Roman DBDR Acquisition Corp. II 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Roman DBDR Acquisition Corp. II. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Roman DBDR Acquisition Sponsor II LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Special Note Regarding Forward-Looking Statements This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the Proposed Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Proposed Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview We are a blank check company incorporated on July 25, 2024 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the Private Placement, the proceeds of the sale of our Ordinary Shares in connection with our initial Business Combination (pursuant to any forward purchase agreements or backstop agreements into which we may enter), Ordinary Shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, other securities issuances, or a combination of the foregoing. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful. We may seek to extend the combination period, which is the 24-month period from the closing of the Initial Public Offering to December 16, 2026, that we have to consummate an initial Business Combination (“Combination Period”), consistent with applicable laws, regulations and stock exchange rules by amending our Amended and Restated Charter. Such an amendment would require the approval of our Public Shareholders, who will be provided the opportunity to redeem all or a portion of their Public Shares in connection with the vote on such approval. Such redemptions will decrease the amount held in our Trust Account and our capitalization, and may affect our ability to maintain our listing on Nasdaq. In addition, the Nasdaq Rules currently require SPACs (such as us) to complete our initial Business Combination in accordance with the requirement pursuant to the Nasdaq rules that a SPAC must complete one or more Business Combinations within 36 months following the effectiveness of its IPO registration statement (the “Nasdaq 36-Month Requirement”). If we do not meet the Nasdaq 36-Month Requirement, our securities will likely be subject to a suspension of trading and delisting from Nasdaq. 21 Table of Contents Recent Developments On January 23, 2025, the underwriters of the Initial Public Offering exercised the over-allotment option in full, and on January 27, 2025, purchased an additional 3,000,000 Units (“Option Units”). The Option Units were sold at an offering price of $10.00 per Option Unit, generating gross proceeds to us of $30,000,000. In connection with the full exercise of the over-allotment option, the Sponsor and B. Riley, the representative of the underwriters in the Initial Public Offering, purchased an additional 750,000 Private Placement Warrants in the aggregate at a price of $1.00 per Private Placement Warrant, generating total gross proceeds of $750,000. Following the full exercise of the over-allotment option and the closing of the Private Placement, an aggregate amount of $30,150,000 was deposited into the Trust Account. Our Units commenced public trading on December 13, 2024, and our Public Shares and Public Warrants commenced separate public trading on February 3, 2025. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities from July 25, 2024 (inception) through March 31, 2025 were organizational activities and those necessary to prepare for and consummate the Initial Public Offering, and following the closing of the Initial Public Offering, searching for a target with which to consummate a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non - operating income in the form of interest income on investments held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. For the three months ended March 31, 2025, we had net income of $2,214,005, which consisted of interest earned on investments held in the Trust Account of $2,286,602, as well as change in fair value of over - allotment liability of $268,783, offset by formation and operating costs of $341,380. Factors That May Adversely Affect our Results of Operations Our results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our results of operations and our ability to consummate an initial Business Combination could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, fluctuations in interest rates, increases in tariffs, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination. Liquidity and Capital Resources Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of Class B Ordinary Shares by the Sponsor and loans from the Sponsor. On July 25, 2024, the Sponsor agreed to loan us up to $300,000 to cover expenses related to the Initial Public Offering pursuant to the IPO Promissory Note. This loan was non-interest bearing and payable on the earlier of March 31, 2025 or the completion of the Initial Public Offering. On December 16, 2024, upon the consummation of the Initial Public Offering, the IPO Promissory Note was repaid in full at the closing of the Initial Public Offering and the IPO Promissory Note is no longer accessible. On December 16, 2024, we consummated the Initial Public Offering of 20,000,000 Units at $10.00 per Unit, generating gross proceeds of $200,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of an aggregate of 7,385,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, in the Private Placement to the Sponsor and B. Riley, generating gross proceeds of $7,385,000. Following the Initial Public Offering and the full exercise of the over-allotment option, a total of $231,150,000 was placed in the Trust Account. We incurred $5,328,515 of offering expenses, consisting of $4,600,000 of cash underwriting fees and $728,515 of other offering costs. The proceeds held in the Trust Account are currently invested only in direct U.S. government treasury obligations. The holding of these assets in this form is intended to be temporary and for the sole purpose of facilitating the intended Business Combination. 22 Table of Contents To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the Trust Account, we may, at any time (based on our management team’s ongoing assessment of all factors related to our potential status under the Investment Company Act), instruct the trustee to liquidate the investments held in the Trust Account and instead to hold the funds in the Trust Account in cash or in an interest-bearing demand deposit account at a bank. On January 23, 2025, the underwriters exercised the over-allotment option in full, and on January 27, 2025, purchased an additional 3,000,000 Units pursuant to the full exercise of the over-allotment option. The over-allotment Units were sold at an offering price of $10.00 per share, generating gross proceeds to the Company of $30,000,000. In connection with the closing of the over-allotment option, the Sponsor and B. Riley purchased an additional 750,000 Private Placement Warrants in the aggregate at a price of $1.00 per Private Placement Warrant, generating total gross proceeds of $750,000. Following the closing of the over-allotment option and the sale of additional Private Placement Warrants, an aggregate amount of $30,150,000 was deposited into the Trust Account. For the three months ended March 31, 2025, cash used in operating activities was $323,430. Net income of $2,214,005 was affected by the interest earned on investments held in the Trust Account of $2,286,602 and a change in the fair value of over-allotment option of $268,783. Changes in operating assets and liabilities provided $17,950 of cash from operating activities. As of March 31, 2025, we had investments held in the Trust Account of $233,753,876. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, which interest shall be net of taxes payable, to complete our Business Combination. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. As of March 31, 2025, we had cash of $948,498. We use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us Working Capital Loans as may be required. If we complete a Business Combination, we would repay such Working Capital Loans. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay any Working Capital Loans, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant at the option of the lender. These warrants would be identical to the Private Placement Warrants. The terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such Working Capital Loans. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business for at least the next 12 months. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than as set forth below. Administrative Services Agreement Commencing on December 13, 2024, and until completion of our initial Business Combination or liquidation, we pay our Sponsor $10,000 per month for certain office space, utilities and secretarial and administrative support pursuant to the Administrative Services Agreement. The Company incurred and paid $30,000 for administrative services for the three months ended March 31, 2025. 23 Table of Contents Underwriting Agreement The underwriters of the Initial Public Offering had a 45-day option from the date of the Initial Public Offering to purchase up to an additional 3,000,000 Option Units to cover over-allotments, if any. On January 23, 2025, the underwriters of the Initial Public Offering fully exercised the over-allotment option, and on January 27, 2025, purchased an additional 3,000,000 Option Units pursuant to such exercise. The Option Units were sold at an offering price of $10.00 per Option Unit, generating gross proceeds of $30,000,000. Business Combination Marketing Agreement We have engaged B. Riley as an advisor in connection with the Business Combination to assist us in arranging meetings with shareholders to discuss the potential Business Combination and the target business’ attributes, introduce us to potential investors that may be interested in purchasing securities, assist in obtaining shareholder approval for the Business Combination and assist us with the preparation of press releases and public filings in connection with the Business Combination. We will pay B. Riley for such services upon the consummation of the initial Business Combination a cash fee in an amount equal to 4.5% of the gross proceeds of the Initial Public Offering (exclusive of any applicable finders’ fees which might become payable). Pursuant to the terms of the Business Combination Marketing Agreement, no fee will be due if we do not complete an initial Business Combination. Critical Accounting Estimates The preparation of condensed financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could materially differ from those estimates. As of March 31, 2025, our critical estimates included estimates made by management in the calculation of the over-allotment liability, primarily related to the estimate of underlying stock volatility, taking into account that changes in such estimates could have material impact on the calculation of the over-allotment liability. Current and anticipated future events might affect the determination of whether certain estimates are considered critical by management. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.