Contract analysis

I. Executive Summary This memorandum sets forth our review and analysis of the common stock valuation history of Calloway-Briggs Renewables Inc. ("CBR" or the "Company") from 2019 through the first quarter of 2022, for purposes of assessing compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder. In addition, this memorandum presents our c

II. Legal and Regulatory Framework A. Section 409A Overview

Section 409A of the Internal Revenue Code, enacted as part of the American Jobs Creation Act of 2004 and effective January 1, 2005, imposes comprehensive requirements on nonqualified deferred compensation arrangements. Section 409A applies broadly to any plan, agreement, or arrangement that provides for the deferral of compensation, subject to certain statutory exclusions. Stock options and stock appreciation rights

III. CBR's Pre-IPO Capitalization and Ownership Structure An understanding of CBR's capitalization history and ownership structure is essential context for the valuation analysis that follows. This section summarizes the key elements of the Company's equity capitalization from its founding through the IPO filing date. Founding and Early History. CBR was founded in 2014 by Garrett Calloway and Elaine Briggs and was in

IV. History of 409A Valuations A. Independent Appraisers Retained As noted above, CBR retained Whitfield Greer & Co. ("WGC"), a nationally recognized independent valuation firm, to prepare all six 409A valuations covering the period from March 31, 2019 through March 31, 2022. WGC is accredited by the American Society of Appraisers and has extensive experience in the valuation of equity securities of privately held co

1. Valuation as of March 31, 2019 Valuation Date: March 31, 2019 Business Context. The March 31, 2019 valuation was prepared following PVCP III's follow-on equity investment of $120 million, which closed in February 2019. At the time, the Company's Red Mesa Wind project (380 MW, Custer County, Oklahoma) was approaching its commercial operations date ("COD"), which was achieved in April 2019. The Company's total opera

2. Valuation as of December 31, 2019 Valuation Date: December 31, 2019 Business Context. The December 31, 2019 valuation was prepared following the completion of FY 2019, for which the Company reported revenue of $312.8 million, Adjusted EBITDA of $138.7 million, and a net loss of ($22.4) million. The Red Mesa Wind project (380 MW) was fully operational, bringing total operating capacity to approximately 2.1 GW. The

3. Valuation as of September 30, 2020 Valuation Date: September 30, 2020 Business Context. The September 30, 2020 valuation was a significant milestone in the Company's valuation history, as it reflected a period of transformative operational growth and the Company's transition to profitability. The Solaris West Solar project (450 MW, Pecos County, Texas) reached COD in August 2020, and the Painted Rock Solar project

4. Valuation as of June 30, 2021 Valuation Date: June 30, 2021 Business Context. The June 30, 2021 valuation reflected a period of continued operational expansion and strengthening sector tailwinds. The Pronghorn Wind project (510 MW, Nolan County, Texas) reached COD in May 2021, adding significant capacity and revenue. The Brazos Storage project (200 MW / 800 MWh, Fort Bend County, Texas), the Company's first standa

5. Valuation as of December 31, 2021 Valuation Date: December 31, 2021 Business Context. The December 31, 2021 valuation was the first to be prepared in the context of active IPO planning. By year-end 2021, the Company's full-year financial results were available: revenue of $487.3 million, Adjusted EBITDA of $218.6 million, net income of $41.7 million, total assets of $3.94 billion, total debt of $1.71 billion, and

6. Valuation as of March 31, 2022 (Contemporaneous with IPO Preparation) Valuation Date: March 31, 2022 Business Context. The March 31, 2022 valuation is the most recent valuation in the review period and is the valuation most closely scrutinized by the SEC in the cheap-stock analysis. By March 31, 2022, the IPO process was actively underway: • March 10, 2022: Calderwood & Harkness LLP (issuer's counsel) engagement l

V. Equity Grant History (2019 – Q1 2022) A. Overview of Equity-Based Compensation CBR has maintained an equity-based compensation program since 2018, under which the Company has granted stock options and restricted stock units ("RSUs") to directors, executive officers, and key employees. Grants made during the review period were made under the Company's 2018 Equity Incentive Plan (the "Pre-IPO Plan"), which was adopt