Daniel,
I hope you're doing well. I'm writing to coordinate with you and your team on several items related to Whitmore Sandoval Group's buy-side quality of earnings engagement in connection with Solara Digital Infrastructure LP's proposed acquisition of Meridian FleetWorks, Inc. (Project Trident).
As you know, Calderwood & Harkness is serving as buyer's counsel on the transaction. I'm the lead associate coordinating the legal diligence workstream, and I wanted to align with your team on areas where our respective findings overlap — particularly around the QofE timeline and the sales tax matters you've begun to flag. There's a fair amount to cover, so I've organized this by topic below.
**Quality of Earnings — Status and Timeline**
The QofE analysis is obviously central to the overall diligence picture and will directly inform the purchase price adjustment mechanics and key representations in the Stock Purchase Agreement. As a reminder, the LOI provides for a buyer's diligence completion deadline of March 15, 2026, and we are targeting execution of the definitive SPA on March 31, 2026. Given those dates, we'll need to have your principal findings in hand well in advance of the diligence deadline so we can incorporate them into the SPA drafting process.
With that in mind, it would be very helpful to get an update on the following:
1. **Current status** of the QofE analysis and the **expected delivery date** for the draft QofE report.
2. Whether Whitmore Sandoval has identified any **preliminary adjustments** to MFW's reported FY 2025 financials. For reference, the key figures we're working from are: - Annual recurring revenue (ARR) of approximately $62,000,000. - Total GAAP revenue of approximately $67,500,000, inclusive of approximately $5,500,000 of professional services / implementation revenue. - EBITDA of approximately $14,800,000, reflecting an EBITDA margin of roughly 21.9%. - If there are any proposed adjustments to EBITDA — whether for normalization, non-recurring items, or otherwise — the deal team would benefit from knowing about them at this stage, even on a preliminary basis.
3. Any observations on the **net working capital** analysis. The LOI establishes a target NWC peg of $5,800,000, calculated as the trailing 12-month average as of December 31, 2025. We'd like to understand whether your independent calculation of NWC is tracking to that peg or whether there are variances we should be prepared to flag in the SPA negotiations.
4. Your team's views on the **sustainability and quality of MFW's recurring revenue base**. MFW reports net revenue retention (NRR) of approximately 112% and gross revenue retention (GRR) of approximately 94% across roughly 4,200 active customer accounts, with an average contract value of approximately $14,762. Any insights on the durability of those metrics — including customer concentration, cohort trends, or churn dynamics — would be valuable.
5. Whether Whitmore Sandoval has had the opportunity to review MFW's **audited financial statements** prepared by Glenmore Kessler & Associates PC, MFW's independent auditor since FY 2019 (engagement partner Linda Chowdhury, CPA). If any questions or observations have arisen from that review, we'd like to discuss them.
**Sales Tax Nexus and Exposure**
I understand from our earlier discussions that Whitmore Sandoval has surfaced a preliminary finding that MFW may have sales tax nexus in 6–8 states where it has not been collecting or remitting SaaS sales tax, with an estimated exposure range of $800,000–$1,400,000. This finding is significant to us for several reasons:
- **SPA drafting**: The exposure will need to be addressed in the tax representations and warranties and potentially through the indemnification provisions or as a specific indemnity. - **R&W insurance**: We are coordinating with Trident Peak Insurance Brokers Inc. on the representations and warranties insurance submission to Atlas Meridian Underwriters Ltd. Known tax exposures of this nature will need to be disclosed to the carrier and will likely be relevant to the underwriting process. - **Purchase price / pre-closing remediation**: Depending on the magnitude and nature of the exposure, it may affect the purchase price or give rise to a pre-closing remediation obligation by the seller.
To allow us to properly address these issues, we'd appreciate the following detail from your team:
- **Identification of the specific states** where Whitmore Sandoval believes MFW has uncollected or unremitted SaaS sales tax obligations. A state-by-state breakdown would be ideal if available. - **The tax periods at issue** for each identified state — i.e., the periods during which the exposure accrued. - **The methodology** used to estimate the $800,000–$1,400,000 range (e.g., revenue allocated to those states, applicable SaaS taxability rules in each jurisdiction, estimated tax rates applied). - Whether the exposure estimate includes **potential penalties and interest**, or reflects only the base tax amount. - Whether Whitmore Sandoval has reviewed any **voluntary disclosure agreement (VDA) history** or whether MFW has participated in any state amnesty or VDA programs that might mitigate the exposure.
For context, MFW maintains offices in McLean, Virginia; Austin, Texas; and Boise, Idaho, which would establish nexus in those states independently through physical presence. Our primary concern here is around states where MFW has established **economic nexus** through its SaaS customer base without a corresponding physical presence, and where it has nonetheless not been collecting or remitting the applicable tax.
**Coordination with Sylvia Hartwell (Tax Diligence)**
I've copied **Sylvia Hartwell**, a partner in our tax group at Calderwood & Harkness, who is leading the tax diligence workstream for the transaction. I'd like to propose that you and Sylvia schedule a call — ideally by the end of this week or early next week — to discuss the sales tax findings in detail and to coordinate on the broader tax diligence. In addition to the sales tax matters, the tax workstream includes:
- State and local tax considerations across Delaware, Virginia, Texas, and Idaho. - Evaluation of a potential **Section 338(h)(10) election** under the Internal Revenue Code, which is currently under analysis and for which MFW's tax basis and asset schedule information will be relevant. - Tax treatment of the equity rollover by Garrett Holliday (approximately $25,000,000) and the option cash-out tax implications.
Please let us know your availability for a call and whether you would prefer to have the discussion before or after delivering a preliminary draft of your sales tax analysis — either approach works on our end.
**VDR Access and Document Requests**
I want to confirm that Whitmore Sandoval has full access to the **Thackeray Solutions virtual data room** (Project Trident VDR) and to ask whether there are any additional financial or tax documents that your team needs from MFW that have not yet been uploaded. We transmitted a comprehensive due diligence request list to MFW's counsel, Hawthorne Kinsey & Alcott LLP (lead partner Rachel Greenwald), on February 19, 2026, which includes tax-related requests. If your team identifies any gaps in the document population, please let us know and we will coordinate follow-up requests through HKA.
**Timeline**
To close the loop on timing, the key dates we're working toward are:
- **March 15, 2026** — Buyer's diligence completion deadline under the LOI. - **March 31, 2026** — Target date for execution of the definitive Stock Purchase Agreement. - **April 30, 2026** — Target closing date (with an outside date of June 30, 2026).
Given these milestones, it's important that the QofE report and sales tax analysis are sufficiently advanced by early-to-mid March so that findings can be incorporated into the SPA drafting and our negotiations with the seller's side. I appreciate that these timelines are tight, and we're happy to coordinate on prioritization if that's helpful.
Thank you to you and your team for the work on this engagement — it's been very helpful to have your analysis running in parallel with the legal diligence. Please don't hesitate to call or email with any questions. If it would be useful to set up a broader working group call with the Solara deal team, Claire Nakamura is copied here and we can arrange that as well.
Best regards,
Andrew Fitzpatrick Calderwood & Harkness LLP 277 Park Avenue, 45th Floor New York, NY 10172 T: (212) 547-3184 E: afitzpatrick@calderwoodharkness.com