EFTA00608160.pdf

COMPLIANCE CERTIFICATE In connection with the Series AA Preferred Stock Purchase Agreement dated as of September 16, 2013, as amended on April 28, 2014 and on July 9, 2014 (as amended, the "Agreement"), by and between Blue Talon Data Systems, Inc., a Delaware corporation (the "Company"), and the Purchasers set forth Exhibit A attached thereto (the "Purchasers"), Pratik Verma certifies that he is the duly elected and acting President of the Company, and further certifies on behalf of the Company that: (i) except as set forth on the updated Disclosure Schedule attached hereto as Exhibit A, the representations and warranties of the Company in Section 2 of the Agreement are true and correct as of the date hereof; (ii) except as set forth on the updated Disclosure Schedule attached hereto as Exhibit A, all covenants, agreements, obligations and conditions contained in the Agreement to be performed or complied with by the Company on or prior to the date hereof have been so performed or complied with. IN WITNESS WHEREOF, the undersigned has hereunto set his hand as President of the Company as of the date first written above. BLUE TALON DATA SYSTEMS, INC. By: Pratik Verma, President 1218220 v2tHN EFTA00608160  EXHIBIT A DISCLOSURE SCHEDULE In connection with that certain (i) Series AA Preferred Stock Purchase Agreement dated as of September 16, 2013, as amended on April 28, 2014 and on July 9, 2014, by and among Blue Talon Data Systems, Inc. (the "Company") and the investors listed on Exhibit A attached thereto (the "Purchase Agreement"), and (ii) Investors' Rights Agreement dated as of September 16, 2013, as amended on April 28, 2014, by and among the Company and each of the investors listed on Schedule A thereto (the "Rights Agreement"), the Company hereby delivers this Disclosure Schedule to the Company's representations and warranties given in the Purchase Agreement and the to the Company's covenants in the Rights Agreement. This Disclosure Schedule and the information and disclosures contained herein are intended only to qualify and limit the representations, warranties and covenants of the Company contained in the Purchase Agreement and the Rights Agreement, as applicable, and shall not be deemed to expand in any way the scope or effect of any of such representations, warranties or covenants. The section numbers in this Disclosure Schedule correspond to the section numbers in the Purchase Agreement or Rights Agreement as indicated; provided, however, that any information disclosed herein under any section number shall be deemed to be disclosed and incorporated in any other section of the Purchase Agreement or Rights Agreement, as applicable, where such disclosure would be appropriate and reasonably apparent. Disclosure of any information or document herein is not a statement or admission that it is material or required to be disclosed herein. References to any document do not purport to be complete and are qualified in their entirety by the document itself. Capitalized terms used but not defined herein shall have the same meanings given them in the Purchase Agreement. Purchase Agreement 2.2(a) Total Authorized Shares: Common Stock 17.142.857 Series AA Preferred Stock 7.142.857 Outstanding Fully diluted Percent% Issued/Reserved: Common Stock 6.899.663 6.899.663 55.73% Series AA Preferred Stock 2.380.952 2.380.952 19.23% 2013 Stock Plan (3.860.000 reserved) Options Outstanding 1.876.050 1.876.050 15.15% Options Committed for Issuance 0 0.00% Available for Issuance 1.224.287 9.89% TOTAL: 11.156.665 12.380.952 100.00% I 2 I K220 c-2/1-IN EFTA00608161 2.2(b) There are 1,876,050 options to purchase shares outstanding, 171,428 shares of Common Stock issued under the Stock Plan and 1,224,287 shares of Common Stock remain availabale under the Stock Plan. Employment Agreement between Eric Tilenius and the Company dated June 21, 2014, as amended ("Eric's Employment Agreement"). 2.2(c) Eric's Employment Agreement. Notice of Stock Option Grant (Early Exercise) dated February 7, 2014 between Eric Tilenius and the Company. Early Exercise Stock Purchase Agreement (Under the 2013 Stock Plan) dated February 27, 2014 between the Company and Eric Tilenius ("Eric's Early Exercise Agreement"). 2.2(d) Eric's Employment Agreement. 2.6 The Company will file a Form D with the SEC with regards to the shares of Series AA preferred stock issued under the Series AA Preferred Stock Purchase Agreement, as amended, following the subsequent closing(s). 2.8 The UHG Agreement (as defined below). The Lilly Agreement (as defined below). Blue Talon — "Proof of Concept" Evaluation Agreement between the Company and IMS Health, Incorporated, dated July 14, 2014. BlueTalon name and logo is a trademark of the Company. Notice of Allowance issued January 21, 2014 by the USPTO for the mark BlueTalon (registration number 86-004,800). 2.10(a) Master Services Agreement between the AgeTak, Inc. and United HealthCare Services, Inc., dated May 15, 2007 and any amendments thereto and Software License Agreement between AgeTak, Inc. and Ingenix, Inc., dated December 28, 2007 and any amendments thereto (collectively, the "UHG Agreement"). Commercial Unmodified Software License Agreement between the AgeTak, Inc. and Eli Lilly, dated December 31 2012 and any amendments thereto (the "Lilly Agreement"). Agreement between the AgeTak, Inc. and DB Research Pvt. Ltd., dated Januaryl, 2011 and any amendments thereto. 2. 1218220 v2/1-1N EFTA00608162  Standard Multi-Tenant Office Lease (Gross) between the Company and White & Less Investments, L.P. dated December 13, 2013 for the premises at 541 Jeferson Avenue, Suite 202, Redwood City, San Mateo 94063. Employment offer letters with employees of the Company that are at-will. 2.10(b) Full Recourse Promissory Note in the principal amount of $99,999.95 dated February 27, 2014 issued by Eric Tilenius to the Company ("Eric's Note") and Stock Pledge Agreement dated February 27, 2014 with respect to 588,235 shares of Common Stock ("Eric's Pledge Agreement") entered into in connection with Eric's Early Exercise Agreement. 2.11(a) Eric's Note and Eric's Pledge Agreement. 2.11(b) Prerna Verma and Rakesh Khanduja are the two directors of DB Research. Pratik Verma and Prerna Verma also have a membership interest in AgeTak Holdings, LLC. Eric's Note. 2.14 See Attachment A hereto for financial statements of the Company as at May 31, 2014 and for the periods set forth therein. Legal fees in connection with services provided by Cooley LLP related to the amendments of the Transaction Documents and investment by the Purchasers in subsequent Closings. AgeTak, Inc. issued warrants to Mark Tibbles and Scott Schwefel in 2006 that have not been exercised. Rights Agreement 5.7 The Company hired Eric Tilenius as Chief Executive Officer on January 21, 2014 and the stockholders elected Eric Tilenius as Director (holding the CEO Director seat) of the Company on January 21, 2014, and Pratik Verma remained the President of the Company and the stockholders elected Pratik Verma as Director (holding the Common Stock seat) at such time. Also at such time, the stockholders elected Scott Barclay as Director (holding the independent seat) of the Company. The Company has not appointed an Executive Chairman. 12 18220 v2/HN EFTA00608163  Attachment A Blue Talon 132 PIA Balance Sheet 06107014 AS Of nay 31. 2014 Accrual Inas Jan 31 14 Feb 2614 M 31.14 let 30.14 nest 31 14 ASSETS Current Asian ChonInglashqs 10300 Cash IWO Wets Eger. Catecken4S1 T 572193 51377.47 79.091.81 04.600.71 1631275 10020 Weds Fargo Seenn .4782 110034703 605.42159 71040685 55169037 47134909 ICOZ1D Cenci Card Checking .. 0358 9001 57 9.00177 900200 1500148 10.033 73 Ten 10000 Cash 1.075007053 946.00083 79358281 652377.56 49766217 TelalChenastlansts 1.075.07053 94600083 79158281 652377.56 49766217 Othe. Cunenl Ansel; ism Prepild Enteases 1.18159 1.07418 421277 7.45136 63x95 14100- Security Droolas 9.00130 900130 9.00130 500130 9.00130 Telal Other Cunha Assets 10.18288 10.175.48 11.264.07 16.45266 1863125 Taal Oaten Assets 1.04525142 956.07631 811.84688 66483622 516.49362 flied Antes 15000- Need Assele 15100 Furniture and Miens 000 141780 1417.80 3.41780 3.41730 15199 Furniture and Salton - AD 000 000 .11192 .17063 15300 Cempulor Equipmen1 000 1.785.36 1.78516 573427 1815.12 15399 CempulorEquipmanl. AD 000 000 .4059 9518 .258-46 Total 15000- Fired bent 000 526111 5.15227 193697 102031$ Total Find Assets 000 520116 515227 193197 10.80316 Other Anal, '000. 0104( Assets 16100 Intangible Assets 206200 205200 205200 2.05200 2.16240 Total 16030 CICher Assets 2.062110 205200 205200 2.05200 Toni Olni Assets 266200 2.05200 2.05200 205200 205200 TOTAL ASSETS 1.08710042 963331.47 815061.15 670821.09 529.349.40 LIASILMIS 8101/eTT Current Inbilints Accounts Payable 20000 ACCOLIIIIS Payable 32621 50 40924 27 24 69155 7.02650 SO 3S7 CO Ten nenunls Panne 32621 50 40924.27 24.69155 7.02150 SO 3S7 CO Cita Ca101. 22100 Credit Cads Prank Cr odilCard 8140 2 383 62 243162 1513942 11.741.98 843623 Tent 22500 Credit Cards 138362 243162 3-63942 11.741.98 843623 Telal Cred4 Cards 2 383 62 243162 158142 11.741,98 813623 Other Current Llebffitles 23003- Expenster Clettung 000 000 000 249484 1113S) 21310 netted !sprees 000 000 000 131000 1.34910 Telal Other Curren Liabilillos 0110 000 000 184184 323230 Ton, Cuneet LLI00.0ee 3413012 43.35989 2620297 2261232 6228359 Tend LLI00.0ee 433012 43.35989 2620297 2261232 6226359 [guile 30000 Capital Sunk 30100 Capital Contributed 301001 Legal Fen-Fnancing 48.2/186 4325386 6825186 -tunes .77.16136 Tela1 30100 Capin ContrIbund 18.233.86 6825386 6425186 -6025186 .17.16336 30200 Cease, Sink 8385966 8185966 8185566 8185566 83059.66 30300- Preferred Sion 303061 - Series AA Preferred 1.499.99)90 1.499.99990 1.499.99090 1.490993.90 1.499.939 93 Pap 1014 EFTA00608164  Jan 21 14 F4025.14 Yv21. 14 Apr 30.14 Nay31.14 Tool 30300 Prelerted Slack 1483933$0 199803890 1.49293090 1.422993.90 1.49.292092 Tom 30000 Capnal Slack 1515105 70 1515505 70 151550570 151560520 1.50657620 31000 9404e0 Earnings .286.41228 .28041228 .280.41228 .2(45.41228 .25641225 264 Income .17451612 40722184 .45542524 •56490&.55 .15120&.11 4404 1040 106257530 91957150 70376115 657.205217 46203341 TOTAL LIABILITIES 610U112 LOST201312 1161.331A1 81 S1.10 520.340410 Pan2sI24 EFTA00608165  EqueTolon 333 Pli Profil & Loss by Month-Tolal 114.102.1.1. 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Amentencn yaw ['mot<iuun E genie 0.1* 0R 60.111 .1221 2162E 423 3,4 TS. 620:0 drain log • ...Man°, 0.1* 0R 60* 4221 116,24 a$01 4)))) 14.n Eiparmei *MO Tsars 41024 Swot Lewin's 0* 0R 01# °SIN 000 • 4.5)50 Inn IWO Taws OCO 0 Of OCO 1.799 040 TV000Y0 One C.v., OM 0R 01# 101360 000 +50100 kw got fftenie 010 0R 60.1 14670 21624 I...4T *MO/et ware la* N,O It* -10.166 1 ‘510:"... He Oxon. 494111.11 .110.20.40 .114411131 .010211.01 •niarre Pop 4 Of al EFTA00608167  Blue Talon 3:32 PM Statement of Cash Flows-Current Month 06/1012014 May 2014 May 14 OPERATING ACTIVITIES Net Income -181.215.56 Adjustments to reconcile Net Income to net cash provided by operations: 13000 Prepaid Expenses -2.378.59 20000 . Accounts Payable 43.330.50 22500 . Credit Cards:Pratik Credit Card - 8460 -3.105.69 23005 . Expensify Clearing -551.54 Net cash provided by Operating Activities -143.920.88 INVESTING ACTIVITIES 15000 . Fixed Assets:15199 Furniture and Fixtures - AD 56.96 15000 - Fixed Assets:15300 Computer Equipment -2.080.85 15000 - Fixed Assets:15399 • Computer Equipment- AD 159.28 Net cash provided by Investing Activities 1.864.61 FINANCING ACTIVITIES 30000 Capital Stock:30100 . Capital Contributed:30100.2 Legal Fees-Financing 8.929.50 Net cash provided by Financing Activities 8.929.50 Net cash increase for period -154.714.99 Cash at beginning of period 652.377.56 Cash at end of period 497.66237 Page 5 of 24 EFTA00608168 Blue Talon Profit & Loss by Class-Current Month May 2014 001-GA 002-SALES Ordinary Income:Expense Expense 60000 . Operating Expenses 60100 • Advertising & Marketing 60170 . Events & Sponsorship 0.00 0.00 Total 60100 . Advertising & Marketing 0.00 0.00 61000 • Compensation 61100 . Salaries 61100-1 • Salaries Reg 5.865.39 17.500.00 61100-3 . Officers Salaries 19.583.34 12.500.00 Total 61100 • Salaries 25.448.73 30.000.00 61400 . Benefits 61410 • Health Care 3,296.00 0.00 61440 • Other Benefits 4.00 0.00 Total 61400 • Benefits 3,300.00 0.00 61500 . Payroll Taxes 61510 • FICANIED 2,903.07 1338.76 61520 • FUTA 42.00 0.00 61530 • State 245.00 0.00 Total 61500 • Payroll Taxes 3,190.07 1338.76 Total 61000 . Compensation 31,938.80 31338.76 62000 • T &E 62110 . Airfare 745.00 540.00 62120 Ground Transportation 0.00 447.59 62130 . Fuel - Mileage 0.00 11.47 62310 . Meals - Internal 0.00 392.61 62320 . Meals & Ent - External 0.00 106.77 Total 62000 . T & E 745.00 1,498.44 63000 • Consulting 63100 . Consulting fees 15.000.00 0.00 Total 63000 . Consulting 15,000.00 0.00 64000 • Recruiting & Relocation 64100 . Recruiter Fees 30.000.00 0.00 Total 64000 . Recruiting & Relocation 30.000.00 0.00 Page 6 of 24 EFTA00608169  001-GA 002-SALES 65000 . General & Admin Fees 65010 • Legal Fees 65010-1 • Legal Fees- General 15,389.00 0.00 Total 65010 . Legal Fees 15,389.00 0.00 65020 • Insurance 65020-1 • General Insurance 107.41 0.00 65020.2 • Workers Compensation 129.40 0.00 Total 65020 . Insurance 236.81 0.00 65050 • Payroll Fees 175.84 0.00 65100 • Finance & Admin 65110 HR 729.17 0.00 65120. Accounting 1,020.83 0.00 Total 65100 . Finance & Admin 1,750.00 0.00 65210 • Computer Equipment -Hardware 660.32 0.00 65220 • Computer Equipment - Software 1/72.00 0.00 65320 • Tech Subscriptions 6.313.41 0.00 65420 • Office Expenses 3,676.25 0.00 65430 • Office Supplies 167.19 0.00 65440 • Printing & Reproduction 277.95 0.00 65500 • Rent 4,500.00 0.00 65510 • Facilities Expense 0.00 0.00 65540 • Telephone & Fax 20.00 0.00 65550 • Internet 202.23 0.00 65915 • Licenses & Fees 1.512.40 0.00 Total 65000 • General & Admin Fees 36.653.40 0.00 Total 60000. Operating Expenses 114.337.20 32.837.20 Total Expense 114.337.20 32,837.20 Net Ordinary Income -114.337.20 -32,837.20 Other Income/Expense Other Income 81000. Other Income 81100 . Interest Income 44.36 0.00 Total 81000 . Other Income 44.36 0.00 Total Other Income 44.36 0.00 Other Expense Page 7 of 24 EFTA00608170  001•GA 002•SALES 82000 . Depreciation & Amortization 82100 Depredation Expense 216.24 0.00 Total 82000 . Depredation & Amortization 216.24 0.00 Total Other Expense 216.24 0.00 Net Other Income -171.88 0.00 Net Income 414.509.08 .32,837.20 Page 8 of 24 EFTA00608171 Blue Talon Profit & Loss by Class-Current Month May 2014 003-PARTNER SALES 004-MARKETING Ordinary Incometxpense Expense 60000 Operating Expenses 60100 • Advertising & Marketing 60170 . Events & Sponsorship 0.00 5.115.00 Total 60100 . Advertising & Marketing 0.00 5.115.00 61000 • Compensation 61100 . Salaries 61100-1 • Salaries Reg 12300.00 0.00 61100-3. Officers Salaries 0.00 0.00 Total 61100 • Salaries 12300.00 0.00 61400 . Benefits 61410 • Health Care 0.00 0.00 61440 • Other Benefits 0.00 0.00 Total 61400 • Benefits 0.00 0.00 61500 . Payroll Taxes 61510 • FICANIED 956.26 0.00 61520 • FUTA 0.00 0.00 61530 • State 0.00 0.00 Total 61500 • Payroll Taxes 956.26 0.00 Total 61000 . Compensation 13,456.26 0.00 62000 • T &E 62110 . Airfare 0.00 0.00 62120 - Ground Transportation 0.00 0.00 62130 . Fuel - Mileage 0.00 0.00 62310 . Meals - Internal 0.00 0.00 62320 . Meals & Ent - External 0.00 0.00 Total 62000 . T & E 0.00 0.00 63000 • Consulting 63100 . Consulting fees 0.00 0.00 Total 63000 . Consulting 0.00 0.00 64000 • Recruiting & Relocation 64100 . Recruiter Fees 0.00 0.00 Total 64000 . Recruiting & Relocation 0.00 0.00 Page 9 of 24 EFTA00608172  003-PARTNER SALES 004-MARKETING 65000 . General & Admin Fees 65010 • Legal Fees 65010-1 • Legal Fees- General 0.00 0.00 Total 65010 . Legal Fees 0.00 0.00 65020 • Insurance 65020.1 • General Insurance 0.00 0.00 65020.2 . Workers Compensation 0.00 0.00 Total 65020 . Insurance 0.00 0.00 65050 • Payroll Fees 0.00 0.00 65100 • Finance & Admin 65110 . HR 0.00 0.00 65120 • Accounting 0.00 0.00 Total 65100 . Finance & Admin 0.00 0.00 65210 . Computer Equipment -Hardware 0.00 150.08 65220 • Computer Equipment - Software 0.00 0.00 65320 • Tech Subscriptions 0.00 0.00 65420 • Office Expenses 0.00 0.00 65430 • Office Supplies 0.00 0.00 65440 • Printing & Reproduction 0.00 0.00 65500 • Rent 0.00 0.00 65510 • Facilities Expense 0.00 0.00 65540 • Telephone & Fax 0.00 0.00 65550 • Internet 0.00 0.00 65915 • Licenses & Fees 0.00 0.00 Total 65000 • General & Admin Fees 0.00 150.08 Total 60000 . Operating Expenses 13.456.26 5,265.08 Total Expense 13.456.26 5,265.08 Net Ordinary Income -13.456.26 -5,265.08 Other Income/Expense Other Income 81000. Other Income 81100 • Interest Income 0.00 0.00 Total 81000 • Other Income 0.00 0.00 Total Other Income 0.00 0.00 Other Expense Page 10 of 24 EFTA00608173  003-PARTNER SALES 004-MARKETING 82000 . Depreciation & Amortization 82100 . Depreciation Expense 0.00 0.00 Total 82000 . Depreciation & Amortization 0.00 0.00 Total Other Expense 0.00 0.00 Net Other Income 0.00 0.00 Net Income -13,456.26 -5,265.08 Page 11 of 24 EFTA00608174 Blue Talon 3:32 PM Profit & Loss by Class-Current Month 06/1012014 May 2014 Accrual Basis 008-TECH OPS 009-RD TOTAL Ordinary Income:Expense Expense 60000 Operating Expenses 60100 • Advertising & Marketing 60170 . Events & Sponsorship 0.00 0.00 5.115.00 Total 60100 . Advertising & Marketing 0.00 0.00 5.115.00 61000 • Compensation 61100 . Salaries 61100-1 • Salaries Reg 12.500O0 0.00 48.365.39 61100-3. Officers Salaries 0.00 0.00 32.08134 Total 61100 • Salaries 12.500.00 0.00 80.448.73 61400 . Benefits 61410 • Health Care 0.00 0.00 3.296.00 61440 • Other Benefits 0.00 0.00 4.00 Total 61400 • Benefits 0.00 0.00 1300.00 61500 . Payroll Taxes 61510 • FICANIED 956.26 0.00 6.154.35 61520 • FUTA 14.31 0.00 56.31 61530 • State 83.46 0.00 328.46 Total 61500 • Payroll Taxes 1.054.03 0.00 6.53912 Total 61000 . Compensation 13.554.03 0.00 90.287.85 62000 • T & E 62110 . Airfare 0.00 0.00 1.285.00 62120 - Ground Transportation 0.00 0.00 447.59 62130 . Fuel - Mileage 0.00 0.00 11.47 62310 . Meals - Internal 0.00 0.00 392.61 62320 . Meals & Ent - External 0.00 0.00 106.77 Total 62000 . T & E 0.00 0.00 2.24144 63000 • Consulting 63100 . Consulting fees 0.00 0.00 15.000.00 Total 63000 . Consulting 0.00 0.00 15.000.00 64000 • Recruiting & Relocation 64100 . Recruiter Fees 0.00 0.00 3O000.00 Total 64000 . Recruiting & Relocation 0.00 0.00 3O000.00 Page 12 of 24 EFTA00608175  008-TECH OPS 009-RD TOTAL 65000 . General & Admin Fees 65010 • Legal Fees 65010.1 • Legal Fees• General 0.00 0.00 15.389.00 Total 65010 . Legal Fees 0.00 0.00 15.38900 65020 • Insurance 65020-1 • General Insurance 0.00 0.00 107.41 65020.2 • Workers Compensation 0.00 0.00 129.40 Total 65020 . Insurance 0.00 0.00 236.81 65050 • Payroll Fees 0.00 0.00 175.84 65100 • Finance & Admin 65110 . HR 0.00 0.00 729.17 65120 • Accounting 0.00 0.00 1.02O83 Total 65100 . Finance & Admin 0.00 0.00 1.75O00 65210 • Computer Equipment -Hardware 0.00 0.00 810.40 65220 • Computer Equipment - Software 873.00 54.95 1699.95 65320 • Tech Subscriptions 0.00 0.00 6.31141 65420 • Office Expenses 528.19 0.00 4.20444 65430 • Office Supplies 0.00 0.00 167.19 65440 • Printing & Reproduction 0.00 0.00 277.95 65500 • Rent 0.00 0.00 4.50O00 65510 • Facilities Expense 28.69 0.00 28.69 65540 • Telephone & Fax 0.00 109.08 129.08 65550 • Internet 0.00 0.00 202.23 65915 • Licenses & Fees 0.00 0.00 1.512.40 Total 65000 • General & Admin Fees 1.429.88 164.03 38.397.39 Total 60000 . Operating Expenses 14.983.91 164.03 181.04168 Total Expense 14983.91 164.03 181.04168 Net Ordinary Income -14.983.91 164.03 181.043.68 Other Income/Expense Other Income 81000. Other Income 81100 • Interest Income 0.00 0.00 44.36 Total 81000 • Other Income 0.00 0.00 44.36 Total Other Income 0.00 0.00 44.36 Other Expense Page 13 of 24 EFTA00608176  008-TECH OPS 009-RD TOTAL 82000 . Depreciation & Amortization 82100 Depreciation Expense 0.00 0.00 216.24 Total 82000 . Depreciation & Amortization