EFiled: Sep 06 2018 01:34P
`Transaction ID 62417330
`Case No. 2018-0141-JTL
`
`
`
`EXHIBIT 1
`
`EFiled: Sep 06 2018 01:34PM EDT
`Transaction ID 62417330
`Case No. 2018-0141-JTL
`
`
`
`
`
`
`
`

`

`June 15, 2016
`
`VIA FIRST CLASS MAIL AND ELECTRONIC MAIL
`
`Datum Corporation
`6009 Business Boulevard
`Sarasota, FL 34240
`Attention: Thomas Frost
`E-mail:
`tomf@datumcorporation.com
`
`Re:
`
`Closing Statements
`
`Dear Tom:
`
`Reference is made to the Asset Purchase Agreement dated March 17, 2016 (the “Purchase Agreement”)
`by and among Datum Corporation (the “Company”), Datum Technologies LLC (“Buyer”) and Thomas
`Frost (the “Shareholder”). Capitalized terms used but not defined herein shall have the meanings givento
`such terms in the Purchase Agreement.
`
`Pursuant to Section 2.5(b) of the Purchase Agreement, please find attached as Exhibit A hereto (i) a
`balance sheet of the Company as of the Closing (ii) the Working Capital of the Company as of the
`Closing and (ili) the Indebtedness of the Company immediately prior to the Closing, constituting the
`Closing Statements pursuant to Section 2.5(b)(i) of the Purchase Agreement.
`
`is a downward
`Based upon the items set forth on Exhibit A, the Post-Closing Purchase Price Adjustment
`adjustment and Buyeris entitled to receive $529,924.70 byrelease ofall funds from the Working Capital
`Escrow Fund and $129,924.70 directly from the Shareholder. Pursuant to Section 2.5(b)(ii) of the
`Purchase Agreement, the Company hasthirty (30) days after receipt of the Closing Statementsset forth
`on Exhibit A to dispute any elements of or amountsreflected in the Closing Statements.
`
`Please execute the Working Capital Certificate attached hereto as Exhibit B for delivery to the Escrow
`Agent pursuant to Section 2.5(c)(ii) of the Purchase Agreement and Section 4 of the Escrow Agreement
`dated March 17, 2016 by and among the Company, Buyer and BOKF, NA.
`
`If you have any questions regarding any ofthe foregoing, please do not hesitate to contact Mary
`Chowning at (617) 763-6125,
`
`
`+
`Sincerely,LO Lf .
`
`Alfonzo
`Technologies LLC
`
`“Rafael
`Datum
`
`CC:
`
`Goodwin Procter LLP
`Exchange Place
`Boston, MA 02109
`Attention:
`jherzog(@goodwinprocter.com and phanoian@yoodwinprocter.com
`
`

`

`Exhibit A
`
`

`

`11:01 PM
`OGN2HE
`Accrual Basis
`
`Datum Corporation
`Closing Balance Sheet - March 17, 2016
`
`ASSETS
`Current Assets
`Checking/Savings
`Insignia Bank Regular Checking
`Insignia Bank Money Market
`BMO Harris Bank Checking
`Total Checking/Savings
`Accounts Receivable
`Accounts Recaivable
`Allowance for Doubtful Accounts
`Accounts Recelvable - Other
`Total Accounts Receivable
`Total Accounts Recelvabie
`Other Current Assets
`Eart Transition Cost-current
`Total Total Inventory
`Prepaid Expenses
`Prepald insurance
`Due From - Alto Velo
`Tota) Other Current Ancets
`Total Current Assets
`Fixed Assets
`Land
`Accumulated Depreciation
`Buildings and tmprovements
`Furniture and Equipment
`Leased Assets - MTSA Clients
`Hardware Purchases
`Software Purchases
`Total Leased Assets - MTSA Clients
`Leased Equipment (Cap Lease)
`Purchases - Hardware
`Software
`Tools
`Vehicles
`Total Fixed Assets
`Other Assets
`Eari Transition Cost
`Loan Fees
`Software for Leases
`Accumulated Amortization
`Loan to Tom Frost
`Security Deposits
`Total Other Assets
`TOTAL ASSETS
`LIABILITIES & EQUITY
`Liabilities
`Current Liabilities
`Accounts Payable
`Accounts Payable
`Total Accounts Payable
`
`Datum Corporation
`Balance Sheet
`As of March 17, 2016
`
`(A)
`
`Mar 17, 16EE
`
`172,794.63
`6,037.42
`9,737.96
`
`188,570 04
`
`(874,750.80)
`2,200,722,92
`1,325,972 12
`1,325,972 12
`
`72,411.00
`283,550.48
`25,454.68
`20,195.69
`10,704.45
`412,316.30
`4,926,858.43
`
`800,000.00
`{1,542,028 90)
`825,440.74
`68,789.64
`
`212,547.66
`53,954.81
`266,502.47
`137,216.60
`1.121,677.99
`59,625.78
`13,157.54
`
`336,918.50
`2,087,300.33
`
`274,267 56
`54,173.28
`51,637 00
`(62,393.49)
`282,100.00
`2,700.00
`
`602,484.35a
`4,616,643.11=
`
`
`309,848.96
`309,848.96
`
`Page 1 of 1
`
`

`

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`

`Datum Corporation
`Cash True Up & Post Closing Activity
`
`Amount
`
`Comments
`
`Book cash balance at 3-17-16
`
`188,570
`
`See Closing Balance Sheet
`
`Cash pd to TF
`Items pd by Datum Technologies
`Amount Due From Datum Corporation
`
`(200,000)
`(39,057)
`(50,487)
`
`Check #2971 pd on 4-4-16
`Alto Velo & TF expenses pd post closing
`
`

`

`Exhibit
`
`
`
`

`

`Joint Instructions to Escrow Agent
`
`June [e], 2016
`
`BOKFinancial
`Corporate Trust Department
`5956 Sherry Lane, Suite 1201
`Dallas, TX 75225
`Attn: Kathy McQuiston
`
`SENT VIA EMAIL: kmcquiston@bokf.com
`
`Dear Ms. McQuiston:
`
`to the Escrow Agreement by and among Datum
`These instructions are given to you pursuant
`Technologies LLC, a Delaware limited liability company (“Buyer”), Datum Corporation, a Florida
`corporation (“Seller” and,
`together with Buyer, each,
`individually a “Party” and, collectively,
`the
`“Parties”), and BOKF, NA (“Escrow Agent”), dated March 17, 2016 (the “Escrow Agreement”),
`
`Subject to the terms set forth below, you are instructed to disburse to Buyerthe full amount of the Escrow
`Fund in accordance with the Payment Instructions provided by the Buyer on Exhibit A of the Escrow
`Agreement.
`
`The total amountto be disbursed to the Buyer may be sent in one paymentto the Buyer. Forclarification,
`the account to which the funds should be sentare as follows:
`
`PaymentInstructions to Buyer:
`
`Bank: Opus Bank
`ABA No.: 122239270
`A/C: Opus Bank
`A/C No.: 18301-888
`Ref: Datum Technologies LLC
`
`This document constitutes the “Working Capital Certificate” issued in accordance with Section 4 of the
`Escrow Agreement.
`
`[Remainder ofPage intentionally Left Blank]
`
`

`

`Buyer and Seiler jointly execute these instructions agreeing to the terms hereof.
`
`BUYER:
`
`SELLER:
`
`DATUM TECHNOLOGIES LLC,
`a Delaware limited liability company
`
`DATUM CORPORATION,
`
`a Florida corporation By:
`Title: Chief Executive Office Name: ThomasFrost
`
`Name: Rafael Alfdnzo
`
`By:
`
`Title: Chief Executive Officer
`
`

`

`EXHIBIT 2
`
`

`

`415 EDWARDS DRIVE
`SARASOTA, FLORIDA 34243
`
`July 29, 2016
`
`Via Electronic Mail and First Class Mail
`Datum Technologies, LLC
`6009 Business Bowlevard
`Sarasota, Florida 34240
`Attn: Rafael Alfonzo. CEO
`
`Re:
`
`Dispute Notice
`
`Dear Mr. Alfonzo:
`
`Reference is made to that certain asset purchase agreement, dated March 17, 2016, (the “Purchase Agreement”)
`by and among Datum Technologies. I.LC (the “Buyer™), Datum Corporation (the Company”) and myself(the
`“Sharcholder’). Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the
`Purchase Agreement.
`
`I received a copy of the Buyer's letter, dated June 15, 2016 (the “Letter”), whereby the Buyer delivered the
`Closing Statements pursuant to Section 2.5(b)(i) of the Purchase Agreement. As acknowledged in your email,
`dated June 20, 2016, to me. however, the Closing Statements delivered on June 15, 2016 did uf contain a
`complete copy of the Company’s Balance Sheet and such Closing Statements were provided in accordance with
`your email. As material clements of the proposed Closing Statements remained open and unsatisfied beyond the
`90-day deadline set forth in Section 2.5(b)(i). the Company and the Shareholder previously advised Buyer on or
`about June 23. 2016 that the Letter was incomplete and, as such, without recourse for the Buyer. The Company
`and the Shareholder also note that
`insofar as the Company had refused to provide the Shareholder and the
`Company with copies ofcertain books and records of the Company to which the Company and Shareholder are
`legally entitled, including, but not limited to, certain excluded assets of the Company that are identified under
`Section 2.1(b)(iv) of the Purchase Agreement which were provided to the Buyer as a courtesy at the time of
`closing ofthe transactions contemplated by the Purchase Agreement dispite the failures on the part of the Buyer
`to have its own books and records set up at the time of closing of the Purchase Agreement and the audited
`financial statements of the Buyer’s parent, Quatrefoil Capital LLC (the “LLC”), and its Subsidiaries (as defined in
`the LLC Agreement, whichincludes the Buyer) required to be delivered in accordance with Section 2.12(a) of the
`ILC Agreement(as defined herein), these withheld documents had precluded the Company and Shareholder from
`undertaking a complete and independent review of the proposed adjustments set forth in the Letter.
`
`Without waiving the foregoing objections and defenses as to timeliness and completeness of the Letter or the right
`to challenge any fact or argument raised by Buyer under the Letter, pursuant to Section 2.5 of the Purchase
`Agreement, or any other forum, the Company and Shareholder agreed to attempt, in good faith, to review the
`contents of the Letter and remit a Dispute Notice.
`in accordance with Section 2.5(b)ii) of the Purchase
`Agreement, by July 30. 2016, which is the deadline offered by the Buyer and accepted by the Companyand
`Shareholder. This communication constitutes the Dispute Notice in accordance with the Purchase Agreement.
`
`Allowance of Doubtful Accounts
`
`The Company and Shareholder dispute the increase of the allowance of doubtful accounts from $426,152 to
`$874,751 since the proposed increase is not
`in accordance with GAAP. The Company has never had an
`allowance for doubtful accounts on its financial statements and the amount of doubtful accounts agreed upon
`between the Company and Buyer at the time of the closing of the transactions contemplated by the Purchase
`
`Page |
`
`1
`
`

`

`Agreement was the subject of negotiation between the parties prior to the closing of the transaction. According to
`GAAP, the allowance for doubtful accounts is an estimate, made to reduce accounts reccivable to the value that
`will be realized. Estimates must be reasonably based using relevant information known or knowable at the time of
`issuance of the financial statements, or in this case, the execution of the Purchase Agreement. Under GAAP,
`Buyer cannot take information which was acquired after the execution of the Purchase Agreement and not
`available at the time of its execution and adjust an estimate agreed upon bythe parties at its sole discretion. In
`accordance with GAAP, an estimate is restated only when it has been made in error(¢.g.. contrary to available
`relevant information). Buyer has not provided any evidence to demonstrate that the method used by the Company
`to estimate the allowance for bad debts was an error in accordance with GAAP and as such the allowance for
`doubtful accounts must be $426,152, the amount agreed upon between the parties.
`
`Earl Transaction
`
`The Company and Shareholder dispute the addition of a current asset and a current liability in the amount of
`$72,411 and $129,422. respectively, relating to the Earl Entreprises transaction. The proposed accounting is not
`in accordance with GAAP. Buyer, contrary to GAAP, created an asset and liability based on a contractual benefit
`and obligation related to the agreement to pay certain employees over a 90 day period. The Buyer's accounting is
`not in accordance with GAAP as to the creation of an asset or ithe recording of a liability. As such, both the asset
`and theliability must be removed from the proposed working capital adjustment.
`
`Other Accruals
`
`The Companyand Shareholder dispute the creation of a liability in the amount of $87.164 related to overpayment
`for equipmentsince this line item does not meet the definition of a liability under GAAP.
`In general, GAAP
`defines a liability as a probable future sacrifice of an economic benefit, arising from a present obligation and
`resulting from past transactions. The Buyer has failed to provide any documentation supporting or showing that
`this adjustmentsatisfies the definition ofa liability in accordance with GAAP,that the customer has made a claim
`as to such adjustment, or that the customer has been made aware that such adjustment has been provided to them
`through the issuance of a statement or other written document provided to the customer by Buyer. Whileit is the
`Company's and Sharehoider’s understanding that such credit has been discussed with the customer, the customer
`has not made any claim for such amount and there is no evidence thai such a claim is probable.
`
`Notably, under Section 2.05(b)(iii) of that certain Second Amended and Restated Limited Liability Agreement
`(the “LLC Agreement”), dated March 17. 2016, of the LLC, the LLC shail not and shall restrict its Subsidiaries
`(as defined in the LLC Agreement, which includes the Buyer) from execuling. amending or modifying and
`material contract or any agreement with payments to or by the LLC or its Subsidiaries in excess of $50,000,
`individually, or in the aggregate, without prior approval of the Board (as defined in the LLC Agreement). As a
`memberof the Board, | can confirm that the Board was never presented with a claim by the customer or proposed
`modification to any agreement with the customer and, consequently, can confirm the Board never approved same.
`Consequently, this purportedliability must be removed from the proposed working capital adjustment.
`
`Based onthe foregoing, and as set forth more fully in Exhibit_A annexed hereto, the Post-Closing Purchase Price
`is an upward adjustment and the Company and Shareholderare entitled to receive $470,109.00 byrelease ofall
`funds from the Working Capital Escrow Fund and $70,109.00 directly from the Buyer.
`If Buyer, the Company
`and Shareholder cannot resolve the disputed items within thirty (30) days after the deliveryof this Dispute Notice,
`the dispute shall be submitted to the Accountants,
`
`These amountsset forth in this Dispute Notice and annexed exhibit do not include all amounts due and payable by
`Buyer to the Company and Shareholder for the Buyer’s defaults, penalties, interest and other amounts that are duc
`and payable as set forth in that certain letter, dated July 18, 2016, from Sichenzia Ross Friedman Ference LLP.
`counsel te the Company and Shareholder, to Goodwin Proctor LLP, counsel to the Buyer.
`
`Page | 2
`
`

`

`This Dispute Notice is without prejudice to anyrights, remedies, powers or privileges available to the Company
`and Shareholder under the Purchase Agreement, the LLC Agreement, or any other transaction document, or
`applicable law, all of which rights and remedies are hereby expressly reserved without further notice to the Buyer,
`all as Shareholder and the Company deem appropriate or necessary in each of their sole and absolute discretion.
`
`Please call or email Stephen A. Cohen at Sichenzia Ross Friedman Ference LLP with any questions or comments
`on the contents set forth in this Dispute Notice.
`
`Sincerely,
`
`Thomas Frost
`
`DATUM CORPORATION
`>
`
`Name: Thomas Frost
`Title: Chief Executive Officer
`
`Enclosure
`
`cc;
`
`Stephen A. Cohen, Sichenzia Ross Friedman Ference LLP
`
`Page| 3
`
`

`

`Exhibit A
`
`

`

`Datum Technologies LLC
`Working Capital Calculation, as adjusted pursuant to Dispute Notice
`July 29, 2016
`
`3/17/2016
`
`2,200,723
`(426,152)
`1,774,571
`
`283,550
`
`7,922
`20,196
`
`0 0
`
`17,506
`2,103,745
`
`309,849
`379,298
`113,122
`0
`
`130,091
`
`0 0
`
`Accounts Receivable
`Bad Debts
`
`Inventory
`Prepaid Expenses
`Prepaid Insurance
`Undeposited Funds
`Earl Transition Cost
`Prepaid Benefits
`Adjusted Current Assets
`
`Accounts Payable
`Credit Cards
`
`OtherLiabilities
`
`Earl Transition Costs
`Payroll & PTO accrual
`Other Accruals
`
`Accrued Contract Costs
`
`Customer Deposits
`17,901
`Work In Progress
`___655,257
`Adjusted currentliabilities
`1,605,518
`
`Net Working Capital
`
`Excluded Assets
`
`Prepaid Insurance
`Undeposited Funds
`Prepaid Expenses
`Additional Bad Debts
`
`Final Working Capital Adjustment
`
`498,227
`
`(20,196)
`
`(7,922)
`
`(28,118)
`
`470,109
`
`Amount to be released from Escrow to Selier
`Amountpayable by Buyerto Seller
`
`$ 400,000.00
`$ 70,109.00
`
`

`

`EXHIBIT 3
`
`

`

`“pmSICHENZIA
`Mm m‘ ROSS
`- FRIEDMAN
`FERENCE”
`
`Via Electronic Mail
`Datum Technologies, LLC
`6009 Business Boulevard
`Sarasota, Florida 34240
`Attn: Rafael Alfonzo, CEO
`
`June 23, 2016
`
`Re:
`
`Request for Additional Information for Working Capital Adjustment
`
`Dear Mr. Alfonzo:
`
`As you are aware, this firm represents Datum Corporation (the “Company”) and Thomas Frost
`(the “Shareholder”). Reference is made to that certain asset purchase agreement, dated March 17, 2016,
`(the “Purchase Agreement”) by and among Datum Technologies, LLC (the “Buyer”), the Company and
`the Shareholder. Capitalized terms not otherwise defined herein shall have the same meaning asset forth
`in the Purchase Agreement.
`
`The Shareholder has received a copy of your letter, dated June 15, 2016 (the “Letter”), whereby
`the Buyer delivered the Closing Statements pursuant to Section 2.5(b)(i) of the Purchase Agreement. As
`acknowledged in your email dated June 20, 2016, however, the Closing Statements delivered on June 15,
`2016 did not contain a complete copy of the Company’s Balance Sheet.
`In addition, your letter did not
`contain a statement of the Indebtedness of the Company immediately prior to the Closing as required in
`accordance with Section 2.5(b)(i)(C), which foregoing deficiencies have not been cured to date. Finally,
`the Closing Statements contain a number of adjustments that were not reflected in the Estimated
`Statements provided by the Company at Closing. As material elements of the proposed Closing
`Statements remain open and unsatisfied beyond the 90-day deadline set forth in Section 2.5(b)(i), the
`Company and the Shareholder deem the letter delivered incomplete and, as such, without recourse for
`Buyer.
`In particular,
`the Company and the Shareholder note that, with respect to the purported
`adjustments, the material deficiencies, together with the lack of any supporting detail for the proposed
`Closing Statements, preclude the Company and the Shareholder from undertaking any meaningful and
`independent review such that the Company and Shareholder could timely remit a Dispute Notice, if
`necessary, if the letter was complete and timely.
`
`Without waiving any objections as to the timeliness and completeness of the Letter or any claim
`or defense that the Buyer’s contractua! right to remit the Letter pursuant to Section 2.5 had expired on
`June 15, 2016, all and any rights being expressly reserved, in good faith the Company and Shareholder
`will
`review the purported adjustments. To that end, the Company and Shareholder request that Buyer
`provide the following:(i) a complete statement of the Indebtedness of the Company immediately prior to
`the Closing as required in accordance with Section 2.5(b)(i)(C), (ii) responses to the initial information
`request set forth on Schedule A annexed hereto and (iii) notwithstanding the request set forth in
`subsection (ii) above, full access to the books and records of the Buyer, the personnel of, and work papers
`prepared by, Buyer, Buyer’s accountants and/or other representatives relating to the Closing Statements
`and to suchhistorical financial information of the Company that was used in computingall of the line
`items referred to in the Closing Statements. Of course, such access should be scheduled with reasonable
`notice so as to avoid interfering with the normal business operations of Buyer. The foregoing requests
`will allow the Company and Shareholder to independently review and verify the accuracy and
`completeness of the Closing Statements and address any other issues that the Company and the
`Shareholder deem appropriate for purposes of preparing a Dispute Notice, if any, in accordance with
`Section 2.5(b)(ii), including but not limited to, the scope of items for which Buyer made adjustments and
`Buyer’s compliance with GAAPin preparing the Closing Statements.
`
`61 Broadway | New York, NY | 10006
`T (212) 930 9700 | F (212) 930 9725 | www.srff.com
`
`

`

`Subject to same non-waiverand reservation ofrights, the Company and Shareholder request that
`Buyer produce the requested documents and provide access to inspect the books and records of Buyer
`(collectively, the “Letter Detail”) within thirty (30) days, or as soon as practicable to Buyer (with
`reasonable written notice to the Company and Shareholder), whichever is later.
`Furthermore,
`the
`Company and Shareholder hereby request an additional forty-five (45) days from receipt of the Letter
`Detail by the Company and Shareholderto provide a Dispute Notice,if any.
`
`On a related note, it has come to our attention that, on June 22, 2016, you indicated to the
`Buyer’s board ofdirectors that the Buyer anticipates receiving $500,000.00 from the Shareholder in or
`around August 2016. For the reasons set forth above, this contention is both unsubstantiated and
`premature. Further, as Shareholder also is a director of the Buyer, we would encourage youto adviseall
`of the directors that your referenceto this line item should not be construed to be an obligation on the part
`of Shareholder to pay Buyer this or any other sum; rather, the line item reflects a demand madeby the
`Buyer for an adjustment, which will be reviewed and considered by the Company and Shareholder.
`In
`this regard, the parties can direct necessary time and resources only to the Letter, Letter Detail, and
`Dispute Notice, if any.
`
`Please call or email us with any questions.
`
`Sincerely,
`
`Stephen A. Cohen
`
`(Za
`
`ACKNOWLEDGED AND ACCEPTED ON BEHALF OF DATUM TECHNOLOGIES, LLC
`
`Name:
`Title:
`
`ce:
`
`Encl.
`
`Datum Corporation
`Thomas Frost
`Jon Herzog, Goodwin Proctor LLP
`Peter Hanoian, Goodwin Proctor LLP
`
`

`

`Schedule A
`
`Reconciliation of Estimated balance to Final balance identifying each item resulting in a net change in
`Accounts Receivable of approximately $16,000.
`Reconciliation of Final balance to the Accounts Receivable Detailed Aging Trial Balance or other report
`identifying the outstanding balance by customer, by invoice, by length of time outstanding.
`Accounts Receivable Detailed Aging Trial Balance or other report identifying the outstanding balance by
`customer, by invoice, by length oftime outstanding as of 3/17/2016, 3/31/2016, 4/30/2016, 5/31/2016, and
`6/15/2016.
`Post-transaction closing journal entries posted by Buyer to correct opening balance of Accounts
`Receivable, along with supporting documentation.
`Reconciliation of Estimated balance to Final balance identifying each item resulting in a net change in
`Allowance For Bad Debts of approximately $449,000;
`Accounting schedules and supporting workpapers, spreadsheets, calculations, analysis or other documents
`supporting, establishing the basis, or estimation that, the Buyer’s determination that the Allowance For Bad
`Debts balance should be $875,000 at 3/17/2016.
`Post-transaction closing journal entries posted by Buyer to correct opening balance of Allowance For Bad
`Debts, along with supporting documentation.
`Schedule identifying the write-off of outstanding invoices or account balances made post-closing through
`6/15/2016.
`Reconciliation of Estimated balance to Final balance identifying each item resulting in a net change in
`Inventory of approximately $107,000.
`. Reconciliation of Final balance to the Inventory report identifying inventory by item description, quantity,
`price per unit and extended cost.
`. Post-transaction closing journal entries posted by Buyer to correct opening balance of Inventory, along with
`supporting documentation.
`. Schedule identifying the write-off or write down of specific inventory items made post-closing through
`6/15/2016.
`. Reconciliation of Estimated balance to Final balance identifying each item resulting in a net change in
`Credit Cards liability of approximately $107,000.
`. Schedule of credit card balances as of 3/17/2015 along with credit card statements or other supporting
`documentation.
`. Post-transaction closing journal entries posted by Buyer to correct opening balance of Credit Cards, along
`with supporting documentation.
`. Schedule of Earl Transition — Short-Term and Long-Term, Assets and Liabilities: for both Estimated and
`Final, which sets forth the accounting transactions, calculations or other details for the items that make-up
`the respective account balances at the respective dates,
`including cash payments, accounts payable
`transaction entries, journal entries, with supporting documentation such as vendor invoices, computations,
`etc.; and documentation supporting the classification of the item as long-term or short-term.
`. Post-transaction closing journal entries posted by Buyerto correct opening balance of the above referenced
`accounts, along with supporting documentation.
`. Schedule showing the calculation for accrued payroll and PTO as of 3/17/2016 along with supporting
`documentation.
`Copy of the company’s PTO policy that wasin effect pre-closing.
`Post-transaction closing journal entries posted by Buyerto correct opening balance of the above referenced
`accounts, along with supporting documentation.
`Schedule of Other Accruals which sets forth the accounting transactions, calculations or other details for
`the items that make-up the account balance including cash payments, accounts payable transaction entries,
`journal entries, with supporting documentation such as vendor invoices, computations, etc.
`. Post-transaction closing journal entries posted by Buyerto correct opening balance of the abovereferenced
`accounts, along with supporting documentation.
`. Trial balance as of March 17, 2016.
`. Balance Sheet at March 17, 2016 and Income Statementfor the year-to-date period then ended.
`. Financial statements for the two most recent annual periods.
`. Accounting due diligence reports provided by third party CPA firm or other financial advisor.
`
`19.
`20.
`
`21.
`
`

`

`EXHIBIT 4
`
`

`

`[
`
`\
`
`G O O DW 1 N
`
`Jordan D. Weiss
`
`+1212 459.7227
`jweiss@goodwinprocter.com
`
`Goodwin Procter LLP
`
`Counselors at Law
`The New York Times Building
`620 Eighth Avenue
`New York, NY 10018
`T: 212.813.8800
`F: 212.355.3333
`
`June 30, 2016
`
`Stephen A. Cohen
`Sichenzia, Ross, Friedman and Ference LLP
`61 Broadway
`New York, NY 10006
`
`Re:
`
`June 23, 2016 Request for Additional Information for Working Capital
`Adjustment
`
`Dear Mr. Cohen,
`
`We represent Datum Technologies LLC (“Buyer”) and we write in response to your June 23,
`2016 Request for Additional Information for Working Capital Adjustment (the “Letter”).!
`Although stylized as a request, your Letter seems in fact to set forth the legal position of
`Shareholder and the Company (together “Company”) that because a single page of Buyer’s
`Closing Statements was inadvertently not transmitted to the Company until the mistake was
`realized only five days later, that the Companyis relieved from all Working Capital obligations
`under the APA, even though the missing page is only of marginal relevance to Buyer’s position
`on the necessary Working Capital adjustment. Wedisagree.
`
`On June 15, 2016 Buyer transmitted to the Company its position on the necessary Working
`Capital adjustment. Although a single page of the balance sheet was inadvertently omitted from
`the June 15, 2016 transmission,
`the only information on that page that relates to Buyer’s
`Working Capital Adjustment is a breakdown of the Company’s credit card debt at Closing—the
`sum of which was in any event included in Buyer’s June 15 transmission.
`In so far, even if
`Buyer’s error was a breach of the APA—which it was not—it was an immaterial one and
`therefore does not relieve the Companyofits obligations under the APA. Tellingly, your Letter
`does not cite any authority for the contrary position.
`
`The remainder of yourletter is largely dedicated to demanding information from Buyer, which
`
`Reference is made to the March 17, 2016 Asset Purchase Agreement (the “APA”) entered into by and among
`Datum Corporation, Datum Technologies LLC (together “Buyer”) and Thomas Frost (“Seller” or “the
`Company”). Capitalized terms not defined herein derive their meaning from the APA.
`
`

`

`[4 GOODWIN
`
`Stephen A. Cohen
`June 30, 2016
`Page 2
`
`the Companyis not entitled to under the APA. You suggest that if you receive the requested
`information, the Companywill review the “purported adjustments” in “good faith”, but you also
`state that the Company is not waiving “any objections as to the timeliness and completeness of
`the June 15 Letter or any claim or defense that the Buyer’s contractual right to remit the June 15
`Letter pursuant to Section 2.5 had expired on June 15, 2016....” We find these statements to be
`irreconcilable. Moreover, we note that the Company has no right under the APA to the
`information it demands and that much ofit does not appear to even be relevant to an accounting
`analysis of Buyer’s calculation of Closing Working Capital. Nevertheless, the Company has the
`audacity to demand an extra 45 days to review that information.
`
`The Company cannot have its cake and eat it too. Buyer will not provide the Company with
`substantial information to which it has no contractual right, only so that the Company can, upon
`realizing that Buyer’s calculation is correct, revert to the argument that it nevertheless does not
`owe Buyerany adjustment because Buyer’s clerical error relieves the Companyofits obligations
`under the APA. If the Company wishesto test its legal position in Court—an expensive, and in
`our view wasteful notion—it is free to do so. On the other hand, if the Company wishesto avoid
`litigation, and engage in a good faith analysis of Buyer’s position, then the Company must make
`clear, in writing, that it waives its argument that any failure (real or perceived) of Buyer to meet
`the deadline set forth in Section 2.5 of the APA limits Buyer’s rights to a Working Capital
`Adjustment under the APA. If the Company does so, Buyer will provide the information listed
`on Annex A to this letter, and provide the Seller with an extra five days, from June 15, 2016, to
`provide Buyer with any Dispute Notice under the APA.
`
`Finally, in your Letter you claim that on June 22, 2016 Buyerindicated to the Board of Directors
`that it expected to receive $500,000 from the Shareholder around August 2016. You suggestthat
`such a statement was inappropriate and demandclarification. Setting aside whether your claim
`is accurate, we do not believe that any clarification is necessary or appropriate. Shareholder, as
`you know, has a seat on the Board.
`If Shareholder believes that Buyer’s statements are
`“unsubstantiated and premature” or has any other opinion on the subject, Shareholder is free to
`voice them in any mannerconsistent with the governing documents andhis fiduciary duties.
`
`I look forward to your prompt response, which should be returned to the undersigned.
`
`Sincerely,
`
`Gordan D. Weise
`
`Jordan D. Weiss
`
`Enc.
`
`

`

`Annex A
`
`Accounts Receivable Detailed Aging Trial Balance or other report identifying the outstanding balance by
`customerby length of time outstanding as of 3/17/2016.
`Schedule and analysis supporting the Buyer's determination of the Allowance For Bad Debts balance of
`$875,000 at 3/17/2016.
`Schedule identifying the write-off of outstanding invoices or account balances made post-closing through
`6/15/2016. None
`Inventory report identifying inventory by item description, quantity, price per unit and extended cost.
`Schedule identifying the write-off or write down of specific inventory items made post-closing through
`6/15/2016. None
`Schedule of credit card balances as of 3/17/2015 along with credit card statements or other supporting
`documentation.
`Schedule of Earl Transition - Short-Term and Long-Term, Assets and Liabilities along with details of
`supporting calculations.
`Schedule showingthe calculation for accrued payroll and PTO asof 3/17/2016.
`Copy of the company's PTO policy that was in effect pre-closing.
`Schedule of Other Accruals including calculations or other details for the items that make-up the account
`balance.
`Bal