1002-00004 · Pinnacle Venture Fund II LP · Correspondence

letter-revised-valuation-proposal.docx DOCUMENT Finance & Banking

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PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law

101 Montgomery Street, Suite 3500 San Francisco, CA 94104 Telephone: (415) 772-8000 Facsimile: (415) 772-8001 www.calderwoodharkness.com

September 19, 2022

Via Email and Overnight Courier

Mr. Raj Anand Chief Executive Officer & Co-Founder Verdana Software, Inc. 1175 NW Couch Street, Suite 800 Portland, OR 97209

Re: Proposed Series D Preferred Stock Investment by Pinnacle Venture Fund II LP in Verdana Software, Inc. — Revised Valuation Proposal

Dear Mr. Anand:

I. Introduction and Purpose

We write on behalf of our client, Pinnacle Venture Fund II LP ("Pinnacle"), a Delaware limited partnership whose general partner is Pinnacle Capital Management LLC, a Delaware limited liability company, in connection with the ongoing negotiations concerning Pinnacle's proposed minority growth equity investment of Sixty Million Dollars ($60,000,000) in Verdana Software, Inc. ("Verdana" or the "Company"), a Delaware C-corporation.

As you are aware, this firm has served as outside counsel to Pinnacle throughout the transaction process. This letter follows extensive discussions between the parties and their respective advisors since Pinnacle initially delivered a non-binding term sheet to the Company on April 22, 2022 (the "Initial Term Sheet"), and the Company delivered its counter-term sheet on May 3, 2022 through the Company's financial advisor, Hargrove Securities LLC ("Hargrove"). The parties subsequently entered into an Exclusivity Agreement dated May 12, 2022, as amended by the First Amendment to the Exclusivity Agreement dated July 8, 2022 and the Second Amendment to the Exclusivity Agreement dated August 15, 2022 (as so amended, the "Exclusivity Agreement"), pursuant to which the current exclusivity period runs through September 30, 2022.

The purpose of this letter is to formally communicate Pinnacle's revised pre-money valuation proposal with respect to the proposed Series D investment and to set forth in detail the rationale supporting that revised proposal. This revised proposal follows the extensive due diligence that Pinnacle and its advisors have conducted since the commencement of the formal diligence process on May 16, 2022, as well as multiple negotiation sessions between the parties and their respective counsel, financial advisors, and management teams during the intervening period. We also address in this letter several additional open issues that bear on the economics and governance structure of the proposed investment and that, in Pinnacle's view, remain material to reaching a definitive agreement.

II. Background and Transaction Summary

As background, the proposed transaction contemplates that Pinnacle would purchase newly issued shares of Series D Preferred Stock of the Company (the "Series D Preferred Stock") for an aggregate purchase price of Sixty Million Dollars ($60,000,000). Pinnacle's investment target is to acquire approximately 18.75% of Verdana's fully-diluted post-closing capitalization.

Based on the Company's representations and the capitalization table provided to Pinnacle in connection with due diligence, Verdana's current fully-diluted share count is 80,000,000 shares, comprising the following:

Notwithstanding the extensive discussions that have occurred since the exchange of the Initial Term Sheet and the Company's counter-term sheet, the parties have not reached agreement on the pre-money valuation applicable to Pinnacle's investment. The Company's position, as communicated through Hargrove and Langford Price & Associates LLP ("Langford Price"), the Company's outside counsel, has been that the appropriate pre-money valuation is Three Hundred Twenty Million Dollars ($320,000,000), which implies a per-share price of $4.00 per share on a fully-diluted basis ($320,000,000 ÷ 80,000,000 shares) and a post-money valuation of Three Hundred Eighty Million Dollars ($380,000,000). At that valuation, Pinnacle's $60,000,000 investment would yield 15,000,000 Series D shares ($60,000,000 ÷ $4.00), representing approximately 15.79% of the post-close fully-diluted share count of 95,000,000 shares — materially below Pinnacle's target ownership of 18.75%.

In addition, the Company has proposed expanding the existing ESOP by an additional 5,000,000 shares prior to the closing, increasing the total option pool from 12,000,000 shares to 17,000,000 shares. Under the Company's proposed valuation and ESOP expansion, the pre-close fully-diluted share count would increase to 85,000,000 shares, the post-close fully-diluted count would be 100,000,000 shares ($60,000,000 ÷ $4.00 = 15,000,000 new shares, plus 85,000,000 existing shares), and Pinnacle's ownership would be further diluted to 15.00% (15,000,000 out of 100,000,000 shares). This outcome is substantially below Pinnacle's target of 18.75% and is not acceptable to Pinnacle.

By contrast, Pinnacle's Initial Term Sheet contemplated a pre-money valuation of Two Hundred Sixty Million Dollars ($260,000,000), implying a per-share price of $3.25 ($260,000,000 ÷ 80,000,000 existing fully-diluted shares) and the issuance of 18,461,538 Series D shares to Pinnacle ($60,000,000 ÷ $3.25, rounded to the nearest whole share). Under this structure, the post-close fully-diluted share count would be 98,461,538 shares (80,000,000 + 18,461,538), and Pinnacle's post-close ownership would be approximately 18.75% (18,461,538 ÷ 98,461,538), consistent with Pinnacle's investment objective.

III. Revised Valuation Proposal

Having carefully evaluated the information and materials provided during the due diligence process, Pinnacle formally proposes a revised pre-money valuation of Two Hundred Sixty Million Dollars ($260,000,000) for the Company. Although this figure represents a reduction from the range that the parties have discussed since early May, Pinnacle believes, for the reasons set forth in detail below, that this valuation more accurately reflects the risk-adjusted value of the Company as of the date of this letter.

The key economic parameters of Pinnacle's revised proposal are as follows:

With respect to the Company's proposal to expand the ESOP by 5,000,000 shares prior to closing, Pinnacle's position is as follows: any increase to the option pool should be treated as included within the pre-money valuation. That is, the existing 80,000,000 fully-diluted shares already include the ESOP allocation of 12,000,000 shares, and the $260,000,000 pre-money valuation is calculated on that basis. If the Company and its board of directors determine that an expansion of the ESOP beyond 12,000,000 shares is necessary or appropriate to attract and retain talent, Pinnacle's strong preference is that any such expansion occur on a post-closing basis and that the resulting dilution be borne pro rata by all stockholders (including the holders of Series D Preferred Stock), rather than being imposed exclusively on the incoming Series D investor prior to closing. This approach is consistent with customary practice for venture-backed growth equity transactions and ensures equitable treatment of all stockholders.

IV. Rationale for Revised Valuation — Customer Concentration Risk

Pinnacle's revised valuation proposal is informed principally by findings from the due diligence process, which commenced on May 16, 2022, and has involved a comprehensive review of the Company's financial statements, customer contracts, operational data, technology platform, intellectual property portfolio, and competitive positioning. Of particular concern to Pinnacle are the customer concentration risks identified during this process.

Based on data provided by the Company and confirmed during diligence, Meridian Logistics Corp. ("Meridian") is by a significant margin the Company's largest customer, contributing $11,800,000 of the Company's $47,300,000 in annualized recurring revenue ("ARR") as of Q1 2022. This represents approximately 24.9% of the Company's total ARR — a level of single-customer concentration that Pinnacle considers material and that introduces meaningful risk into any forward-looking valuation analysis.

Moreover, the concentration risk is not limited to Meridian alone. The Company's top five customers collectively account for $27,200,000, or approximately 57.5%, of total ARR, as summarized below:

The concentration of nearly one-quarter of the Company's revenue base in a single customer relationship is of particular concern in light of the following risk factors identified during diligence:

(a) Contract Structure and Termination Risk. The Meridian contract is structured as a three-year enterprise license agreement with a term expiring on December 31, 2023. The agreement is subject to automatic renewal for successive one-year terms, unless either party provides written notice of non-renewal at least 180 days prior to the expiration of the then-current term. This means that Meridian could provide notice of non-renewal as early as July 2, 2023 — a date that falls within approximately ten (10) months of the anticipated closing date of the Series D transaction. The short horizon between closing and the earliest possible non-renewal date creates a material near-term risk for the Company's largest revenue relationship.

(b) Meridian Leadership Change and Competitive RFP. During the course of diligence, Pinnacle became aware that Meridian recently underwent a change in its Chief Executive Officer. Furthermore, Meridian has issued a formal request for proposals for competitive supply chain optimization solutions. The issuance of a competitive RFP, in combination with a leadership transition, creates meaningful uncertainty regarding Meridian's intent to renew its existing agreement with Verdana. While Pinnacle recognizes that such activities do not necessarily indicate that Meridian will terminate or fail to renew the agreement, the combination of these factors materially increases the probability-weighted risk of revenue loss associated with this customer.

(c) Impact of Non-Renewal. In the event that Meridian elects not to renew its agreement, the Company would experience a reduction in ARR of approximately $11,800,000, or approximately 25% of total ARR. A revenue decline of this magnitude would materially impair the Company's growth trajectory, cash flow profile, and ability to service its existing credit facility obligations. It would also fundamentally undermine the growth assumptions that form the basis of the Company's proposed $320,000,000 pre-money valuation.

In Pinnacle's view, the customer concentration risk described above justifies a significant downward adjustment to the pre-money valuation. Pinnacle's revised proposal of $260,000,000 reflects, in part, this concentration risk and the uncertainty surrounding the Meridian relationship. However, Pinnacle remains open to discussing alternative risk-mitigation mechanisms that could address the Meridian concentration risk without a full valuation adjustment. Such mechanisms might include, by way of example and without limitation, a customer retention escrow arrangement pursuant to which a portion of the purchase price would be held in escrow pending confirmation of Meridian's renewal, or an earnout structure that would provide additional consideration to the Company or its stockholders in the event that the Meridian relationship is successfully renewed on terms reasonably satisfactory to Pinnacle. Pinnacle welcomes a dialogue with the Company and its advisors regarding these or other creative structures that might bridge the gap between the parties' respective valuation positions.

V. Rationale for Revised Valuation — Financial and Operational Considerations

In addition to the customer concentration risks discussed above, Pinnacle's revised valuation proposal takes into account the Company's broader financial and operational profile as revealed through the due diligence process.

Pinnacle acknowledges that the Company has demonstrated strong growth metrics. In particular, the Company achieved year-over-year ARR growth of approximately 63.7%, increasing from $28,900,000 in Q1 2021 to $47,300,000 in Q1 2022. The Company's net revenue retention rate of approximately 128% reflects healthy expansion activity within the existing customer base, and the Company's gross margin of approximately 74.2% is consistent with a well-functioning enterprise SaaS business model. These are positive indicators of the underlying strength of the Verdana SCX platform and the value proposition it delivers to customers.

However, these growth metrics must be evaluated in the context of the Company's overall financial position, which includes the following factors:

(a) Negative EBITDA and Continued Cash Burn. The Company reported negative EBITDA of approximately ($11,600,000) on a trailing twelve-month basis as of March 31, 2022. While negative EBITDA is not unusual for a high-growth enterprise SaaS company in the expansion phase, the magnitude of the cash burn — and its trajectory relative to the Company's available liquidity — is a consideration that bears on valuation and investment risk.

(b) Limited Cash Runway. As of March 31, 2022, the Company had cash on its balance sheet of approximately $22,400,000. At the current rate of cash consumption, this balance provides the Company with a limited operating runway absent additional equity financing or other capital infusions. The urgency of the Company's capital needs is, in Pinnacle's respectful view, a factor that should be taken into account in the valuation analysis, as it limits the Company's ability to pursue alternative financing on terms as favorable as those offered by Pinnacle.

(c) Existing Credit Facility and Covenant Constraints. The Company maintains a $10,000,000 revolving credit facility with Pacific Summit Bank, N.A. (the "Pacific Summit Facility"), of which $6,200,000 is currently drawn. The Pacific Summit Facility bears interest at a rate of SOFR plus 3.50% per annum and matures on June 30, 2024. Importantly, the Pacific Summit Facility includes a minimum liquidity covenant requiring the Company to maintain at least $10,000,000 in unrestricted cash at all times, as well as an ARR-based coverage ratio that further constrains the Company's financial flexibility. These covenants, taken together with the Company's current cash position and burn rate, create additional financial pressure that Pinnacle believes is relevant to the valuation discussion.

The concentration of the Company's revenue base in a small number of customer accounts amplifies the risk profile associated with the Company's cash-burning posture. A meaningful decline in ARR — whether resulting from the loss of the Meridian relationship or otherwise — could trigger a cascading series of adverse consequences, including potential violations of the Pacific Summit Facility's financial covenants, further erosion of the Company's cash position, and a loss of operational flexibility.

From a valuation multiples perspective, Pinnacle notes that the Company's proposed pre-money valuation of $320,000,000 implies an ARR multiple of approximately 6.8x ($320,000,000 ÷ $47,300,000). By comparison, Pinnacle's revised pre-money valuation of $260,000,000 implies an ARR multiple of approximately 5.5x ($260,000,000 ÷ $47,300,000). Pinnacle believes that a 5.5x ARR multiple more appropriately reflects the risk-adjusted value of the business in light of the customer concentration dynamics, the Company's cash-burn profile, the limited operating runway, and the broader macroeconomic environment. The difference between a 6.8x multiple and a 5.5x multiple is, in Pinnacle's assessment, a reasonable and proportionate adjustment to account for the specific risk factors identified during the diligence process.

VI. Ongoing Disagreements on Protective Provisions and Deal Terms

In addition to the valuation gap that is the primary subject of this letter, Pinnacle wishes to note that the parties remain unable to agree on several material economic and governance terms that bear directly on the risk profile and risk-adjusted return of Pinnacle's proposed $60,000,000 investment. While Pinnacle recognizes that these terms are the subject of ongoing negotiation, and while Pinnacle remains prepared to engage constructively on each of them, we believe it is important to catalog the open issues so that the parties may address them comprehensively in connection with the valuation discussion.

Liquidation Preference. Pinnacle has proposed that the Series D Preferred Stock carry a 1.5x non-participating liquidation preference, which would entitle the holders of Series D Preferred Stock to receive a return of $90,000,000 (1.5 times the original purchase price of $60,000,000) before any distributions are made to the holders of common stock or junior preferred stock in connection with a liquidation event, merger, sale, or other deemed liquidation event. The Company has countered with a 1.0x non-participating liquidation preference ($60,000,000), citing consistency with the liquidation preference terms applicable to the Series A, Series B, and Series C Preferred Stock. Pinnacle's position is that the 1.5x preference is warranted in light of the heightened risk factors identified during due diligence — including the customer concentration risk and the Company's cash-burn profile — which distinguish the current investment from the prior preferred stock financing rounds completed at earlier stages of the Company's development.

Anti-Dilution Protection. Pinnacle has proposed that the Series D Preferred Stock include full-ratchet anti-dilution protection, which would adjust the conversion price of the Series D Preferred Stock to the price per share of any subsequent down-round financing. The Company and its existing investors — particularly Brindoval Capital Group LLC, as the holder of the Series C Preferred Stock — have insisted that the Series D anti-dilution provision be structured on a broad-based weighted average basis, consistent with the anti-dilution provisions applicable to the Series A, Series B, and Series C Preferred Stock. The parties remain at impasse on this point following the negotiation session held on August 2, 2022, and Pinnacle believes this issue must be resolved in tandem with the valuation discussion.

Protective Provisions and Consent Rights. Pinnacle has proposed that the holders of Series D Preferred Stock, voting as a separate class, have consent rights over certain significant corporate actions, including (i) the incurrence of new indebtedness in excess of $5,000,000 in the aggregate, and (ii) annual budget deviations exceeding 15% from the board-approved operating plan. These consent rights are designed to provide Pinnacle with appropriate governance protections as a significant minority investor. The Company has not yet agreed to these provisions, and they remain under discussion.

Pay-to-Play. Pinnacle has proposed a mandatory pay-to-play provision that would require each holder of preferred stock to participate on a pro rata basis in any future financing round, with the consequence that any preferred stockholder that declines to participate would have its preferred shares automatically converted into common stock. The Company has formally rejected this proposal, and to date has declined to engage in further discussion on the point.

Redemption Rights. Pinnacle has proposed that the holders of Series D Preferred Stock have the right to require the Company to redeem all outstanding shares of Series D Preferred Stock at the original purchase price plus any accrued but unpaid dividends, exercisable at any time following the fifth (5th) anniversary of the closing date. This proposal remains under discussion, and the parties have not yet reached agreement on the terms or conditions of any redemption mechanism.

Drag-Along Rights. Pinnacle has proposed a drag-along provision that would authorize a majority of the outstanding preferred stockholders to compel all stockholders to consent to and participate in a sale of the Company or an initial public offering. The founders, Raj Anand and Lena Kovac, have formally objected to this provision in writing as of August 10, 2022, and have insisted that any drag-along provision include a minimum enterprise value threshold of Five Hundred Million Dollars ($500,000,000), below which no drag-along sale could be compelled. Among the Company's existing preferred stockholders, Ridgeline Ventures Fund III LP and Brindoval Capital Group LLC have indicated support for the founders' position on the minimum value threshold, while Northgate Growth Partners Fund II LP has indicated alignment with Pinnacle's position favoring a drag-along mechanism that is not subject to a minimum valuation floor.

These unresolved terms, taken together, have a material impact on the risk-adjusted return on Pinnacle's proposed $60,000,000 investment. In the absence of adequate protective provisions, the effective economic risk borne by Pinnacle is greater, which in turn supports a lower entry valuation. Pinnacle therefore views the resolution of these governance and economic terms as inextricably linked to the valuation discussion.

VII. Pacific Summit Bank — Lender Consent

As identified in this firm's review of the Company's credit facility documentation, the issuance of Series D Preferred Stock may trigger one or more negative covenants under the Pacific Summit Facility that restrict the Company from issuing new equity securities, incurring certain equity-linked obligations, or effecting changes to the Company's capitalization without the prior written consent or waiver of Pacific Summit Bank, N.A.

Pinnacle reiterates that obtaining such consent or waiver from Pacific Summit Bank, N.A. remains a condition to any closing of the Series D investment. Failure to obtain lender consent could result in a default under the Pacific Summit Facility, which would have adverse consequences for the Company and all of its stakeholders.

Accordingly, Pinnacle respectfully requests that the Company and its outside counsel at Langford Price & Associates LLP provide, at the earliest practicable date, a status update on any communications that the Company or its representatives have had with Pacific Summit Bank regarding the proposed Series D transaction, including any preliminary indications from the lender regarding its willingness to grant consent or waive the applicable negative covenants.

VIII. Reaffirmation of Interest and Path Forward

Notwithstanding the revised valuation proposal and the open issues identified in this letter, Pinnacle wishes to reaffirm its strong interest in completing the $60,000,000 Series D investment in Verdana. Pinnacle has invested significant time and resources in evaluating this opportunity, and Pinnacle's conviction regarding the long-term potential of the business remains firm.

Pinnacle recognizes the strength of the Company's technology platform, Verdana SCX, and the compelling market opportunity in AI-driven supply chain optimization for mid-market and enterprise customers. The Company's strong ARR growth trajectory, its attractive net revenue retention metrics, and its demonstrated ability to win and expand relationships with significant enterprise accounts are all factors that contribute to Pinnacle's interest in the investment.

Pinnacle further believes that its revised pre-money valuation of $260,000,000 fairly reflects the current risk profile of the business while still representing a meaningful validation of the progress the Company has achieved since its Series C financing. At a price per share of $3.25, the revised valuation represents an approximately 8.3% premium over the Series C price of $3.00 per share, which Pinnacle views as a fair and appropriate step-up given the Company's growth since the Series C round and the risk factors identified during the current diligence process.

In order to advance the negotiations efficiently and in good faith, Pinnacle proposes that the parties schedule a principals-level meeting at the earliest mutually convenient date to discuss the revised proposal set forth in this letter. Pinnacle's objective is to reach agreement with the Company on all open commercial and legal terms before the expiration of the current exclusivity period on September 30, 2022. Pinnacle's partner, Marcus Trejo, is available to participate in any such meeting, and we understand that Hargrove's Nathan Callister would similarly be available to facilitate the discussion on the Company's side.

In the interim, Pinnacle is prepared to work constructively and expeditiously with the Company and its professional advisors to finalize the following definitive transaction documents, all of which remain in partially negotiated draft form:

(i) Series D Preferred Stock Purchase Agreement;

(ii) Amended and Restated Investors' Rights Agreement;

(iii) Amended and Restated Voting Agreement;

(iv) Amended and Restated Right of First Refusal and Co-Sale Agreement; and

(v) Amended and Restated Certificate of Incorporation of Verdana Software, Inc.

Pinnacle's objective remains to complete the Series D transaction on a timeline that is consistent with the needs of the Company and the mutual interests of the parties.

IX. Non-Binding Nature and Reservation of Rights

This letter and the revised valuation proposal set forth herein are intended solely to facilitate the parties' ongoing negotiations and are non-binding in all respects. Nothing in this letter shall constitute or be deemed to constitute a commitment, obligation, or agreement of Pinnacle Venture Fund II LP, Pinnacle Capital Management LLC, or any of their respective affiliates, partners, members, officers, directors, employees, or agents to consummate the proposed investment or any other transaction on the terms described herein or on any other terms.

All terms of the proposed investment remain subject to (i) the mutual agreement of the parties on definitive transaction documentation in form and substance satisfactory to each party and its respective counsel, (ii) the completion of due diligence satisfactory to Pinnacle in its sole discretion, and (iii) the satisfaction or waiver of all conditions to closing that may be set forth in the definitive transaction documents.

Pinnacle expressly reserves all rights, remedies, and defenses available to it at law, in equity, or under any agreement between the parties, including without limitation the right to withdraw, modify, amend, or supplement this proposal at any time prior to the execution and delivery of mutually acceptable definitive agreements.

This letter shall not be construed as an amendment, modification, waiver, or supplement to the Exclusivity Agreement or any other agreement, understanding, or arrangement between the parties or their respective affiliates.

X. Confidentiality

This letter and its contents are confidential and are subject to the terms of any applicable non-disclosure agreement, confidentiality agreement, or confidentiality provisions contained in any agreement between the parties or their respective affiliates. Pinnacle requests that this communication and the information contained herein not be disclosed, disseminated, or shared with any third party, other than the members of the Company's board of directors, the Company's officers and employees on a need-to-know basis, and the Company's professional advisors (including Langford Price & Associates LLP and Hargrove Securities LLC), without Pinnacle's prior written consent.

We appreciate the Company's continued engagement throughout this process and the constructive manner in which the Company's management team and advisors have participated in the negotiations to date. Pinnacle remains committed to working collaboratively with Verdana to reach a mutually satisfactory outcome, and we look forward to continuing our discussions in the coming days.

Please do not hesitate to contact the undersigned at (415) 772-8047 or hwexford@calderwoodharkness.com with any questions or to schedule a meeting to discuss this letter and the revised proposal.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Harrison Wexford Partner

101 Montgomery Street, Suite 3500 San Francisco, CA 94104 Telephone: (415) 772-8047

Email: hwexford@calderwoodharkness.com

On behalf of Pinnacle Venture Fund II LP

cc: Marcus Trejo, Partner, Pinnacle Capital Management LLC, 2400 Sand Hill Road, Suite 310, Menlo Park, CA 94025

cc: Jonathan Hale, Langford Price & Associates LLP, 1000 SW Broadway, Suite 1600, Portland, OR 97205

cc: Nathan Callister, Hargrove Securities LLC, 600 Lexington Avenue, 22nd Floor, New York, NY 10022

Enclosures: None

Stockholder / Category	Shares	% of Fully-Diluted Capitalization
Raj Anand and Lena Kovac (Founders — Common Stock)	28,000,000	35.0%
Ridgeline Ventures Fund III LP (Series A Preferred)	12,000,000	15.0%
Northgate Growth Partners Fund II LP (Series B Preferred)	16,000,000	20.0%
Brindoval Capital Group LLC (Series C Preferred)	12,000,000	15.0%
Employee Stock Option Pool (ESOP)	12,000,000	15.0%
Total (Pre-Close Fully-Diluted)	80,000,000	100.0%
Term	Amount
Pre-Money Valuation	$260,000,000
Investment Amount	$60,000,000
Post-Money Valuation	$320,000,000
Pre-Close Fully-Diluted Share Count	80,000,000
Price Per Share	$3.25 ($260,000,000 ÷ 80,000,000)
Series D Shares to be Issued to Pinnacle	18,461,538 ($60,000,000 ÷ $3.25)
Post-Close Fully-Diluted Share Count	98,461,538 (80,000,000 + 18,461,538)
Pinnacle Post-Close Ownership	~18.75% (18,461,538 ÷ 98,461,538)
Customer	ARR (Q1 2022)	% of Total ARR
Meridian Logistics Corp.	$11,800,000	24.9%
Caldera Manufacturing Inc.	$5,200,000	11.0%
Atlas Freight Holdings LLC	$4,100,000	8.7%
Brannock Industrial Group	$3,400,000	7.2%
Solaris Warehousing Co.	$2,700,000	5.7%
Top 5 Total	$27,200,000	57.5%
All Other Customers	$20,100,000	42.5%
Total ARR	$47,300,000	100.0%

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
101 Montgomery Street, Suite 3500 San Francisco, CA 94104 Telephone: (415) 772-8000 Facsimile: (415) 772-8001 www.calderwoodharkness.com
September 19, 2022
Via Email and Overnight Courier
Mr. Raj Anand Chief Executive Officer & Co-Founder Verdana Software, Inc. 1175 NW Couch Street, Suite 800 Portland, OR 97209
Re: Proposed Series D Preferred Stock Investment by Pinnacle Venture Fund II LP in Verdana Software, Inc. — Revised Valuation Proposal
Dear Mr. Anand:
I. Introduction and Purpose
We write on behalf of our client, Pinnacle Venture Fund II LP ("Pinnacle"), a Delaware limited partnership whose general partner is Pinnacle Capital Management LLC, a Delaware limited liability company, in connection with the ongoing negotiations concerning Pinnacle's proposed minority growth equity investment of Sixty Million Dollars ($60,000,000) in Verdana Software, Inc. ("Verdana" or the "Company"), a Delaware C-corporation.
As you are aware, this firm has served as outside counsel to Pinnacle throughout the transaction process. This letter follows extensive discussions between the parties and their respective advisors since Pinnacle initially delivered a non-binding term sheet to the Company on April 22, 2022 (the "Initial Term Sheet"), and the Company delivered its counter-term sheet on May 3, 2022 through the Company's financial advisor, Hargrove Securities LLC ("Hargrove"). The parties subsequently entered into an Exclusivity Agreement dated May 12, 2022, as amended by the First Amendment to the Exclusivity Agreement dated July 8, 2022 and the Second Amendment to the Exclusivity Agreement dated August 15, 2022 (as so amended, the "Exclusivity Agreement"), pursuant to which the current exclusivity period runs through September 30, 2022.
The purpose of this letter is to formally communicate Pinnacle's revised pre-money valuation proposal with respect to the proposed Series D investment and to set forth in detail the rationale supporting that revised proposal. This revised proposal follows the extensive due diligence that Pinnacle and its advisors have conducted since the commencement of the formal diligence process on May 16, 2022, as well as multiple negotiation sessions between the parties and their respective counsel, financial advisors, and management teams during the intervening period. We also address in this letter several additional open issues that bear on the economics and governance structure of the proposed investment and that, in Pinnacle's view, remain material to reaching a definitive agreement.
II. Background and Transaction Summary
As background, the proposed transaction contemplates that Pinnacle would purchase newly issued shares of Series D Preferred Stock of the Company (the "Series D Preferred Stock") for an aggregate purchase price of Sixty Million Dollars ($60,000,000). Pinnacle's investment target is to acquire approximately 18.75% of Verdana's fully-diluted post-closing capitalization.
Based on the Company's representations and the capitalization table provided to Pinnacle in connection with due diligence, Verdana's current fully-diluted share count is 80,000,000 shares, comprising the following:
Notwithstanding the extensive discussions that have occurred since the exchange of the Initial Term Sheet and the Company's counter-term sheet, the parties have not reached agreement on the pre-money valuation applicable to Pinnacle's investment. The Company's position, as communicated through Hargrove and Langford Price & Associates LLP ("Langford Price"), the Company's outside counsel, has been that the appropriate pre-money valuation is Three Hundred Twenty Million Dollars ($320,000,000), which implies a per-share price of $4.00 per share on a fully-diluted basis ($320,000,000 ÷ 80,000,000 shares) and a post-money valuation of Three Hundred Eighty Million Dollars ($380,000,000). At that valuation, Pinnacle's $60,000,000 investment would yield 15,000,000 Series D shares ($60,000,000 ÷ $4.00), representing approximately 15.79% of the post-close fully-diluted share count of 95,000,000 shares — materially below Pinnacle's target ownership of 18.75%.
In addition, the Company has proposed expanding the existing ESOP by an additional 5,000,000 shares prior to the closing, increasing the total option pool from 12,000,000 shares to 17,000,000 shares. Under the Company's proposed valuation and ESOP expansion, the pre-close fully-diluted share count would increase to 85,000,000 shares, the post-close fully-diluted count would be 100,000,000 shares ($60,000,000 ÷ $4.00 = 15,000,000 new shares, plus 85,000,000 existing shares), and Pinnacle's ownership would be further diluted to 15.00% (15,000,000 out of 100,000,000 shares). This outcome is substantially below Pinnacle's target of 18.75% and is not acceptable to Pinnacle.
By contrast, Pinnacle's Initial Term Sheet contemplated a pre-money valuation of Two Hundred Sixty Million Dollars ($260,000,000), implying a per-share price of $3.25 ($260,000,000 ÷ 80,000,000 existing fully-diluted shares) and the issuance of 18,461,538 Series D shares to Pinnacle ($60,000,000 ÷ $3.25, rounded to the nearest whole share). Under this structure, the post-close fully-diluted share count would be 98,461,538 shares (80,000,000 + 18,461,538), and Pinnacle's post-close ownership would be approximately 18.75% (18,461,538 ÷ 98,461,538), consistent with Pinnacle's investment objective.
III. Revised Valuation Proposal
Having carefully evaluated the information and materials provided during the due diligence process, Pinnacle formally proposes a revised pre-money valuation of Two Hundred Sixty Million Dollars ($260,000,000) for the Company. Although this figure represents a reduction from the range that the parties have discussed since early May, Pinnacle believes, for the reasons set forth in detail below, that this valuation more accurately reflects the risk-adjusted value of the Company as of the date of this letter.
The key economic parameters of Pinnacle's revised proposal are as follows:
With respect to the Company's proposal to expand the ESOP by 5,000,000 shares prior to closing, Pinnacle's position is as follows: any increase to the option pool should be treated as included within the pre-money valuation. That is, the existing 80,000,000 fully-diluted shares already include the ESOP allocation of 12,000,000 shares, and the $260,000,000 pre-money valuation is calculated on that basis. If the Company and its board of directors determine that an expansion of the ESOP beyond 12,000,000 shares is necessary or appropriate to attract and retain talent, Pinnacle's strong preference is that any such expansion occur on a post-closing basis and that the resulting dilution be borne pro rata by all stockholders (including the holders of Series D Preferred Stock), rather than being imposed exclusively on the incoming Series D investor prior to closing. This approach is consistent with customary practice for venture-backed growth equity transactions and ensures equitable treatment of all stockholders.
IV. Rationale for Revised Valuation — Customer Concentration Risk
Pinnacle's revised valuation proposal is informed principally by findings from the due diligence process, which commenced on May 16, 2022, and has involved a comprehensive review of the Company's financial statements, customer contracts, operational data, technology platform, intellectual property portfolio, and competitive positioning. Of particular concern to Pinnacle are the customer concentration risks identified during this process.
Based on data provided by the Company and confirmed during diligence, Meridian Logistics Corp. ("Meridian") is by a significant margin the Company's largest customer, contributing $11,800,000 of the Company's $47,300,000 in annualized recurring revenue ("ARR") as of Q1 2022. This represents approximately 24.9% of the Company's total ARR — a level of single-customer concentration that Pinnacle considers material and that introduces meaningful risk into any forward-looking valuation analysis.
Moreover, the concentration risk is not limited to Meridian alone. The Company's top five customers collectively account for $27,200,000, or approximately 57.5%, of total ARR, as summarized below:
The concentration of nearly one-quarter of the Company's revenue base in a single customer relationship is of particular concern in light of the following risk factors identified during diligence:
(a) Contract Structure and Termination Risk. The Meridian contract is structured as a three-year enterprise license agreement with a term expiring on December 31, 2023. The agreement is subject to automatic renewal for successive one-year terms, unless either party provides written notice of non-renewal at least 180 days prior to the expiration of the then-current term. This means that Meridian could provide notice of non-renewal as early as July 2, 2023 — a date that falls within approximately ten (10) months of the anticipated closing date of the Series D transaction. The short horizon between closing and the earliest possible non-renewal date creates a material near-term risk for the Company's largest revenue relationship.
(b) Meridian Leadership Change and Competitive RFP. During the course of diligence, Pinnacle became aware that Meridian recently underwent a change in its Chief Executive Officer. Furthermore, Meridian has issued a formal request for proposals for competitive supply chain optimization solutions. The issuance of a competitive RFP, in combination with a leadership transition, creates meaningful uncertainty regarding Meridian's intent to renew its existing agreement with Verdana. While Pinnacle recognizes that such activities do not necessarily indicate that Meridian will terminate or fail to renew the agreement, the combination of these factors materially increases the probability-weighted risk of revenue loss associated with this customer.
(c) Impact of Non-Renewal. In the event that Meridian elects not to renew its agreement, the Company would experience a reduction in ARR of approximately $11,800,000, or approximately 25% of total ARR. A revenue decline of this magnitude would materially impair the Company's growth trajectory, cash flow profile, and ability to service its existing credit facility obligations. It would also fundamentally undermine the growth assumptions that form the basis of the Company's proposed $320,000,000 pre-money valuation.
In Pinnacle's view, the customer concentration risk described above justifies a significant downward adjustment to the pre-money valuation. Pinnacle's revised proposal of $260,000,000 reflects, in part, this concentration risk and the uncertainty surrounding the Meridian relationship. However, Pinnacle remains open to discussing alternative risk-mitigation mechanisms that could address the Meridian concentration risk without a full valuation adjustment. Such mechanisms might include, by way of example and without limitation, a customer retention escrow arrangement pursuant to which a portion of the purchase price would be held in escrow pending confirmation of Meridian's renewal, or an earnout structure that would provide additional consideration to the Company or its stockholders in the event that the Meridian relationship is successfully renewed on terms reasonably satisfactory to Pinnacle. Pinnacle welcomes a dialogue with the Company and its advisors regarding these or other creative structures that might bridge the gap between the parties' respective valuation positions.
V. Rationale for Revised Valuation — Financial and Operational Considerations
In addition to the customer concentration risks discussed above, Pinnacle's revised valuation proposal takes into account the Company's broader financial and operational profile as revealed through the due diligence process.
Pinnacle acknowledges that the Company has demonstrated strong growth metrics. In particular, the Company achieved year-over-year ARR growth of approximately 63.7%, increasing from $28,900,000 in Q1 2021 to $47,300,000 in Q1 2022. The Company's net revenue retention rate of approximately 128% reflects healthy expansion activity within the existing customer base, and the Company's gross margin of approximately 74.2% is consistent with a well-functioning enterprise SaaS business model. These are positive indicators of the underlying strength of the Verdana SCX platform and the value proposition it delivers to customers.
However, these growth metrics must be evaluated in the context of the Company's overall financial position, which includes the following factors:
(a) Negative EBITDA and Continued Cash Burn. The Company reported negative EBITDA of approximately ($11,600,000) on a trailing twelve-month basis as of March 31, 2022. While negative EBITDA is not unusual for a high-growth enterprise SaaS company in the expansion phase, the magnitude of the cash burn — and its trajectory relative to the Company's available liquidity — is a consideration that bears on valuation and investment risk.
(b) Limited Cash Runway. As of March 31, 2022, the Company had cash on its balance sheet of approximately $22,400,000. At the current rate of cash consumption, this balance provides the Company with a limited operating runway absent additional equity financing or other capital infusions. The urgency of the Company's capital needs is, in Pinnacle's respectful view, a factor that should be taken into account in the valuation analysis, as it limits the Company's ability to pursue alternative financing on terms as favorable as those offered by Pinnacle.
(c) Existing Credit Facility and Covenant Constraints. The Company maintains a $10,000,000 revolving credit facility with Pacific Summit Bank, N.A. (the "Pacific Summit Facility"), of which $6,200,000 is currently drawn. The Pacific Summit Facility bears interest at a rate of SOFR plus 3.50% per annum and matures on June 30, 2024. Importantly, the Pacific Summit Facility includes a minimum liquidity covenant requiring the Company to maintain at least $10,000,000 in unrestricted cash at all times, as well as an ARR-based coverage ratio that further constrains the Company's financial flexibility. These covenants, taken together with the Company's current cash position and burn rate, create additional financial pressure that Pinnacle believes is relevant to the valuation discussion.
The concentration of the Company's revenue base in a small number of customer accounts amplifies the risk profile associated with the Company's cash-burning posture. A meaningful decline in ARR — whether resulting from the loss of the Meridian relationship or otherwise — could trigger a cascading series of adverse consequences, including potential violations of the Pacific Summit Facility's financial covenants, further erosion of the Company's cash position, and a loss of operational flexibility.
From a valuation multiples perspective, Pinnacle notes that the Company's proposed pre-money valuation of $320,000,000 implies an ARR multiple of approximately 6.8x ($320,000,000 ÷ $47,300,000). By comparison, Pinnacle's revised pre-money valuation of $260,000,000 implies an ARR multiple of approximately 5.5x ($260,000,000 ÷ $47,300,000). Pinnacle believes that a 5.5x ARR multiple more appropriately reflects the risk-adjusted value of the business in light of the customer concentration dynamics, the Company's cash-burn profile, the limited operating runway, and the broader macroeconomic environment. The difference between a 6.8x multiple and a 5.5x multiple is, in Pinnacle's assessment, a reasonable and proportionate adjustment to account for the specific risk factors identified during the diligence process.
VI. Ongoing Disagreements on Protective Provisions and Deal Terms
In addition to the valuation gap that is the primary subject of this letter, Pinnacle wishes to note that the parties remain unable to agree on several material economic and governance terms that bear directly on the risk profile and risk-adjusted return of Pinnacle's proposed $60,000,000 investment. While Pinnacle recognizes that these terms are the subject of ongoing negotiation, and while Pinnacle remains prepared to engage constructively on each of them, we believe it is important to catalog the open issues so that the parties may address them comprehensively in connection with the valuation discussion.
Liquidation Preference. Pinnacle has proposed that the Series D Preferred Stock carry a 1.5x non-participating liquidation preference, which would entitle the holders of Series D Preferred Stock to receive a return of $90,000,000 (1.5 times the original purchase price of $60,000,000) before any distributions are made to the holders of common stock or junior preferred stock in connection with a liquidation event, merger, sale, or other deemed liquidation event. The Company has countered with a 1.0x non-participating liquidation preference ($60,000,000), citing consistency with the liquidation preference terms applicable to the Series A, Series B, and Series C Preferred Stock. Pinnacle's position is that the 1.5x preference is warranted in light of the heightened risk factors identified during due diligence — including the customer concentration risk and the Company's cash-burn profile — which distinguish the current investment from the prior preferred stock financing rounds completed at earlier stages of the Company's development.
Anti-Dilution Protection. Pinnacle has proposed that the Series D Preferred Stock include full-ratchet anti-dilution protection, which would adjust the conversion price of the Series D Preferred Stock to the price per share of any subsequent down-round financing. The Company and its existing investors — particularly Brindoval Capital Group LLC, as the holder of the Series C Preferred Stock — have insisted that the Series D anti-dilution provision be structured on a broad-based weighted average basis, consistent with the anti-dilution provisions applicable to the Series A, Series B, and Series C Preferred Stock. The parties remain at impasse on this point following the negotiation session held on August 2, 2022, and Pinnacle believes this issue must be resolved in tandem with the valuation discussion.
Protective Provisions and Consent Rights. Pinnacle has proposed that the holders of Series D Preferred Stock, voting as a separate class, have consent rights over certain significant corporate actions, including (i) the incurrence of new indebtedness in excess of $5,000,000 in the aggregate, and (ii) annual budget deviations exceeding 15% from the board-approved operating plan. These consent rights are designed to provide Pinnacle with appropriate governance protections as a significant minority investor. The Company has not yet agreed to these provisions, and they remain under discussion.
Pay-to-Play. Pinnacle has proposed a mandatory pay-to-play provision that would require each holder of preferred stock to participate on a pro rata basis in any future financing round, with the consequence that any preferred stockholder that declines to participate would have its preferred shares automatically converted into common stock. The Company has formally rejected this proposal, and to date has declined to engage in further discussion on the point.
Redemption Rights. Pinnacle has proposed that the holders of Series D Preferred Stock have the right to require the Company to redeem all outstanding shares of Series D Preferred Stock at the original purchase price plus any accrued but unpaid dividends, exercisable at any time following the fifth (5th) anniversary of the closing date. This proposal remains under discussion, and the parties have not yet reached agreement on the terms or conditions of any redemption mechanism.
Drag-Along Rights. Pinnacle has proposed a drag-along provision that would authorize a majority of the outstanding preferred stockholders to compel all stockholders to consent to and participate in a sale of the Company or an initial public offering. The founders, Raj Anand and Lena Kovac, have formally objected to this provision in writing as of August 10, 2022, and have insisted that any drag-along provision include a minimum enterprise value threshold of Five Hundred Million Dollars ($500,000,000), below which no drag-along sale could be compelled. Among the Company's existing preferred stockholders, Ridgeline Ventures Fund III LP and Brindoval Capital Group LLC have indicated support for the founders' position on the minimum value threshold, while Northgate Growth Partners Fund II LP has indicated alignment with Pinnacle's position favoring a drag-along mechanism that is not subject to a minimum valuation floor.
These unresolved terms, taken together, have a material impact on the risk-adjusted return on Pinnacle's proposed $60,000,000 investment. In the absence of adequate protective provisions, the effective economic risk borne by Pinnacle is greater, which in turn supports a lower entry valuation. Pinnacle therefore views the resolution of these governance and economic terms as inextricably linked to the valuation discussion.
VII. Pacific Summit Bank — Lender Consent
As identified in this firm's review of the Company's credit facility documentation, the issuance of Series D Preferred Stock may trigger one or more negative covenants under the Pacific Summit Facility that restrict the Company from issuing new equity securities, incurring certain equity-linked obligations, or effecting changes to the Company's capitalization without the prior written consent or waiver of Pacific Summit Bank, N.A.
Pinnacle reiterates that obtaining such consent or waiver from Pacific Summit Bank, N.A. remains a condition to any closing of the Series D investment. Failure to obtain lender consent could result in a default under the Pacific Summit Facility, which would have adverse consequences for the Company and all of its stakeholders.
Accordingly, Pinnacle respectfully requests that the Company and its outside counsel at Langford Price & Associates LLP provide, at the earliest practicable date, a status update on any communications that the Company or its representatives have had with Pacific Summit Bank regarding the proposed Series D transaction, including any preliminary indications from the lender regarding its willingness to grant consent or waive the applicable negative covenants.
VIII. Reaffirmation of Interest and Path Forward
Notwithstanding the revised valuation proposal and the open issues identified in this letter, Pinnacle wishes to reaffirm its strong interest in completing the $60,000,000 Series D investment in Verdana. Pinnacle has invested significant time and resources in evaluating this opportunity, and Pinnacle's conviction regarding the long-term potential of the business remains firm.
Pinnacle recognizes the strength of the Company's technology platform, Verdana SCX, and the compelling market opportunity in AI-driven supply chain optimization for mid-market and enterprise customers. The Company's strong ARR growth trajectory, its attractive net revenue retention metrics, and its demonstrated ability to win and expand relationships with significant enterprise accounts are all factors that contribute to Pinnacle's interest in the investment.
Pinnacle further believes that its revised pre-money valuation of $260,000,000 fairly reflects the current risk profile of the business while still representing a meaningful validation of the progress the Company has achieved since its Series C financing. At a price per share of $3.25, the revised valuation represents an approximately 8.3% premium over the Series C price of $3.00 per share, which Pinnacle views as a fair and appropriate step-up given the Company's growth since the Series C round and the risk factors identified during the current diligence process.
In order to advance the negotiations efficiently and in good faith, Pinnacle proposes that the parties schedule a principals-level meeting at the earliest mutually convenient date to discuss the revised proposal set forth in this letter. Pinnacle's objective is to reach agreement with the Company on all open commercial and legal terms before the expiration of the current exclusivity period on September 30, 2022. Pinnacle's partner, Marcus Trejo, is available to participate in any such meeting, and we understand that Hargrove's Nathan Callister would similarly be available to facilitate the discussion on the Company's side.
In the interim, Pinnacle is prepared to work constructively and expeditiously with the Company and its professional advisors to finalize the following definitive transaction documents, all of which remain in partially negotiated draft form:
(i) Series D Preferred Stock Purchase Agreement;
(ii) Amended and Restated Investors' Rights Agreement;
(iii) Amended and Restated Voting Agreement;
(iv) Amended and Restated Right of First Refusal and Co-Sale Agreement; and
(v) Amended and Restated Certificate of Incorporation of Verdana Software, Inc.
Pinnacle's objective remains to complete the Series D transaction on a timeline that is consistent with the needs of the Company and the mutual interests of the parties.
IX. Non-Binding Nature and Reservation of Rights
This letter and the revised valuation proposal set forth herein are intended solely to facilitate the parties' ongoing negotiations and are non-binding in all respects. Nothing in this letter shall constitute or be deemed to constitute a commitment, obligation, or agreement of Pinnacle Venture Fund II LP, Pinnacle Capital Management LLC, or any of their respective affiliates, partners, members, officers, directors, employees, or agents to consummate the proposed investment or any other transaction on the terms described herein or on any other terms.
All terms of the proposed investment remain subject to (i) the mutual agreement of the parties on definitive transaction documentation in form and substance satisfactory to each party and its respective counsel, (ii) the completion of due diligence satisfactory to Pinnacle in its sole discretion, and (iii) the satisfaction or waiver of all conditions to closing that may be set forth in the definitive transaction documents.
Pinnacle expressly reserves all rights, remedies, and defenses available to it at law, in equity, or under any agreement between the parties, including without limitation the right to withdraw, modify, amend, or supplement this proposal at any time prior to the execution and delivery of mutually acceptable definitive agreements.
This letter shall not be construed as an amendment, modification, waiver, or supplement to the Exclusivity Agreement or any other agreement, understanding, or arrangement between the parties or their respective affiliates.
X. Confidentiality
This letter and its contents are confidential and are subject to the terms of any applicable non-disclosure agreement, confidentiality agreement, or confidentiality provisions contained in any agreement between the parties or their respective affiliates. Pinnacle requests that this communication and the information contained herein not be disclosed, disseminated, or shared with any third party, other than the members of the Company's board of directors, the Company's officers and employees on a need-to-know basis, and the Company's professional advisors (including Langford Price & Associates LLP and Hargrove Securities LLC), without Pinnacle's prior written consent.
We appreciate the Company's continued engagement throughout this process and the constructive manner in which the Company's management team and advisors have participated in the negotiations to date. Pinnacle remains committed to working collaboratively with Verdana to reach a mutually satisfactory outcome, and we look forward to continuing our discussions in the coming days.
Please do not hesitate to contact the undersigned at (415) 772-8047 or hwexford@calderwoodharkness.com with any questions or to schedule a meeting to discuss this letter and the revised proposal.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Harrison Wexford Partner
101 Montgomery Street, Suite 3500 San Francisco, CA 94104 Telephone: (415) 772-8047
Email: hwexford@calderwoodharkness.com
On behalf of Pinnacle Venture Fund II LP
cc: Marcus Trejo, Partner, Pinnacle Capital Management LLC, 2400 Sand Hill Road, Suite 310, Menlo Park, CA 94025
cc: Jonathan Hale, Langford Price & Associates LLP, 1000 SW Broadway, Suite 1600, Portland, OR 97205
cc: Nathan Callister, Hargrove Securities LLC, 600 Lexington Avenue, 22nd Floor, New York, NY 10022
Enclosures: None
Stockholder / Category | Shares | % of Fully-Diluted Capitalization
Raj Anand and Lena Kovac (Founders — Common Stock) | 28,000,000 | 35.0%
Ridgeline Ventures Fund III LP (Series A Preferred) | 12,000,000 | 15.0%
Northgate Growth Partners Fund II LP (Series B Preferred) | 16,000,000 | 20.0%
Brindoval Capital Group LLC (Series C Preferred) | 12,000,000 | 15.0%
Employee Stock Option Pool (ESOP) | 12,000,000 | 15.0%
Total (Pre-Close Fully-Diluted) | 80,000,000 | 100.0%
Term | Amount
Pre-Money Valuation | $260,000,000
Investment Amount | $60,000,000
Post-Money Valuation | $320,000,000
Pre-Close Fully-Diluted Share Count | 80,000,000
Price Per Share | $3.25 ($260,000,000 ÷ 80,000,000)
Series D Shares to be Issued to Pinnacle | 18,461,538 ($60,000,000 ÷ $3.25)
Post-Close Fully-Diluted Share Count | 98,461,538 (80,000,000 + 18,461,538)
Pinnacle Post-Close Ownership | ~18.75% (18,461,538 ÷ 98,461,538)
Customer | ARR (Q1 2022) | % of Total ARR
Meridian Logistics Corp. | $11,800,000 | 24.9%
Caldera Manufacturing Inc. | $5,200,000 | 11.0%
Atlas Freight Holdings LLC | $4,100,000 | 8.7%
Brannock Industrial Group | $3,400,000 | 7.2%
Solaris Warehousing Co. | $2,700,000 | 5.7%
Top 5 Total | $27,200,000 | 57.5%
All Other Customers | $20,100,000 | 42.5%
Total ARR | $47,300,000 | 100.0%

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