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2023
Business
Key Products
Arculus Business Solutions, page 10
Notwithstanding your October 13, 2022 response to comment 2 in our September 22,
2022 comment letter on your 2021 Form 10-K, please tell us more about whether you
have a crypto asset custody obligation to your Arculus customers. Specifically, in
your October 13, 2022 response, you provided excerpts of your contracts with
customers that specifically indicated that you were not responsible for a customer's
loss of crypto assets resulting from theft, loss, or mishandling of encrypted private
keys or recovery phrase outside your control. Please tell us what losses are within
your control for which you are, or may be, responsible. In your response:
•Specifically tell us whether you are responsible for the loss of crypto assets
related to software malfunction that does not permit customers to access their
private keys or recreate their private keys from their recovery phrases.
Clarify for us whether your software or your customers create the recovery •1.

November 5, 2024
Page 2
phrases.
•Tell us what algorithm your software uses in creating recovery phrases.
•Tell us whether the private keys could be recreated using the algorithm identified
in the preceding bullet without specifically using your smartphone app.
•Tell us whether your customers can transfer their private keys to a different wallet
provider if they lose access to your product.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Use of Non-GAAP Financial Measures, page 56
2.We note your income tax expense adjustment to derive the "adjusted net income
before adjustments" subtotal in deriving "adjusted net income" and related per share
amounts. Please address the following:
•Revise your introductory paragraph to explain the rationale behind your
presentation of adjusted net income and related per share amounts. In this regard,
confirm for us if true, that you include a full tax provision in adjusted net income
and include  your Class B common stock in calculating the per share amounts to
remove the impact of your historical Up-C structure.
•As your "income tax expense" adjustment line item is isolated from your other
non-GAAP adjustments by the "adjusted net income before adjustments" subtotal,
it is unclear whether it includes only the tax impact on GAAP income before
income taxes if you had no noncontrolling interests associated with your Up-C
structure or whether it also includes the tax impact of your other non-GAAP
adjustments in deriving adjusted net income. Revise footnote (1) to clarify and, if
appropriate, consider revising your presentation to group the income tax
adjustment with the other adjustments and remove the intervening subtotal.
3.Please tell us why you do not include:
•The change in fair value of the derivative liability associated with your
convertible notes redemption make-whole provision as a non-GAAP adjustment
in deriving adjusted net income when you include it as an adjustment in deriving
adjusted EBITDA; nor
•The effect of the Exchangeable Notes on the shares outstanding in your diluted
adjusted net income per share.
Notes to Consolidated Financial Statements
Note 4: Revenue Recognition, page 85
4.Please tell us the amount of revenues recorded related to your Arculus ecosystem for
each of the years ended December 31, 2023 and 2022 as well as for the six months
ended June 30, 2024. In your response, separately tell us the amount of revenue for
each period associated with product sales as well as for transaction processing and
subscription fees as referenced in your October 13, 2022 response to comment 4 in
our September 22, 2022 comment letter on your 2021 Form 10-K.

November 5, 2024
Page 3
Note 7: Debt
Exchangeable Senior Notes, page 86
5.Regarding the sentence immediately after anti-dilution adjustment "e" on page 87,
please address the following, with reference to section 14.05(e) of the Exchangeable
Notes Indenture provided as Exhibit 10.7 to your Form 8-K filed on December 29,
2021:
•Revise your disclosure to clarify that the sentence relates only to the provisions in
adjustment "e" and not all five potential adjustments.
•Revise the sentence to be consistent with that in section 14.05(e) of the Indenture
in that it currently implies that a downward adjustment will only be made when a
tender or exchange offer is announced and not consummated, which is
inconsistent with the last sentence in section 14.05(e).
Note 10: Equity Compensation
Earnout Conisderation, page 97
6.We note that your earnout consideration grants certain equity holders of Holdings the
contingent right to receive additional shares of your Class A common stock or
additional equity units in Holdings and a corresponding number of shares of your
Class B common stock. We also note from your disclosure in your August 7, 2024,
August 9, 2024 and September 17, 2024 Forms 8-K that the private transactions with
Resolute resulted in the elimination of your dual-class structure, but we note no
discussion in those filings or related exhibits that discuss the impact of those
transactions on your earnout obligation. Please tell us whether and, if so, how your
earnout obligation changed as a result of the Resolute transactions closing on
September 17, 2024. Explain whether the contingent obligation is now payable only in
Class A common stock or whether it no longer exists.
            In closing, 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.
            Please contact Mark Brunhofer at 202-551-3638 or Jason Niethamer at 202-551-3855
with any questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets