DISCLOSURE SCHEDULES

DISCLOSURE SCHEDULES
TO
AGREEMENT AND PLAN OF MERGER
Delivered by
CODELAUNCH LABS, INC.
a Delaware corporation
Dated as of June 1, 2023
In connection with that certain Agreement and Plan of Merger, dated as of June 1, 2023 (the "Agreement"), among Brightfield Cloud Services Inc., a Delaware corporation ("Parent"), BCS DevTools Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), and Codelaunch Labs, Inc., a Delaware corporation (the "Company")
Prepared by:
Caldwell, Raines & Fitch LLP 600 Congress Avenue, Suite 2200 Austin, TX 78701
as counsel to the Company
in coordination with
Calderwood & Harkness LLP 2000 McKinney Avenue, Suite 3400 Dallas, TX 75201
as counsel to Parent
Lead Counsel References: Geoffrey Aldrich (Caldwell, Raines & Fitch LLP) Beatrice Holloway (Calderwood & Harkness LLP)
CONFIDENTIAL TREATMENT REQUESTED — This document contains confidential and proprietary information of Codelaunch Labs, Inc. and is subject to the Confidentiality Agreement between the parties.
INTRODUCTORY NOTES AND GENERAL DISCLAIMERS
These Disclosure Schedules (the "Schedules") are delivered by Codelaunch Labs, Inc., a Delaware corporation (the "Company"), to Brightfield Cloud Services Inc., a Delaware corporation ("Parent"), and BCS DevTools Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), pursuant to Article III of that certain Agreement and Plan of Merger, dated as of June 1, 2023 (the "Agreement"), among Parent, Merger Sub, and the Company. These Schedules form a part of, and qualify the representations and warranties of the Company set forth in, the Agreement.
Capitalized terms used but not otherwise defined in these Schedules shall have the respective meanings ascribed to such terms in the Agreement. Unless the context otherwise requires, references to "Sections" and "Schedules" herein refer to Sections of, and Schedules to, the Agreement.
The inclusion of any item, information, or document in these Schedules shall not be construed as an admission by the Company that such item, information, or document is material, that such item, information, or document would give rise to a Material Adverse Effect, or that such item, information, or document is required to be disclosed under the Agreement. The disclosure of any item, information, or document herein is made solely for purposes of the Agreement and shall not be deemed to constitute an admission of liability or obligation to any third party, nor shall any such disclosure be used as a basis for any claim by any third party.
Information disclosed in any particular Schedule shall be deemed to have been disclosed with respect to, and to qualify, all other Schedules and the corresponding representations and warranties in the Agreement to the extent that the relevance of such information to such other Schedules or representations and warranties is reasonably apparent on the face of such disclosure, notwithstanding the absence of a specific cross-reference to such other Schedules or representations and warranties.
The headings and section references contained in these Schedules are included for convenience of reference only and shall not affect in any way the meaning, interpretation, or construction of these Schedules or any provision hereof.
These Schedules may include items, information, or documents that are not strictly required to be disclosed pursuant to the representations and warranties set forth in Article III of the Agreement. Such items, information, or documents have been included for informational purposes only, and the inclusion thereof shall not be deemed to establish or set a standard of materiality for any purpose, including for purposes of determining the accuracy of any representation or warranty contained in the Agreement.
The information contained in these Schedules is qualified in its entirety by reference to the specific provisions of the Agreement, and nothing in these Schedules is intended to broaden the scope of any representation, warranty, covenant, or agreement contained in the Agreement. The summaries of agreements and other documents set forth herein are qualified in their entirety by reference to the full text of such agreements and documents, copies of which have been made available to Parent in the electronic data room maintained by Crestline Solutions in connection with the transactions contemplated by the Agreement (the "Data Room").
The Company's registered agent in the State of Delaware is Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801.
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SCHEDULE 3.1
ORGANIZATION AND GOOD STANDING
The following information is provided with respect to the organization, qualification, and good standing of the Company as of the date of these Schedules:
1. Company Full Legal Name:
Codelaunch Labs, Inc.
2. State of Incorporation:
Delaware
3. Delaware Secretary of State File Number:
7834219
4. Employer Identification Number (EIN):
84-3291057
5. Date of Incorporation:
The Company was incorporated in the State of Delaware in 2019 pursuant to the filing of its Certificate of Incorporation with the Secretary of State of the State of Delaware.
6. Principal Office:
1607 East 6th Street, Suite 300 Austin, Texas 78702
7. Registered Office in Delaware:
c/o Capitol Registered Agents LLC 1209 Orange Street Wilmington, Delaware 19801
8. Registered Agent in Delaware:
Capitol Registered Agents LLC
9. Foreign Qualification:
The Company is qualified to do business as a foreign corporation in the State of Texas. The Company is not qualified to do business as a foreign corporation in any other jurisdiction. Based on the nature and scope of the Company's operations, the Company does not believe that qualification in any other jurisdiction is required.
10. Good Standing:
The Company is in good standing in the State of Delaware and the State of Texas as of the date hereof. Certificates of good standing from each such jurisdiction have been made available to Parent in the Data Room.
11. Subsidiaries:
None. The Company does not own, directly or indirectly, any equity interest in any other Person, including any corporation, limited liability company, partnership, joint venture, or other entity. The Company is not a participant in any joint venture or partnership arrangement.
SCHEDULE 3.2
CAPITALIZATION
Section (a) — Authorized and Outstanding Capital Stock
The authorized and outstanding capital stock of the Company as of the date hereof is as follows:
Authorized Capital Stock:
(i) 15,000,000 shares of Common Stock, par value $0.001 per share (the "Common Stock"); and
(ii) 5,000,000 shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock").
All 5,000,000 authorized shares of Preferred Stock were originally designated as Series A Preferred Stock pursuant to the Company's Amended and Restated Certificate of Incorporation, as amended. All issued and outstanding shares of Series A Preferred Stock were converted into shares of Common Stock in accordance with the terms of the Amended and Restated Certificate of Incorporation, and no shares of Preferred Stock remain issued or outstanding as of the date hereof. The conversion was effected in connection with the Series A financing round and subsequent corporate actions by the Board of Directors.
Outstanding Shares:
On a fully diluted, as-exercised basis, 10,000,000 shares of Common Stock are outstanding. This figure includes shares issuable upon exercise of outstanding stock options under the Company's 2019 Equity Incentive Plan, as described in Section (c) below.
All outstanding shares of Common Stock have been duly authorized, validly issued, and are fully paid and nonassessable. No shares of Common Stock are held in treasury by the Company.
Section (b) — Stockholder Table (Fully Diluted)
The following table sets forth all holders of Common Stock of the Company on a fully diluted, as-exercised basis as of the date hereof:
A detailed schedule listing each individual angel investor and option holder within the aggregate 800,000-share figure has been provided separately to Parent in the Data Room (Folder 2.1.3 — Capitalization Detail). The aggregate figure includes shares held by eleven (11) angel investors who participated in seed and pre-Series A financings, as well as shares issuable upon exercise of outstanding stock options (on an as-exercised basis) held by employees and consultants of the Company under the Plan.
Section (c) — Stock Option Plan and Outstanding Options/Warrants
The Company maintains the Codelaunch Labs, Inc. 2019 Equity Incentive Plan (the "Plan"), which was adopted by the Board of Directors and approved by the stockholders of the Company in 2019. The Plan has been amended from time to time, with the most recent amendment dated January 10, 2022. Copies of the Plan and all amendments thereto have been made available to Parent in the Data Room.
Plan Summary:
(i) Total shares of Common Stock reserved for issuance under the Plan: 1,200,000 shares.
(ii) Options granted and currently outstanding (unexercised): 600,000 shares. All such outstanding options are included in the 800,000-share figure attributed to "Angel investors and option holders (aggregate)" in the Stockholder Table above, presented on a fully diluted, as-exercised basis.
(iii) Options previously exercised: 200,000 shares. The shares issued upon such exercises are also included in the aggregate figure referenced in the Stockholder Table above.
(iv) Shares available for future grants under the Plan: 400,000 shares.
All outstanding, unexercised options will be cancelled or cashed out at the Effective Time in accordance with the terms and conditions set forth in the Agreement. The treatment of each outstanding option (whether vested or unvested) at the Closing is as described in Section 2.5 of the Agreement. A schedule of all outstanding options, including the name of each holder, the number of shares subject to each option, the exercise price per share, the grant date, the vesting schedule, and the expiration date, has been provided to Parent in the Data Room (Folder 2.1.4 — Option Grant Detail).
No warrants to purchase shares of Common Stock or any other securities of the Company are outstanding as of the date hereof. No other convertible securities, phantom equity, stock appreciation rights, restricted stock units, profit interests, or other equity-linked instruments or rights to acquire equity interests in the Company are outstanding or authorized, other than the options described above.
Section (d) — Voting Agreements and Transfer Restrictions
The Company is a party to the following agreements that impose voting obligations, transfer restrictions, or other rights relating to the capital stock of the Company:
1.  Investors' Rights Agreement, dated March 15, 2020, by and among the Company, Ridgeway Ventures Fund II, LP ("Ridgeway Ventures"), Naveen Subramaniam, Elise Thornberry, and Marcus Okonkwo (collectively, the "Founders"). This agreement includes, among other things, a right of first refusal in favor of Ridgeway Ventures and the Company with respect to proposed transfers of shares by the Founders, co-sale rights in favor of Ridgeway Ventures, information rights in favor of Ridgeway Ventures (including annual and quarterly financial statements), and drag-along provisions requiring the Founders to support and vote in favor of a Deemed Liquidation Event approved by specified stockholder thresholds.
2.  Right of First Refusal and Co-Sale Agreement, dated March 15, 2020, by and among the same parties as set forth in item 1 above. This agreement provides Ridgeway Ventures and the Company with a right of first refusal on proposed transfers of Common Stock by the Founders, and provides Ridgeway Ventures with a co-sale right (tag-along right) with respect to certain proposed transfers.
3.  Voting Agreement, dated March 15, 2020, by and among the same parties as set forth in item 1 above. This agreement provides that the parties will vote their shares to elect one (1) board designee of Ridgeway Ventures to the Board of Directors of the Company, one (1) board designee of the Founders, and one (1) independent director mutually agreed upon by Ridgeway Ventures and the Founders.
Each of the foregoing agreements will terminate at the Effective Time of the Merger pursuant to their respective terms upon the consummation of the transactions contemplated by the Agreement. Copies of each agreement have been made available to Parent in the Data Room (Folder 2.2 — Stockholder Agreements).
SCHEDULE 3.3
AUTHORITY; NO CONFLICTS
The execution, delivery, and performance by the Company of the Agreement, and the consummation by the Company of the Merger and the other transactions contemplated by the Agreement, do not and will not require any consent, approval, authorization, order, or other action of, or filing with, any Person (other than the Company's stockholders and governmental authorities addressed in Schedule 3.4), except as set forth below:
1.  Stockholder Approval. The Company is required to obtain the written consent of stockholders holding a majority of the outstanding shares of Common Stock of the Company, pursuant to Section 228 of the Delaware General Corporation Law (the "DGCL"), approving the Agreement and the Merger. Such written consent will be obtained following the execution and delivery of the Agreement in accordance with Section 5.4 of the Agreement.
2.  Certificate of Merger. The Company is required to file a Certificate of Merger with the Secretary of State of the State of Delaware in accordance with Section 251 of the DGCL.
Other than as set forth above, the execution, delivery, and performance of the Agreement and the consummation of the Merger do not and will not (a) violate, conflict with, or result in a breach of any provision of the Company's Certificate of Incorporation or Bylaws, as amended, (b) violate, conflict with, result in a breach of, constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, result in the termination, modification, acceleration, or cancellation of, or require any consent or approval under, any Material Contract or other agreement, instrument, order, judgment, or decree to which the Company is a party or by which the Company or any of its properties or assets is bound, except as disclosed in Schedule 3.7(f) with respect to the change-of-control provision in the Master Subscription Agreement with Vantage Systems Group, LLC, or (c) result in the creation or imposition of any Lien upon any property or asset of the Company.
SCHEDULE 3.4
GOVERNMENTAL APPROVALS
The following governmental consents, approvals, orders, authorizations, registrations, declarations, or filings are required in connection with the execution, delivery, and performance by the Company of the Agreement and the consummation of the Merger:
1.  Certificate of Merger. The filing of a Certificate of Merger with the Secretary of State of the State of Delaware pursuant to Section 251 of the DGCL.
Hart-Scott-Rodino Act. The aggregate merger consideration payable in connection with the Merger is below the applicable filing thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), as adjusted. Accordingly, no premerger notification filing under the HSR Act is required in connection with the transactions contemplated by the Agreement.
No other governmental consents, approvals, orders, authorizations, registrations, declarations, or filings with or from any federal, state, local, or foreign governmental authority or regulatory body are required in connection with the execution, delivery, and performance by the Company of the Agreement or the consummation of the Merger or the other transactions contemplated thereby.
SCHEDULE 3.5
FINANCIAL STATEMENTS
The Company has delivered or made available to Parent the following financial statements of the Company (collectively, the "Financial Statements"):
1.  Audited Financial Statements. Audited financial statements of the Company for the fiscal years ended December 31, 2021 and December 31, 2022, consisting of audited balance sheets as of such dates and the related audited statements of operations, changes in stockholders' equity, and cash flows for the fiscal years then ended, together with all related notes thereto and the reports of the Company's independent registered public accounting firm, Whitmore & Shelton LLP, Austin, Texas. Copies of the audited financial statements have been made available to Parent in the Data Room (Folder 3.1 — Audited Financials).
2.  Unaudited Interim Financial Statements. Unaudited interim financial statements of the Company for the three-month period ended March 31, 2023 (the "Interim Financial Statements"), consisting of an unaudited balance sheet as of March 31, 2023 and the related unaudited statement of operations for the three-month period then ended. The Interim Financial Statements have been made available to Parent in the Data Room (Folder 3.2 — Interim Financials).
Annual Recurring Revenue. As of the date of the Agreement, the Company's Annual Recurring Revenue ("ARR") is approximately $4,800,000, calculated in accordance with the methodology described in the Agreement.
Exceptions and Qualifications:
(a) The Interim Financial Statements do not contain footnotes and are subject to normal year-end adjustments, none of which are individually or in the aggregate expected to be material. The absence of footnotes is consistent with the Company's ordinary course practice for interim financial reporting.
(b) The Company follows accrual-basis accounting in conformity with United States generally accepted accounting principles ("GAAP"); however, the Company has not historically prepared a statement of cash flows for interim periods. A statement of cash flows for the three-month period ended March 31, 2023 was not included in the Interim Financial Statements. The Company has prepared and made available to Parent a management-prepared cash flow summary for such period in the Data Room for informational purposes.
Other than as set forth above, the Financial Statements have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods covered thereby, and present fairly, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein.
SCHEDULE 3.6
ABSENCE OF CERTAIN CHANGES
Since December 31, 2022 (the "Balance Sheet Date"), except as contemplated by the Agreement or as set forth below, the Company has conducted its business only in the ordinary course consistent with past practice, and no Material Adverse Effect has occurred.
The following items are disclosed for purposes of this Schedule 3.6:
1.  Salary Increases. Effective January 1, 2023, the Company granted salary increases to all employees of the Company in the ordinary course of business consistent with the Company's historical compensation practices. The average increase was approximately four percent (4%) of each employee's base salary, consistent with market adjustments and the Company's annual compensation review process. No employee received a salary increase in excess of six percent (6%) of such employee's prior base salary.
2.  New Customer Agreement. On February 8, 2023, the Company entered into a Master Subscription Agreement with Meridian DataWorks, Inc., an enterprise SaaS customer, with an annual contract value of approximately $175,000 and an initial term of two (2) years. This agreement was negotiated and entered into in the ordinary course of business and is included in the list of Material Contracts set forth in Schedule 3.7(a)(3).
3.  Capital Expenditures. The Company made ordinary-course capital expenditures totaling approximately $85,000 during the period from January 1, 2023 through the date hereof, consisting primarily of expenditures for development server infrastructure, including the procurement and deployment of additional cloud-based compute and storage resources to support the Company's engineering and quality assurance operations. These expenditures were within the Company's approved budget for the fiscal year 2023.
Other than as set forth above, since the Balance Sheet Date, the Company has not (a) declared, set aside, or paid any dividend or made any distribution with respect to its capital stock, (b) issued, sold, or otherwise disposed of any shares of its capital stock or any options, warrants, or other rights to acquire such shares, (c) incurred any indebtedness for borrowed money, (d) made any loan or advance to any Person, (e) sold, assigned, transferred, or otherwise disposed of any material assets, (f) entered into, amended, or terminated any Material Contract other than as described above, (g) made any change in its accounting methods, principles, or practices, or (h) agreed or committed to do any of the foregoing.
SCHEDULE 3.7
MATERIAL CONTRACTS
The following is a list of all Material Contracts (as defined in the Agreement) to which the Company is a party or by which the Company or any of its properties or assets is bound as of the date hereof. Copies of each of the agreements listed below have been made available to Parent in the Data Room (Folder 5 — Material Contracts).
(a) Customer Contracts (Contracts with Annual Recurring Revenue ≥ $100,000)
1.  Master Subscription Agreement with Vantage Systems Group, LLC, dated September 12, 2021. ARR: $320,000. The agreement provides for access to the Company's Platform on a subscription basis, with auto-renewal on an annual basis unless either party provides written notice of non-renewal at least ninety (90) days prior to the end of the then-current term. The agreement includes standard representations, warranties, indemnification obligations, and limitation of liability provisions. See also Schedule 3.7(f) regarding the change-of-control provision contained in this agreement.
2.  Enterprise License Agreement with Polaris Engineering Corp., dated January 5, 2022. ARR: $275,000. The agreement has a three-year initial term expiring on January 5, 2025, with an option to renew for successive one-year periods upon mutual written agreement. The agreement includes customized service-level commitments and data residency requirements.
3.  Master Subscription Agreement with Meridian DataWorks, Inc., dated February 8, 2023. ARR: $175,000. The agreement has a two-year initial term, with auto-renewal for successive one-year periods unless either party provides written notice of non-renewal at least sixty (60) days prior to the end of the then-current term. This agreement was entered into after the Balance Sheet Date and is also referenced in Schedule 3.6.
4.  SaaS Order Form with Hargrove Technologies, Inc., dated June 1, 2021. ARR: $150,000. The agreement auto-renews on an annual basis unless either party provides written notice of non-renewal at least sixty (60) days prior to the end of the then-current renewal term. The agreement is governed by the Company's standard terms of service, which are incorporated by reference.
5.  Enterprise License Agreement with Cascadia Financial Solutions, LP, dated April 20, 2022. ARR: $140,000. The agreement has a two-year initial term expiring on April 20, 2024. The agreement includes customized data processing addendum provisions reflecting the financial services regulatory environment in which Cascadia operates.
(b) Vendor / Service Provider Contracts
1.  Cloud Hosting Agreement with Nimbus Cloud Infrastructure, Inc., dated March 1, 2020, as renewed effective February 28, 2023 for a three-year term expiring March 1, 2026. Annual spend: approximately $380,000. The agreement provides for the Company's use of Nimbus's cloud infrastructure services, including compute, storage, and networking resources, for the hosting and delivery of the Company's Platform. The agreement contains customary service-level commitments, data security obligations, and limitation of liability provisions. The February 2023 renewal included updated pricing terms and an expanded scope of services.
2.  Office Lease. The Company's lease for its principal office at 1607 East 6th Street, Suite 300, Austin, Texas 78702, with Sixth Street Realty Partners, LP. See Schedule 3.13 (Real Property) for a detailed description of this lease.
3.  Professional Services Agreement with Kepler Analytics LLC, dated August 15, 2022. Kepler Analytics LLC provides data analytics consulting services to the Company in connection with the development and optimization of the Company's machine-learning models. The agreement provides for a monthly retainer of $8,500 and is terminable by either party upon thirty (30) days' prior written notice without penalty. All work product created by Kepler Analytics LLC under the agreement is assigned to the Company.
(c) Financing Agreements
None. The Company has no outstanding indebtedness for borrowed money, no credit facilities, no lines of credit, no promissory notes, no guarantees of the obligations of any other Person, and no other financing arrangements. The short-term loan from Naveen Subramaniam referenced in Schedule 3.15 was repaid in full in June 2020, and no amounts remain outstanding thereunder.
(d) intellectual Property Licenses (Inbound)
1.  Open-Source Software Licenses. The Company's Platform incorporates various open-source software components licensed under open-source licenses, as described in detail in Schedule 3.8(c).
2.  License Agreement with Sentinel Code Analysis GmbH, dated July 10, 2021. The agreement grants the Company a non-exclusive, non-transferable license to use Sentinel's proprietary static analysis engine for integration into the Company's automated code-review functionality. Annual license fee: $45,000, payable in advance on each anniversary of the agreement. The agreement is terminable by either party upon sixty (60) days' prior written notice. The agreement does not contain a change-of-control provision. The agreement includes standard restrictions on reverse engineering, sublicensing, and redistribution of the licensed software.
(e) Other Agreements
1.  Investors' Rights Agreement, dated March 15, 2020. See Schedule 3.2(d) for a description of this agreement.
2.  Right of First Refusal and Co-Sale Agreement, dated March 15, 2020. See Schedule 3.2(d) for a description of this agreement.
3.  Voting Agreement, dated March 15, 2020. See Schedule 3.2(d) for a description of this agreement.
4.  Engagement Letter with Ashburn Park Capital LLC, dated March 20, 2023, pursuant to which Ashburn Park Capital LLC has been engaged as the Company's exclusive financial advisor in connection with the transaction. Under the terms of the engagement letter, Ashburn Park Capital LLC is entitled to an advisory fee of $660,000 (equal to three percent (3%) of the aggregate merger consideration of $22,000,000), payable at the Closing from the Company's or the selling stockholders' portion of the merger consideration proceeds. The engagement letter also provides for reimbursement of Ashburn Park Capital LLC's reasonable out-of-pocket expenses, subject to a cap of $25,000 without prior written approval. See also Schedule 3.17 (Brokers and Finders).
(f) Change-of-Control Provisions
The Master Subscription Agreement with Vantage Systems Group, LLC (listed as item (a)(1) above) contains a provision (Section 12.3 thereof) that permits Vantage Systems Group, LLC to terminate the agreement upon sixty (60) days' prior written notice following a "Change of Control" of the Company (as defined therein). A "Change of Control" is defined in the Vantage agreement to include, among other things, a merger, consolidation, or similar transaction in which the Company's stockholders immediately prior to such transaction hold less than fifty percent (50%) of the voting power of the surviving entity immediately following such transaction. The Merger would constitute a Change of Control under the Vantage agreement.
The Company intends to seek a consent or waiver from Vantage Systems Group, LLC with respect to the Change of Control resulting from the Merger prior to the Closing. The Company has initiated preliminary discussions with Vantage regarding such consent, and management believes such consent will be obtained in due course.
No other Material Contract to which the Company is a party contains any change-of-control provision, acceleration clause, termination right, or other provision that would be triggered by, or that would require any consent or notice in connection with, the consummation of the Merger or the other transactions contemplated by the Agreement.
SCHEDULE 3.8
INTELLECTUAL PROPERTY
(a) Owned intellectual Property — Registrations and Applications
The following is a list of all registered intellectual property and pending applications for intellectual property owned by the Company as of the date hereof:
1.  U.S. Trademark Registration
Mark: CODELAUNCH (word mark) Registration No.: 6,345,210 Registration Date: April 12, 2022 International Class: 042 (Software as a Service — software development tools) Status: Active; Section 8 affidavit not yet due Owner: Codelaunch Labs, Inc.
2.  U.S. Trademark Application
Mark: CODELAUNCH PIPELINE (word mark) Application No.: 97/654,321 Filing Date: October 3, 2022 International Class: 042 (Software as a Service — software development tools) Status: Pending; the application was published for opposition in the Official Gazette on April 25, 2023. The thirty (30)-day opposition period has expired, and no opposition was filed. The application is awaiting issuance of a Notice of Allowance. Owner/Applicant: Codelaunch Labs, Inc.
3.  U.S. Patent Application
Title: "Method and System for Automated CI/CD Pipeline Orchestration Using Machine-Learning-Based Dependency Resolution"
Application No.: 17/892,456 Filing Date: August 22, 2022 Application Type: Non-provisional utility application Status: Pending; the application has been assigned to an examiner, and the Company anticipates receiving a first office action within the next six (6) to twelve (12) months Inventors: Elise Thornberry, Marcus Okonkwo Assignee: Codelaunch Labs, Inc.
4.  Domain Names
The Company owns the following domain names, all of which are registered through Ember Domain Services LLC:
•  codelaunch.io
•  codelaunchlabs.com
•  codelaunch.dev
All domain name registrations are current and in good standing.
5.  Copyrights
All source code, software documentation, user manuals, marketing materials, website content, and other copyrightable works created by or on behalf of the Company are owned by the Company. Such works were created either as "works made for hire" within the meaning of the Copyright Act (17 U.S.C. § 101) by employees acting within the scope of their employment, or were assigned to the Company pursuant to the Company's standard Proprietary Information and Inventions Assignment Agreement ("PIIA"), which has been executed by all employees and independent contractors of the Company. The Company has not registered any copyrights with the United States Copyright Office but retains common-law copyright ownership in all such works.
(b) Material Unregistered intellectual Property
In addition to the registered and applied-for intellectual property listed in Section (a) above, the Company owns the following material unregistered intellectual property:
(i) The Company's proprietary CI/CD pipeline orchestration platform (the "Platform"), including all source code (in all programming languages utilized), algorithms, data models, application programming interfaces ("APIs"), microservices architectures, configuration scripts, build scripts, deployment scripts, and all related technical documentation, design documents, and architectural specifications.
(ii) The Company's proprietary automated code-review engine, including all machine-learning models, training data sets (which consist of proprietary, anonymized code review data), inference pipelines, model weights, hyperparameters, and related technical documentation. The machine-learning models have been trained on proprietary datasets developed by the Company's engineering team and are not derived from or dependent upon any third-party proprietary datasets.
(iii) Trade secrets relating to the Company's deployment optimization algorithms, including proprietary methods for resource allocation, load balancing, and failure prediction in distributed CI/CD environments. These trade secrets are maintained through reasonable security measures, including access controls, encryption, non-disclosure agreements, and the PIIA referenced in Section (a)(5) above.
(c) Open-Source Software
The Company's Platform incorporates open-source software components licensed under the following open-source licenses:
•  MIT License
•  Apache License 2.0
•  BSD 2-Clause License ("Simplified BSD License")
•  GNU Lesser General Public License v2.1 ("LGPL v2.1")
The Company has conducted an internal audit of all open-source components used in the Platform and has prepared a comprehensive bill of materials listing all such components, their respective versions, and their applicable licenses. The open-source audit report, dated April 2023, has been made available to Parent in the Data Room (Folder 4.3.2 — Open Source Audit Report).
Exception / Risk Item — GPLv3 Component:
The Company uses a module known as "FastBuild Compiler Wrapper," which is licensed under the GNU General Public License v3.0 ("GPLv3"). The FastBuild Compiler Wrapper is a standalone tool that is invoked as a separate process within the Company's build pipeline. The module is dynamically linked and operates independently of the Company's proprietary source code; it is not statically linked to, compiled into, or otherwise combined with the Company's proprietary codebase. The Company's legal counsel at Caldwell, Raines & Fitch LLP has reviewed the Company's use of the FastBuild Compiler Wrapper and has opined that such use, given the manner of integration (i.e., dynamic linking and invocation as a standalone process), does not trigger copyleft obligations under the GPLv3 with respect to the Company's proprietary source code. Notwithstanding this opinion, this use has been disclosed for purposes of this Schedule due to the nature of the GPLv3 license and the ongoing debate in the open-source community regarding the scope of copyleft obligations in analogous contexts. The Company is prepared to replace the FastBuild Compiler Wrapper with a permissively licensed alternative if requested by Parent.
(d) Inbound Licenses
(i) License Agreement with Sentinel Code Analysis GmbH. See Schedule 3.7(d)(2) for a description of this agreement.
(ii) Standard commercial software licenses. The Company licenses certain commercial software products in the ordinary course of business, including development tools (e.g., Ashgrove Technologies coliliJ IDEA, Tidewater Solutions), productivity and collaboration software (e.g., Meridian Solutions, Crestline Software), and project management tools (e.g., Northpoint Technologies). All such licenses are standard commercial licenses obtained at market rates on commercially reasonable terms.
(e) Outbound Licenses
All customer agreements listed in Schedule 3.7(a) grant customers a non-exclusive, non-transferable, non-sublicensable subscription license to access and use the Platform during the applicable subscription term, delivered on a software-as-a-service basis. No customer has been granted a license to, or any right to access, the Company's source code. No source code escrow agreements or source code access arrangements are in effect. No customer has been granted exclusive rights, rights of first refusal, or most-favored-nation pricing provisions with respect to the Platform or any intellectual property of the Company.
(f) IP Disputes / Claims
None. As of the date hereof, there are no pending lawsuits, claims, actions, proceedings, or investigations, and, to the Company's Knowledge, no threatened lawsuits, claims, actions, proceedings, or investigations, alleging infringement, misappropriation, dilution, or other violation by the Company of any intellectual property rights of any third party. The Company has not received any demand letters, licensing inquiries, or other communications asserting or suggesting that the Company's products, services, or operations infringe, misappropriate, or otherwise violate any third-party intellectual property rights, except for the cease-and-desist letter from Axonware Solutions, Inc. described in Schedule 3.9 (Litigation), which relates to a design patent claim that the Company believes is without merit.
The Company has not asserted any claims of infringement, misappropriation, or violation against any third party with respect to the Company's intellectual property.
SCHEDULE 3.9
LITIGATION
Pending Litigation:
There are no pending lawsuits, actions, claims, arbitrations, administrative proceedings, governmental investigations, or other legal proceedings of any nature involving the Company, whether as plaintiff, defendant, or otherwise, before any court, arbitral tribunal, governmental authority, or other body.
Threatened Litigation:
On March 3, 2023, the Company received a cease-and-desist letter from Axonware Solutions, Inc., a Delaware corporation with its principal place of business in San Jose, California ("Axonware"), alleging that certain user interface ("UI") elements in the Company's automated code-review dashboard infringe upon Axonware's U.S. Design Patent No. D945,678 (the "Axonware Design Patent"). The Axonware Design Patent, entitled "Display Screen or Portion Thereof with Graphical User Interface for Code Analysis," was issued on March 15, 2022, and claims ornamental design features related to the visual layout and arrangement of elements in a code analysis dashboard.
The Company's patent counsel at Caldwell, Raines & Fitch LLP reviewed the Axonware Design Patent and the Company's automated code-review dashboard UI and prepared a written response, dated March 20, 2023, denying infringement. The response set forth the Company's position that the Company's dashboard UI is not substantially similar to the claimed design in the Axonware Design Patent, noting significant differences in the overall visual impression, layout, and specific design elements of the respective interfaces. As of the date hereof, no further correspondence has been received from Axonware or its counsel, and no lawsuit or other formal legal proceeding has been filed by Axonware against the Company.
The Company believes the claim asserted in the Axonware cease-and-desist letter is without merit and does not expect this matter to result in any material liability or disruption to the Company's business. This matter was disclosed to Parent during the due diligence process, and copies of the Axonware cease-and-desist letter and the Company's response have been made available to Parent in the Data Room (Folder 6.1 — Litigation / IP Disputes).
Judgments / Orders:
There are no outstanding judgments, orders, injunctions, decrees, stipulations, or awards of any court, arbitral tribunal, governmental authority, or other body against the Company or binding upon any of the Company's properties or assets.
SCHEDULE 3.10
TAX MATTERS
Jurisdictions in Which the Company Files Tax Returns:
(i) Federal: United States Internal Revenue Service ("IRS")
(ii) State of Delaware: Delaware Division of Revenue (franchise tax)
(iii) State of Texas: Texas Comptroller of Public Accounts (franchise tax / margin tax)
The Company does not file tax returns in any other federal, state, local, or foreign jurisdiction.
Employer Identification Number (EIN): 84-3291057
Tax Returns: The Company has timely filed (or has caused to be timely filed) all federal, state, and local income, franchise, and other tax returns required to be filed by the Company for all taxable periods through and including the fiscal year ended December 31, 2022. All such tax returns were true, correct, and complete in all material respects as of the date of filing. All Taxes shown as due on such tax returns have been timely paid in full.
Open Tax Periods:
The following tax periods remain open and subject to examination or assessment by the applicable taxing authority:
Tax periods prior to 2020 are closed under the applicable statutes of limitations.
Audits / Examinations: No audit, examination, investigation, or other proceeding by any taxing authority is currently pending or, to the Company's Knowledge, threatened with respect to any Tax or Tax Return of the Company. The Company has not received any notice of deficiency, proposed adjustment, or assessment from any taxing authority. The Company has not waived or extended, or been requested to waive or extend, any statute of limitations with respect to the assessment or collection of any Tax.
Tax Liens: There are no Tax Liens on any of the Company's properties or assets, other than statutory Liens for Taxes not yet due and payable.
Exceptions:
(a) Net Operating Loss Carryforwards. As of December 31, 2022, the Company has federal net operating loss carryforwards ("NOLs") of approximately $2,100,000. These NOLs were generated during the Company's early-stage operations in fiscal years 2019, 2020, and a portion of 2021. NOLs generated in tax years beginning after December 31, 2017 are not subject to the twenty-year carryforward limitation but are limited to eighty percent (80%) of taxable income in any given tax year under Section 172 of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017. The utilization of such NOLs may be subject to additional limitations under Section 382 of the Internal Revenue Code following the Merger, as the Merger may constitute an "ownership change" within the meaning of Section 382, which would impose an annual limitation on the Company's (or the Surviving Corporation's) ability to utilize pre-change NOLs. The Company has not conducted a formal Section 382 analysis, but a preliminary assessment has been prepared and made available in the Data Room (Folder 7.2 — Tax Analysis).
(b) Section 338 / Section 336(e) Elections. The Company has not made, and is not subject to, any election under Section 338 or Section 336(e) of the Internal Revenue Code with respect to any acquisition or disposition of assets or stock.
(c) Tax-Sharing Agreements. There are no tax-sharing agreements, tax-indemnification agreements, tax-allocation agreements, or similar arrangements to which the Company is a party or by which the Company is bound, other than commercial agreements entered into in the ordinary course of business that contain customary tax-related provisions (such as gross-up provisions or tax indemnification provisions that are ancillary to the primary commercial purpose of such agreements).
(d) Withholding. The Company has complied in all material respects with all applicable withholding and deposit requirements with respect to all amounts required to be withheld and deposited in connection with amounts paid or owed to employees, independent contractors, stockholders, and other third parties, including withholding requirements under the Internal Revenue Code and applicable state and local tax laws.
SCHEDULE 3.11
EMPLOYEE MATTERS
(a) Employees.  As of the date hereof, the Company has a total of thirty-eight (38) employees, all of whom are located in Austin, Texas or working remotely within the United States. No employees of the Company are located outside the United States.
The following table sets forth the Key Personnel of the Company:
A complete list of all employees of the Company, including their respective titles, hire dates, annual base salaries, target bonus amounts (if any), work locations, and equity holdings, has been provided to Parent in the Data Room (Folder 8.1 — Employee Census). The information contained in the employee census is current as of May 15, 2023.
All employees of the Company are employed on an at-will basis. No employees of the Company are represented by a labor union, works council, or other labor organization, and no employees are covered by or subject to any collective bargaining agreement. The Company has not experienced any labor dispute, work stoppage, strike, slowdown, or picketing, and, to the Company's Knowledge, no such actions are threatened. No representation election petition or other organizational activity is pending or, to the Company's Knowledge, threatened with respect to any employees of the Company.
In connection with the Closing, thirty-four (34) of the Company's thirty-eight (38) employees will receive offer letters from Brightfield Cloud Services Inc. or a designated Affiliate thereof ("BCS") setting forth the terms and conditions of their continued employment following the Effective Time. Four (4) employees have elected not to continue their employment with BCS following the Closing. The identities of such employees have been communicated to Parent.
(b) Employee Benefit Plans
The following is a list of all Employee Benefit Plans (as defined in the Agreement) maintained, sponsored, contributed to, or required to be contributed to by the Company for the benefit of any current or former employee, officer, director, or consultant of the Company:
1.  Codelaunch Labs, Inc. 2019 Equity Incentive Plan. See Schedule 3.2(c) for a description of this Plan.
2.  Group Health Insurance Plan. The Company sponsors a group health insurance plan through Wellpoint Group Insurance Co. providing medical, dental, and vision coverage to eligible employees and their dependents. Approximately thirty-six (36) of the Company's thirty-eight (38) employees currently participate in the plan. The Company pays approximately seventy-five percent (75%) of the premium for employee-only coverage and approximately fifty percent (50%) of the premium for dependent coverage. The plan renews annually on January 1.
3.  401(k) Retirement Plan. The Company sponsors a defined contribution 401(k) retirement savings plan administered by Cornerstone Retirement Services, Inc. The Company makes matching contributions equal to one hundred percent (100%) of each eligible employee's elective deferrals up to three percent (3%) of eligible compensation. All matching contributions vest immediately (i.e., there is no vesting schedule). The plan is intended to be qualified under Section 401(a) of the Internal Revenue Code, and the Company has received a favorable determination letter from the IRS with respect to the plan (or relies on a prototype plan that has received a favorable opinion letter).
4.  Unlimited Paid Time Off Policy. The Company maintains an unlimited paid time off ("PTO") policy for all employees. Under this policy, employees do not accrue PTO on an hourly or daily basis, and accordingly, the Company has no accrued PTO liability on its balance sheet.
The Company does not maintain or contribute to any defined benefit pension plan, retiree medical plan, deferred compensation arrangement, supplemental executive retirement plan, or multiemployer plan (as defined in Section 3(37) of ERISA). No Employee Benefit Plan provides for post-employment or post-termination benefits to any individual, except as required by COBRA or similar state law.
(c) Employment Agreements / Offer Letters
The three co-founders of the Company — Naveen Subramaniam, Elise Thornberry, and Marcus Okonkwo — each have employment agreements with the Company dated March 2020 (collectively, the "Founder Employment Agreements"). The Founder Employment Agreements include provisions regarding base salary, title, duties, non-competition (twelve (12) months post-termination), non-solicitation (twelve (12) months post-termination), confidentiality, and intellectual property assignment. The Founder Employment Agreements will be superseded at the Closing by new employment agreements between BCS and each of the three co-founders, the terms of which have been negotiated and agreed upon in connection with the Agreement.
All other employees of the Company are employed pursuant to standard offer letters issued by the Company in the ordinary course of business. No offer letter contains any guaranteed term of employment, severance entitlement, or change-of-control payment obligation.
All employees of the Company have executed the Company's standard Proprietary Information and Inventions Assignment Agreement ("PIIA"), pursuant to which each employee has assigned to the Company all right, title, and interest in and to any intellectual property created during the course of such employee's employment. Copies of all executed PIIAs have been made available in the Data Room (Folder 8.3 — PIIA Agreements).
(d) Contractor Agreements
The Company currently engages five (5) independent contractors. Four (4) of such contractors are software developers who provide engineering services on a part-time or project basis, and one (1) is a marketing consultant who provides content marketing and digital advertising services. All independent contractors are engaged pursuant to written consulting agreements that include standard provisions for intellectual property assignment, confidentiality, and indemnification. The Company believes that all independent contractors have been properly classified as independent contractors and not as employees under applicable federal and state law, including for purposes of the Internal Revenue Code, FICA, FUTA, and applicable state employment and tax laws.
(e) WARN Act / Layoffs
No layoffs, reductions in force, plant closings, or mass layoffs (as such terms are defined in the Worker Adjustment and Retraining Notification Act of 1988, as amended (the "WARN Act"), or any similar state or local law) have occurred with respect to the Company's employees at any time during the ninety (90)-day period preceding the date hereof. The Company has not implemented any early retirement or voluntary separation program during such period.
The four (4) employees who will not receive BCS offer letters and who will not continue employment with BCS following the Closing do not constitute a sufficient number of employees to trigger any notice or other obligation under the federal WARN Act or any similar state or local law. The Company's total employee count of thirty-eight (38) is below the one hundred (100)-employee threshold for WARN Act applicability.
(f) Workers' Compensation / OSHA
There are no pending workers' compensation claims involving any current or former employee of the Company. The Company has not received any citation, notice of violation, complaint, or other communication from the Occupational Safety and Health Administration ("OSHA") or any state occupational safety and health agency. No OSHA inspection or investigation of the Company's facilities or operations is pending or, to the Company's Knowledge, threatened.
SCHEDULE 3.12
INSURANCE
The Company maintains the following insurance policies as of the date hereof:
1.  Commercial General Liability Insurance
Carrier: Ironclad Mutual Insurance Co. Policy No.: IM-CGL-2022-5589 Limits: $2,000,000 per occurrence / $4,000,000 annual aggregate Deductible: $5,000 per occurrence Renewal Date: October 1 (renews annually) Named Insured: Codelaunch Labs, Inc.
2.  Technology Errors & Omissions / Cyber Liability Insurance
Carrier: Ironclad Mutual Insurance Co. Policy No.: IM-TEO-2022-3341 Limits: $3,000,000 per claim / $5,000,000 annual aggregate Retention: $10,000 per claim Renewal Date: October 1 (renews annually) Named Insured: Codelaunch Labs, Inc. Coverage includes: technology errors and omissions, data breach and privacy liability, network security liability, media liability, and crisis management/notification costs.
3.  Directors & Officers Liability Insurance
Carrier: Westbrook Indemnity Group Policy No.: WIG-DO-2023-0174 Limits: $2,000,000 per claim / $2,000,000 annual aggregate Retention: $15,000 per claim (Side B and C only; no retention for Side A) Renewal Date: January 1 (renewed January 1, 2023) Named Insured: Codelaunch Labs, Inc. Note: In connection with the Merger, the Company will bind tail coverage (an "extended reporting period" endorsement) at the Closing for a six (6)-year run-off period in accordance with Section 5.7 of the Agreement. The estimated premium for such tail coverage has been quoted at approximately $18,000.
4.  Workers' Compensation Insurance
Coverage as required by the laws of the State of Texas. The Company participates in the Texas workers' compensation system.
5.  Umbrella / Excess Liability Insurance
Carrier: Ironclad Mutual Insurance Co. Limits: $5,000,000 in excess of underlying Commercial General Liability and Technology Errors & Omissions / Cyber Liability policies Renewal Date: October 1 (renews annually) Named Insured: Codelaunch Labs, Inc.
Claims History:
No claims have been made under any of the foregoing policies during the three (3)-year period preceding the date hereof, except for the following:
In November 2022, the Company submitted a claim under its Technology Errors & Omissions / Cyber Liability policy (Policy No. IM-TEO-2022-3341) in connection with a cyber incident involving unauthorized access to a non-production test environment maintained by the Company. The investigation determined that the unauthorized access was limited to the test environment and that no customer data, personally identifiable information, or production systems were compromised. The incident was contained within forty-eight (48) hours of detection, and remediation measures were promptly implemented. The claim was resolved with no payout by the carrier, as the Company's losses did not exceed the applicable retention. A detailed incident report was prepared by the Company's engineering team and has been made available in the Data Room (Folder 9.1 — Insurance / Cyber Incident Report). See also Schedule 3.9 (Litigation) and Schedule 3.16 (Compliance with Laws; Permits).
All insurance policies listed above are in full force and effect, and all premiums due thereon have been timely paid. The Company has not received any notice of cancellation, non-renewal, or material change in coverage with respect to any such policy.
SCHEDULE 3.13
REAL PROPERTY
Owned Real Property:
The Company does not own any real property, and has never owned any real property.
Leased Real Property:
The Company is a party to the following lease for real property:
The Company is current on all rent and other payment obligations under the lease and is not in default under any provision thereof. The Landlord is not, to the Company's Knowledge, in default under the lease.
In connection with the Merger, the lease will be assigned to the Surviving Corporation (BCS DevTools Merger Sub, Inc., as the surviving entity in the Merger) by operation of law. The Company will seek the Landlord's prior written consent to such assignment in accordance with the terms of the lease. The Company has initiated discussions with Sixth Street Realty Partners, LP regarding such consent and anticipates that consent will be obtained prior to the Closing.
The Company does not lease, sublease, license, or otherwise occupy any other real property.
SCHEDULE 3.14
ENVIRONMENTAL MATTERS
None.
The Company's operations are limited exclusively to software development and the provision of software-as-a-service (SaaS) products and services. The Company does not manufacture, process, generate, store, treat, handle, transport, release, or dispose of any Hazardous Materials (as defined in the Agreement or under any applicable Environmental Law). The Company's sole leased premises (described in Schedule 3.13) are used exclusively for general office purposes.
The Company does not hold, and is not required to hold, any environmental permits, licenses, registrations, or authorizations under any applicable Environmental Law. The Company has not received any notice of violation, complaint, order, directive, claim, or request for information from any governmental authority or any other Person with respect to any actual or alleged violation of, or liability under, any Environmental Law. There are no pending or, to the Company's Knowledge, threatened environmental claims, actions, investigations, or proceedings involving or relating to the Company, its operations, or its leased premises.
SCHEDULE 3.15
RELATED PARTY TRANSACTIONS
The following transactions between the Company and any of its directors, officers, stockholders, or their respective Affiliates or family members are disclosed:
1.  Thornberry Design LLC Engagement. In 2021, the Company engaged Thornberry Design LLC, a graphic design firm based in Austin, Texas, to provide branding, visual identity, and user interface/user experience ("UI/UX") design services for the Platform. Thornberry Design LLC is wholly owned by a family member of Elise Thornberry, the Company's Co-Founder and Chief Technology Officer. The engagement was conducted at arm's-length terms and at market rates consistent with fees charged by comparable design firms in the Austin, Texas area. Total fees paid by the Company to Thornberry Design LLC during the period of the engagement were approximately $42,000. The engagement was terminated in December 2021 upon completion of the project deliverables. There are no ongoing obligations, outstanding invoices, or continuing contractual commitments between the Company and Thornberry Design LLC.
2.  Short-Term Loan from Naveen Subramaniam. In January 2020, Naveen Subramaniam, the Company's Co-Founder and Chief Executive Officer, made a short-term loan to the Company in the principal amount of $50,000 to fund the Company's working capital requirements during the period preceding the closing of the Company's Series A financing round. The loan bore interest at a rate of three percent (3%) per annum and was unsecured. The loan, together with all accrued interest thereon, was repaid in full by the Company in June 2020. No amounts remain outstanding under the loan, and the promissory note evidencing the loan has been cancelled.
Other than as set forth above, no director, officer, stockholder, employee, or Affiliate of the Company, or any family member of any of the foregoing, is a party to, or has any direct or indirect interest in, any Contract, transaction, or arrangement with the Company, or has any claim or right against the Company, other than (a) rights as a stockholder or optionholder of the Company, (b) rights under the stockholder agreements described in Schedule 3.2(d), and (c) compensation and benefits received in the ordinary course of employment as described in Schedule 3.11.
SCHEDULE 3.16
COMPLIANCE WITH LAWS; PERMITS
The Company is, and at all times during the three (3)-year period preceding the date hereof has been, in compliance in all material respects with all applicable federal, state, local, and foreign laws, statutes, rules, regulations, ordinances, orders, judgments, decrees, and directives.
Permits and Licenses.
The Company holds no material governmental permits, licenses, registrations, or authorizations other than standard business permits and licenses required for the operation of a software company in the City of Austin and the State of Texas, including a general business registration with the City of Austin and a Texas sales and use tax permit issued by the Texas Comptroller of Public Accounts. All such permits and licenses are current, valid, and in good standing.
Regulatory Status.
The Company is not subject to any industry-specific regulatory regime. Without limiting the generality of the foregoing:
(a) The Company is not a "covered entity" or "business associate" under the Health Insurance Portability and Accountability Act o