[sheet: Cover]

Field	Value
Document Title	Capitalization Table Analysis and Liquidation Waterfall Memorandum
Subject Company	Verdana Software, Inc. (EIN: 93-1485726; DE SOS File No. 6274913)
Date	June 1, 2022
Prepared By	Naomi Petersen, Working Associate, Calderwood & Harkness LLP
Reviewed By	Andrew Fitzpatrick, Lead Associate; Harrison Wexford, Responsible Partner
Prepared For	Marcus Trejo, Partner, Head of Growth Equity, Pinnacle Capital Management LLC
Client	Pinnacle Venture Fund II LP
Matter Number	1002-00004
Billing Client Number	PIN-0042
Confidentiality	PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
Transaction	Proposed $60,000,000 Series D Preferred Stock Investment
Purpose	Model Verdana's fully-diluted capitalization table pre- and post-Series D under multiple valuation scenarios; analyze liquidation waterfall at 1.0x and 1.5x preference levels; model anti-dilution impact under full-ratchet and broad-based weighted average mechanisms

[sheet: Pre-Investment Cap Table]

Stockholder / Category	Series / Class	Original Investment Amount ($)	Price Per Share ($)	Shares	% of Fully Diluted	Liquidation Preference Multiple	Aggregate Liquidation Preference ($)	Anti-Dilution Protection	Notes
Raj Anand (CEO & Co-Founder)	Common	N/A	N/A	14000000	17.50%	N/A	N/A	N/A	Co-Founder; 14,000,000 shares
Lena Kovac (CTO & Co-Founder)	Common	N/A	N/A	14000000	17.50%	N/A	N/A	N/A	Co-Founder; 14,000,000 shares
Founders Subtotal	Common	N/A	N/A	28000000	35.00%	N/A	N/A	N/A	Combined founder holdings
Ridgeline Ventures Fund III LP	Series A Preferred	9600000	0.8	12000000	15.00%	1	9600000	Broad-Based Weighted Average	Series A Lead (2018); Board seat: Priya Dasgupta
Northgate Growth Partners Fund II LP	Series B Preferred	32000000	2	16000000	20.00%	1	32000000	Broad-Based Weighted Average	Series B Lead (2019); Board seat: Elliott Margolis
Brindoval Capital Group LLC	Series C Preferred	36000000	3	12000000	15.00%	1	36000000	Broad-Based Weighted Average	Series C Lead (2021); Board seat: Diana Chen
ESOP (Issued and Unissued)	Common (Option Pool)	N/A	N/A	12000000	15.00%	N/A	N/A	N/A	Existing employee stock option plan pool
TOTAL (Fully Diluted)	All Classes	77600000	N/A	80000000	100.00%	N/A	77600000	N/A	Total pre-investment fully diluted shares

[sheet: Scenario 1 — $320M Pre-Money]

Stockholder / Category	Series / Class	Shares Pre-Investment	New Shares Issued	Total Shares Post-Investment	% of Fully Diluted Post-Investment	Liquidation Preference Multiple	Aggregate Liquidation Preference ($)	Notes
Raj Anand (CEO & Co-Founder)	Common	14000000	0	14000000	14.74%	N/A	N/A
Lena Kovac (CTO & Co-Founder)	Common	14000000	0	14000000	14.74%	N/A	N/A
Founders Subtotal	Common	28000000	0	28000000	29.47%	N/A	N/A	Diluted from 35.00% to 29.47%
Ridgeline Ventures Fund III LP	Series A Preferred	12000000	0	12000000	12.63%	1	9600000	Diluted from 15.00% to 12.63%
Northgate Growth Partners Fund II LP	Series B Preferred	16000000	0	16000000	16.84%	1	32000000	Diluted from 20.00% to 16.84%
Brindoval Capital Group LLC	Series C Preferred	12000000	0	12000000	12.63%	1	36000000	Diluted from 15.00% to 12.63%
Pinnacle Venture Fund II LP	Series D Preferred	0	15000000	15000000	15.79%	1.0x or 1.5x (see Waterfall)	60,000,000 or 90,000,000	$60M investment at $4.00/share; $320M pre-money; below Pinnacle's 18.75% target
ESOP (Issued and Unissued)	Common (Option Pool)	12000000	0	12000000	12.63%	N/A	N/A	No ESOP expansion in this scenario
TOTAL	All Classes	80000000	15000000	95000000	100.00%	N/A	N/A	Post-money valuation: $380,000,000 ($95M shares × $4.00)

[sheet: Scenario 2 — $320M + ESOP Exp]

Stockholder / Category	Series / Class	Shares Pre-Investment	ESOP Expansion Shares	Adjusted Pre-Investment Shares	New Series D Shares Issued	Total Shares Post-Investment	% of Fully Diluted Post-Investment	Liquidation Preference Multiple	Aggregate Liquidation Preference ($)	Notes
Raj Anand (CEO & Co-Founder)	Common	14000000	0	14000000	0	14000000	14.00%	N/A	N/A
Lena Kovac (CTO & Co-Founder)	Common	14000000	0	14000000	0	14000000	14.00%	N/A	N/A
Founders Subtotal	Common	28000000	0	28000000	0	28000000	28.00%	N/A	N/A	Diluted from 35.00% to 28.00%
Ridgeline Ventures Fund III LP	Series A Preferred	12000000	0	12000000	0	12000000	12.00%	1	9600000
Northgate Growth Partners Fund II LP	Series B Preferred	16000000	0	16000000	0	16000000	16.00%	1	32000000
Brindoval Capital Group LLC	Series C Preferred	12000000	0	12000000	0	12000000	12.00%	1	36000000
Pinnacle Venture Fund II LP	Series D Preferred	0	0	0	15000000	15000000	15.00%	1.0x or 1.5x	60,000,000 or 90,000,000	$60M at $4.00/share; ESOP expansion reduces Pinnacle from 15.79% to 15.00%
ESOP (Issued and Unissued)	Common (Option Pool)	12000000	5000000	17000000	0	17000000	17.00%	N/A	N/A	Expanded from 12M to 17M shares pre-close per Verdana's proposal
TOTAL	All Classes	80000000	5000000	85000000	15000000	100000000	100.00%	N/A	N/A	Post-money fully diluted = 100,000,000 shares

[sheet: Scenario 3 — $260M Pre-Money]

Stockholder / Category	Series / Class	Shares Pre-Investment	New Shares Issued	Total Shares Post-Investment	% of Fully Diluted Post-Investment	Liquidation Preference Multiple	Aggregate Liquidation Preference ($)	Notes
Raj Anand (CEO & Co-Founder)	Common	14000000	0	14000000	14.22%	N/A	N/A
Lena Kovac (CTO & Co-Founder)	Common	14000000	0	14000000	14.22%	N/A	N/A
Founders Subtotal	Common	28000000	0	28000000	28.45%	N/A	N/A	Diluted from 35.00% to 28.45%
Ridgeline Ventures Fund III LP	Series A Preferred	12000000	0	12000000	12.19%	1	9600000	Diluted from 15.00% to 12.19%
Northgate Growth Partners Fund II LP	Series B Preferred	16000000	0	16000000	16.25%	1	32000000	Diluted from 20.00% to 16.25%
Brindoval Capital Group LLC	Series C Preferred	12000000	0	12000000	12.19%	1	36000000	Diluted from 15.00% to 12.19%
Pinnacle Venture Fund II LP	Series D Preferred	0	18461538	18461538	18.75%	1.0x or 1.5x	60,000,000 or 90,000,000	$60M at $3.25/share; achieves 18.75% target ownership
ESOP (Issued and Unissued)	Common (Option Pool)	12000000	0	12000000	12.19%	N/A	N/A	No ESOP expansion; existing pool included in pre-money
TOTAL	All Classes	80000000	18461538	98461538	100.00%	N/A	N/A	Post-money valuation: $320,000,000 ($260M + $60M)

[sheet: Scenario 4 — $290M Bridge]

Stockholder / Category	Series / Class	Shares Pre-Investment	New Shares Issued	Total Shares Post-Investment	% of Fully Diluted Post-Investment	Liquidation Preference Multiple	Aggregate Liquidation Preference ($)	Notes
Raj Anand (CEO & Co-Founder)	Common	14000000	0	14000000	14.50%	N/A	N/A
Lena Kovac (CTO & Co-Founder)	Common	14000000	0	14000000	14.50%	N/A	N/A
Founders Subtotal	Common	28000000	0	28000000	29.00%	N/A	N/A	Diluted from 35.00% to 29.00%
Ridgeline Ventures Fund III LP	Series A Preferred	12000000	0	12000000	12.43%	1	9600000	Diluted from 15.00% to 12.43%
Northgate Growth Partners Fund II LP	Series B Preferred	16000000	0	16000000	16.57%	1	32000000	Diluted from 20.00% to 16.57%
Brindoval Capital Group LLC	Series C Preferred	12000000	0	12000000	12.43%	1	36000000	Proposed this compromise on October 14, 2022
Pinnacle Venture Fund II LP	Series D Preferred	0	16551724	16551724	17.14%	1.0x or 1.5x	60,000,000 or 90,000,000	$60M at $3.625/share; between Pinnacle's 18.75% target and Verdana's 15.79% scenario
ESOP (Issued and Unissued)	Common (Option Pool)	12000000	0	12000000	12.43%	N/A	N/A	No ESOP expansion assumed
TOTAL	All Classes	80000000	16551724	96551724	100.00%	N/A	N/A	Post-money valuation: $350,000,000 ($290M + $60M); Brindoval proposed with 1.0x preference

[sheet: Cover]
Field | Value
Document Title | Capitalization Table Analysis and Liquidation Waterfall Memorandum
Subject Company | Verdana Software, Inc. (EIN: 93-1485726; DE SOS File No. 6274913)
Date | June 1, 2022
Prepared By | Naomi Petersen, Working Associate, Calderwood & Harkness LLP
Reviewed By | Andrew Fitzpatrick, Lead Associate; Harrison Wexford, Responsible Partner
Prepared For | Marcus Trejo, Partner, Head of Growth Equity, Pinnacle Capital Management LLC
Client | Pinnacle Venture Fund II LP
Matter Number | 1002-00004
Billing Client Number | PIN-0042
Confidentiality | PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
Transaction | Proposed $60,000,000 Series D Preferred Stock Investment
Purpose | Model Verdana's fully-diluted capitalization table pre- and post-Series D under multiple valuation scenarios; analyze liquidation waterfall at 1.0x and 1.5x preference levels; model anti-dilution impact under full-ratchet and broad-based weighted average mechanisms
[sheet: Pre-Investment Cap Table]
Stockholder / Category | Series / Class | Original Investment Amount ($) | Price Per Share ($) | Shares | % of Fully Diluted | Liquidation Preference Multiple | Aggregate Liquidation Preference ($) | Anti-Dilution Protection | Notes
Raj Anand (CEO & Co-Founder) | Common | N/A | N/A | 14000000 | 17.50% | N/A | N/A | N/A | Co-Founder; 14,000,000 shares
Lena Kovac (CTO & Co-Founder) | Common | N/A | N/A | 14000000 | 17.50% | N/A | N/A | N/A | Co-Founder; 14,000,000 shares
Founders Subtotal | Common | N/A | N/A | 28000000 | 35.00% | N/A | N/A | N/A | Combined founder holdings
Ridgeline Ventures Fund III LP | Series A Preferred | 9600000 | 0.8 | 12000000 | 15.00% | 1 | 9600000 | Broad-Based Weighted Average | Series A Lead (2018); Board seat: Priya Dasgupta
Northgate Growth Partners Fund II LP | Series B Preferred | 32000000 | 2 | 16000000 | 20.00% | 1 | 32000000 | Broad-Based Weighted Average | Series B Lead (2019); Board seat: Elliott Margolis
Brindoval Capital Group LLC | Series C Preferred | 36000000 | 3 | 12000000 | 15.00% | 1 | 36000000 | Broad-Based Weighted Average | Series C Lead (2021); Board seat: Diana Chen
ESOP (Issued and Unissued) | Common (Option Pool) | N/A | N/A | 12000000 | 15.00% | N/A | N/A | N/A | Existing employee stock option plan pool
TOTAL (Fully Diluted) | All Classes | 77600000 | N/A | 80000000 | 100.00% | N/A | 77600000 | N/A | Total pre-investment fully diluted shares
[sheet: Scenario 1 — $320M Pre-Money]
Stockholder / Category | Series / Class | Shares Pre-Investment | New Shares Issued | Total Shares Post-Investment | % of Fully Diluted Post-Investment | Liquidation Preference Multiple | Aggregate Liquidation Preference ($) | Notes
Raj Anand (CEO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 14.74% | N/A | N/A
Lena Kovac (CTO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 14.74% | N/A | N/A
Founders Subtotal | Common | 28000000 | 0 | 28000000 | 29.47% | N/A | N/A | Diluted from 35.00% to 29.47%
Ridgeline Ventures Fund III LP | Series A Preferred | 12000000 | 0 | 12000000 | 12.63% | 1 | 9600000 | Diluted from 15.00% to 12.63%
Northgate Growth Partners Fund II LP | Series B Preferred | 16000000 | 0 | 16000000 | 16.84% | 1 | 32000000 | Diluted from 20.00% to 16.84%
Brindoval Capital Group LLC | Series C Preferred | 12000000 | 0 | 12000000 | 12.63% | 1 | 36000000 | Diluted from 15.00% to 12.63%
Pinnacle Venture Fund II LP | Series D Preferred | 0 | 15000000 | 15000000 | 15.79% | 1.0x or 1.5x (see Waterfall) | 60,000,000 or 90,000,000 | $60M investment at $4.00/share; $320M pre-money; below Pinnacle's 18.75% target
ESOP (Issued and Unissued) | Common (Option Pool) | 12000000 | 0 | 12000000 | 12.63% | N/A | N/A | No ESOP expansion in this scenario
TOTAL | All Classes | 80000000 | 15000000 | 95000000 | 100.00% | N/A | N/A | Post-money valuation: $380,000,000 ($95M shares × $4.00)
[sheet: Scenario 2 — $320M + ESOP Exp]
Stockholder / Category | Series / Class | Shares Pre-Investment | ESOP Expansion Shares | Adjusted Pre-Investment Shares | New Series D Shares Issued | Total Shares Post-Investment | % of Fully Diluted Post-Investment | Liquidation Preference Multiple | Aggregate Liquidation Preference ($) | Notes
Raj Anand (CEO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 0 | 14000000 | 14.00% | N/A | N/A
Lena Kovac (CTO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 0 | 14000000 | 14.00% | N/A | N/A
Founders Subtotal | Common | 28000000 | 0 | 28000000 | 0 | 28000000 | 28.00% | N/A | N/A | Diluted from 35.00% to 28.00%
Ridgeline Ventures Fund III LP | Series A Preferred | 12000000 | 0 | 12000000 | 0 | 12000000 | 12.00% | 1 | 9600000
Northgate Growth Partners Fund II LP | Series B Preferred | 16000000 | 0 | 16000000 | 0 | 16000000 | 16.00% | 1 | 32000000
Brindoval Capital Group LLC | Series C Preferred | 12000000 | 0 | 12000000 | 0 | 12000000 | 12.00% | 1 | 36000000
Pinnacle Venture Fund II LP | Series D Preferred | 0 | 0 | 0 | 15000000 | 15000000 | 15.00% | 1.0x or 1.5x | 60,000,000 or 90,000,000 | $60M at $4.00/share; ESOP expansion reduces Pinnacle from 15.79% to 15.00%
ESOP (Issued and Unissued) | Common (Option Pool) | 12000000 | 5000000 | 17000000 | 0 | 17000000 | 17.00% | N/A | N/A | Expanded from 12M to 17M shares pre-close per Verdana's proposal
TOTAL | All Classes | 80000000 | 5000000 | 85000000 | 15000000 | 100000000 | 100.00% | N/A | N/A | Post-money fully diluted = 100,000,000 shares
[sheet: Scenario 3 — $260M Pre-Money]
Stockholder / Category | Series / Class | Shares Pre-Investment | New Shares Issued | Total Shares Post-Investment | % of Fully Diluted Post-Investment | Liquidation Preference Multiple | Aggregate Liquidation Preference ($) | Notes
Raj Anand (CEO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 14.22% | N/A | N/A
Lena Kovac (CTO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 14.22% | N/A | N/A
Founders Subtotal | Common | 28000000 | 0 | 28000000 | 28.45% | N/A | N/A | Diluted from 35.00% to 28.45%
Ridgeline Ventures Fund III LP | Series A Preferred | 12000000 | 0 | 12000000 | 12.19% | 1 | 9600000 | Diluted from 15.00% to 12.19%
Northgate Growth Partners Fund II LP | Series B Preferred | 16000000 | 0 | 16000000 | 16.25% | 1 | 32000000 | Diluted from 20.00% to 16.25%
Brindoval Capital Group LLC | Series C Preferred | 12000000 | 0 | 12000000 | 12.19% | 1 | 36000000 | Diluted from 15.00% to 12.19%
Pinnacle Venture Fund II LP | Series D Preferred | 0 | 18461538 | 18461538 | 18.75% | 1.0x or 1.5x | 60,000,000 or 90,000,000 | $60M at $3.25/share; achieves 18.75% target ownership
ESOP (Issued and Unissued) | Common (Option Pool) | 12000000 | 0 | 12000000 | 12.19% | N/A | N/A | No ESOP expansion; existing pool included in pre-money
TOTAL | All Classes | 80000000 | 18461538 | 98461538 | 100.00% | N/A | N/A | Post-money valuation: $320,000,000 ($260M + $60M)
[sheet: Scenario 4 — $290M Bridge]
Stockholder / Category | Series / Class | Shares Pre-Investment | New Shares Issued | Total Shares Post-Investment | % of Fully Diluted Post-Investment | Liquidation Preference Multiple | Aggregate Liquidation Preference ($) | Notes
Raj Anand (CEO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 14.50% | N/A | N/A
Lena Kovac (CTO & Co-Founder) | Common | 14000000 | 0 | 14000000 | 14.50% | N/A | N/A
Founders Subtotal | Common | 28000000 | 0 | 28000000 | 29.00% | N/A | N/A | Diluted from 35.00% to 29.00%
Ridgeline Ventures Fund III LP | Series A Preferred | 12000000 | 0 | 12000000 | 12.43% | 1 | 9600000 | Diluted from 15.00% to 12.43%
Northgate Growth Partners Fund II LP | Series B Preferred | 16000000 | 0 | 16000000 | 16.57% | 1 | 32000000 | Diluted from 20.00% to 16.57%
Brindoval Capital Group LLC | Series C Preferred | 12000000 | 0 | 12000000 | 12.43% | 1 | 36000000 | Proposed this compromise on October 14, 2022
Pinnacle Venture Fund II LP | Series D Preferred | 0 | 16551724 | 16551724 | 17.14% | 1.0x or 1.5x | 60,000,000 or 90,000,000 | $60M at $3.625/share; between Pinnacle's 18.75% target and Verdana's 15.79% scenario
ESOP (Issued and Unissued) | Common (Option Pool) | 12000000 | 0 | 12000000 | 12.43% | N/A | N/A | No ESOP expansion assumed
TOTAL | All Classes | 80000000 | 16551724 | 96551724 | 100.00% | N/A | N/A | Post-money valuation: $350,000,000 ($290M + $60M); Brindoval proposed with 1.0x preference

[sheet: Cover]

Record

Parties

Dates

Amounts