Project Romulus Discussion Materials for the Special Committee of the Board of Directors RMG Networks Holding Corporation August 1, 2018 Member FINRA SIPC
DISCLAIMER Project Romulus This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “Materials”), are provided solely for the information of the Special Committee of the Board of Directors (the “Committee”) of RMG Networks Holding Corporation (“Romulus” or the “Company”) by Cassel Salpeter & Co., LLC (“CS”) in connection with the Committee’s Board’s consideration of a potential merger (the “Merger”) involving the Company and New RMG Networks Holding Corporation (“New Romulus”), a company recently formed by Hale Capital Partners, LP (“Hercules”). This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with CS in connection therewith. The Materials are for discussion purposes only and may not be relied upon by any person or entity for any purpose without CS’s express prior written consent. The Materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Committee, the Board of Directors of the Company (the “Board”), the Company, or CS takes any responsibility for the use of the Materials by persons other than the Committee. The Materials are provided on a confidential basis solely for the information of the Committee and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without CS’s express prior written consent. The Materials necessarily are based on financial, economic, market, tax and other conditions as in effect on, and the information available to CS as of, the date of the Materials. Although subsequent developments may affect the contents of the Materials, CS has not undertaken, and is under no obligation, to update, revise or reaffirm the Materials. The Materials are not intended to provide the sole basis for evaluation of the Merger and do not purport to contain all information that may be required. The Materials do not address the underlying business decision of the Committee, the Board, the Company, or any other party to proceed with or effect the Merger. The Materials do not constitute any opinion, nor do the Materials constitute a recommendation to the Committee, the Board, the Company, any security holder of the Company, or any other person as to how to vote or act with respect to any matter relating to the Merger or whether to buy or sell any assets or securities of any company. CS’s only opinion will be the opinion, if any, that is actually delivered to the Committee / Board in connection with the Merger. The preparation of the Materials was a complex process involving quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaptation and application of these methods to the unique facts and circumstances presented and, therefore, is not readily susceptible to partial analysis or summary description. Furthermore, CS did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, the analyses contained in the Materials must be considered as a whole. Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view. 1
DISCLAIMER (continued) Project Romulus The Materials reflect judgments and assumptions with regard to general business, economic, regulatory, market, tax and financial conditions and other matters, many of which are beyond the control of the participants in the Merger. Any estimates of value contained in the Materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold. All budgets, projections, estimates, financial analyses, reports, and other information with respect to the Company and New Romulus, its assets and liabilities (contingent or not) as reflected in the Materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports, and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable. The budgets, projections, and estimates contained in the Materials may or may not be achieved and differences between projected results and those actually achieved may be material. CS has relied upon representations made by management of the Company that such budgets, projections, and estimates have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management (or, with respect to information obtained from public sources, represent reasonable estimates), and CS expresses no opinion with respect to such budgets, projections, or estimates or the assumptions on which they are based. The scope of the financial analysis contained herein is based on discussions with the Committee (including, without limitation, regarding the methodologies to be utilized), and CS does not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose. CS’s role in reviewing any information is limited solely to performing such a review as it shall deem necessary to support its own advice and analysis and shall not be on behalf of the Committee, the Board, the Company, or any other party. The amount and form of the consideration was determined pursuant to negotiations between the Company, New Romulus, and Hercules, and their respective advisors, and not pursuant to recommendations of CS. CS has assumed and relied upon the accuracy and completeness of the financial, and other information provided to or reviewed by it without (and without assuming responsibility for) independent verification of such information, makes no representation or warranty (express or implied) in respect of the accuracy or completeness of such information and has further relied upon the assurances of the Company that it is not aware of any facts or circumstances that would make such information inaccurate or misleading. In addition, CS has relied upon representations made by management of the Company, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows, or prospects of the Company or any other participant in the Merger since the date of the most recent financial statements provided to CS that would be material to our analyses, and that the final forms of any draft documents reviewed by CS will not differ in any material respect from such draft documents. 2
GLOSSARY OF TERMS Project Romulus CAG R Co m p o u n d a v e r a g e g r o w t h r a t e CS E Co m m o n s t o c k e q u i v a le n t CY Ca le n d a r y e a r EB IT Ear n i n g s b e f o r e i n t e r e s t an d t ax e s EB IT D A Ear n i n g s b e f o r e i n t e r e s t , t ax e s , d e p r e c i at i o n an d am o r t i z at i o n EPS Ear n i n g s p e r s h ar e EV En t e r p r i s e v al u e FY Fi s c a l y e a r IT M In t h e m o n e y LFY La t e s t f i s c a l y e a r LT M La t e s t t w e l v e m o n t h s MV Ma r k e t v a l u e MRQ Mo s t r e c e n t q u a r t e r NCI No n c o n t r o l l i n g in t e r e s t s OT M Ou t o f t h e m o n e y PF Pr o f o r m a SEC Se c u r i t i e s a n d E x c h a n g e C o m m i s s i o n TI C To t a l i n v e s t e d c a p i t a l TTM Tr a i l i n g t w e l v e mo n t h s VWA P Vo l u m e we i g h t e d a v e r a g e p r i c e WA C C We i g h t e d a v e r a g e c o s t o f c a p i t a l 3
Project Romulus I II III 4 APPENDIX ANALYSIS EXECUTIVE SUMMARY
MERGER OVERVIEW Project Romulus MERGER MERGER CONSIDERATION SERIES A PREFERRED MANAGEMENT Sources of information: Company management and draft Merger Agreement. This overview addresses only selected terms of the proposed Merger. It is not intended to be a complete description of all terms or details of the proposed Merger. 5 ƒ In c o n n e c t i o n w i t h M e r g e r , H a l e i n t e n d s t o s u p p l e m e n t R o m u l u s s e n i o r m a n a g e m e n t w i t h ke y m a n a g e m e n t a d d i t i o n s . ƒ Pr i o r t o t h e M e r g e r , H a l e C a p i t a l Pa r t n e r s , L P, ( “ H e r c u l e s ” ) w i l l p u r c h a s e 4 , 8 2 7 , 5 8 7 s h a r e s of N e w R om u l u s S e r i e s A p r e f e r r e d s t oc k ( t h e “S e r i e s A ”) i n e x c h a n g e f or $ 7 m i l l i on i n c a s h . ƒ Am o n g o t h e r i t e m s , t h e Se r i e s A p r o v i d e s f o r : ƒ pr e f e r r e d di v i de nd e qua l t o t he pr i m e c o r po r a t e r a t e a nno unc e d f r o m t i m e t o c o m e by th e W a l l S tr eet J o u r n a l p l u s 1 % p er a n n u m , p a y a b l e q u a r ter l y ; ƒ co n v e r s i o n i n t o co m m o n s t o ck o f N e w R o m u l u s a t $ 1 . 4 5 i n i t i a l co n v e r s i o n p r i ce p e r sh a r e ; ƒ ma n d a t o r y c o n v e r s i o n u p o n c e r t a i n c o n d i t i o n s s t a r t i n g o n e y e a r a f t e r i s s u a n c e ; a n d ƒ re p u rc h as e b y N e w R o m u lu s , at t h e o p t io n o f t h e h o ld e r o f t h e S e rie s A , b e g in n in g fiv e ye a r s a f t e r i s s u a n c e . ƒEa ch s h a r e o f co m m o n s t o ck o f R o m u l u s w i l l b e e x ch a n g e d f o r o n e s h a r e o f co m m o n s t o ck of N e w R om u l u s . ƒ We u n d e r s t a n d t h a t R M G N e t w o r ks H o l d i n g C o r p o r a t i o n (“ R o m u l u s ” o r t h e “ C o m p a n y ” ) m a y en ter i n to a n A g r eem en t a n d P l a n o f M er g er ( th e “ M er g er A g r eem en t” ) wi th N ew R M G Ne t w o r k s H o l d i n g C o r p o r a t i o n ( “ Ne w R o m u l u s ” ) p u r s u a n t t o w h i c h R o m u l u s w i l l m e r g e w i t h an d in t o N e w R o m u lu s .
MERGER OVERVIEW (continued) Project Romulus HERCULES PLAN & PROJECTIONS TAX TREATMENT GOI NG P R I VAT E TRANSACTION . CS ASSIGNMENT Sources of information: Company management and draft Merger Agreement. This overview addresses only selected terms of the proposed Merger. It is not intended to be a complete description of all terms or details of the proposed Merger. 6 ƒ Th e C o m p a n y h a s r eta i n ed C S on b e h a l f of t h e C om m i t t e e to r en d er a n o p i n i o n to th e Co m m i t t e e a s t o w h e t h e r , o n t h e d a t e o f su c h o p i n i o n , t h e M e r g e r Co n si d e r a t i o n to b e re c e iv e d b y t h e C o m p an y ’ s s t o c k h o ld e rs in t h e M e rg e r p u rs u an t t o t h e M e rg e r A g re e m e n t is fai r, fro m a fi n an c i al p o i n t o f v i e w , t o t h e Co m p an y ’ s s t o c k h o l d e rs . ƒ On A p r il 2 , 2 0 1 8 Ro m u lu s e n t e r e d in t o a n A g r e e m e n t a n d P la n o f M e r g e r w it h S C G D ig it a l, LLC a n d o t h e r p a r t i e s , p u r s u a n t t o w h i c h e a c h o f h o l d e r o f R o m u l u s c o m m o n s t o c k o t h e r th a n th o s e a s s o c i a ted wi th c er ta i n r el a ted p a r ti es wo u l d r ec ei v e $ 1 . 2 7 in c as h fo r ea c h sh a r e o f Ro m u l u s c o m m o n st o c k . ƒ Th e M er g er wi l l b e tr ea ted a s a S ec ti o n 3 5 1 a n d / o r S ec ti o n 3 6 8 ( a ) ta x - fre e re o rg an iz at io n . co n d i t i o n s . ƒHe r c ul e s pr e pa r e d a pr o po s e d s t r a t e g i c pl a n w i t h r e l a t e d f i na nc i a l pr o j e c t i o ns ( t he “H e r c u l e s P r oj e c t i on s ”) a n d p r e s e n t e d s u c h m a t e r i a l s t o R om u l u s m a n a g e m e n t a n d t h e Spe c i a l C o m m i t t e e o f t he B o a r d o f D i r e c t o r s o f R o m ul us ( t he “ C o m m i t t e e ” ) . T he He r c ul e s Pr o j e c t i o n s w e r e r e f i n e d w i t h t h e a s s i s t a n c e a n d i n p u t o f R o mu l u s ma n a g e me n t b e f o r e th ey wer e p r o v i d ed to C a sse l S a l p e te r & C o . ( “ C S ” ) .
FINANCIAL OVERVIEW Project Romulus ($ in thousands) Prelim. LTM 30-Jun-18 2H 2018 P CAGR 2015 2016 2017 2018 P 2019 P 2020 P 2021 P 2022 P 2023 P 2024 P Dec 31, '15-'17 '18 P-'24 P Products Maintenance & Content Services Professional Services SaaS $ $ $ $ 17,874 14,618 8,110 - $ $ $ $ 16,246 13,888 7,467 - $ $ $ $ 16,350 13,545 7,147 - $ $ $ $ 15,307 13,587 6,171 - $ $ $ $ 7,296 6,251 3,788 269 $ $ $ $ 13,990 12,882 6,542 269 $ $ $ $ 15,949 11,517 7,702 1,081 $ $ $ $ 19,054 10,365 9,144 3,188 $ $ $ $ 19,374 9,329 10,606 6,425 $ $ $ $ 19,863 8,315 12,378 9,887 $ $ $ $ 20,211 7,386 14,862 13,147 $ $ $ $ 20,360 6,565 18,488 16,229 -4.4% -3.7% -6.1% na 6.5% -10.6% 18.9% 98.0% Total Revenue Gross Profit Normalized EBITDA $ $ $ 40,602 22,542 $ $ 37,601 22,121 $ $ 37,042 21,133 (1,806) $ $ $ 35,065 19,291 (3,116) $ $ $ 17,605 9,613 1,030 $ $ $ 33,684 18,336 $ $ 36,249 19,079 1,367 $ $ $ 41,751 21,351 3,001 $ $ $ 45,734 23,531 4,750 $ $ $ 50,444 26,011 6,884 $ $ $ 55,606 28,753 8,976 $ $ $ 61,642 31,738 11,543 -4.5% -3.2% -45.1% 10.6% 9.6% na (5,994) $ (1,464) $ (1,115) $ Depreciation & Amortization Capital Expenditures, net $ $ 3,756 $ 381 $ 3,147 $ 348 $ 3,074 120 $ $ 3,010 95 $ $ 1,165 365 $ $ 2,663 $ 392 $ 1,560 652 $ $ 1,260 520 $ $ 940 442 $ $ 793 374 $ $ 780 323 $ $ 780 278 NWC (Non-Cash) Debt ¹ Net Debt ¹ Pro Forma Net Debt ¹ $ $ $ (5,805) $ 400 $ (2,806) $ (4,273) $ 1,274 $ (3,868) $ (2,050) 1,250 (288) $ $ $ $ (3,889) 3,110 1,373 (1,383) $ $ $ (2,281) $ 2,065 $ (1,160) $ (1,794) $ 3,879 $ (231) $ (1,781) $ 4,360 $ (1,724) $ (1,603) $ 3,328 $ (5,072) $ (1,838) $ - $ (11,177) $ (2,447) $ - $ (19,885) $ (2,949) - (31,098) Margin Review Products GP Maintenance & Content Services GP Professional Services GP SaaS GP Gross Profit Normalized EBITDA 39.7% 84.3% 32.9% na 55.5% -14.8% 45.2% 91.0% 28.6% na 58.8% -3.9% 42.5% 88.6% 30.5% na 57.1% -4.9% 33.7% 89.3% 36.2% 73.7% 54.6% 5.9% 33.0% 88.3% 36.4% 77.0% 52.6% 3.8% 33.4% 88.6% 36.8% 76.1% 51.1% 7.2% 33.1% 89.0% 37.3% 75.6% 51.5% 10.4% 32.8% 88.4% 37.9% 75.5% 51.6% 13.6% 32.4% 89.3% 38.4% 75.4% 51.7% 16.1% 32.1% 88.6% 38.7% 75.4% 51.5% 18.7% 55.0% -8.9% 54.4% -3.3% Growth Review Products Maintenance & Content Services Professional Services SaaS Total Revenue Gross Profit Normalized EBITDA -9.1% -5.0% -7.9% na -7.4% -1.9% na 0.6% -2.5% -4.3% na -1.5% -4.5% na -6.4% 0.3% -13.7% na -5.3% -8.7% na -14.4% -4.9% -8.5% na -9.1% -13.2% na 14.0% -10.6% 17.7% 301.5% 7.6% 4.1% na 19.5% -10.0% 18.7% 194.8% 15.2% 11.9% 119.5% 1.7% -10.0% 16.0% 101.6% 9.5% 10.2% 58.3% 2.5% -10.9% 16.7% 53.9% 10.3% 10.5% 44.9% 1.7% -11.2% 20.1% 33.0% 10.2% 10.5% 30.4% 0.7% -11.1% 24.4% 23.4% 10.9% 10.4% 28.6% (1) Excludes Series A Preferred. Contains normalizing adjustments, please see full review for details. Sources of information: Romulus historical financial statements, Hercules projections, and Hercules for adjustments. 7 Hercules Projections Romulus Historical Summary Financial Data
FINANCIAL OVERVIEW Project Romulus ($ in thousands) $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $-$(2,000) $(4,000) $(6,000) $(8,000) 60.0% $70,000 58.0% $60,000 56.0% $50,000 54.0% $40,000 52.0% $30,000 50.0% $20,000 48.0% $10,000 $-46.0% 20.0% 140.0% 25.0% 20.0% 15.0% 120.0% 15.0% 10.0% 100.0% 10.0% 5.0% 80.0% 5.0% 0.0% 0.0% 60.0% -5.0% -5.0% 40.0% -10.0% -10.0% 20.0% -15.0% -20.0% -15.0% 0.0% Contains normalizing adjustments, please see full review for details. Historical amounts are from Romulus historical financial statements and projected amounts are from Hercules projections. Sources of information: Romulus historical financial statements, Hercules projections, and Hercules for adjustments. 8 Normalized EBITDA Margin Normalized EBITDA Growth Total Revenue Growth SaaS Professional Services Maintenance & Content Services Products Normalized EBITDA Gross Profit Margin Total Revenue Selected Normalized Financial Graphs
ROMULUS TRADING HISTORY Project Romulus $3.00 30,000,000 140 120 $2.50 25,000,000 100 $2.00 20,000,000 80 $1.50 15,000,000 60 $1.00 10,000,000 40 $0.50 5,000,000 20 $-- 0 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Selected companies equals market capitalization weighted index of LLNW, AGYS, HLIT, DAKT, BCOV, PAR, RTHM, AVID, LYTS, BTN, CLRO, QUMU, and SOFO. Sources of information: S&P Capital IQ. 9 1 Week 1 Month 3 Months Post Annoc. Start Date 25-Jul-182-Jul-1830-Apr-184-Apr-18 # Trading Days5216583 1 Year 31-Jul-17 253 High$1.47$1.47$1.59$1.23 Mean$1.45$1.31$1.08$1.19 Median$1.45$1.33$1.07$1.20 Low$1.42$1.12$0.81$1.12 Start$1.18$1.19$1.14$1.19 End Volume Weighted Mean$1.17$1.19$1.20$1.19 Volume Mean150,592202,785637,64470,189 Volume Median59,570167,360130,10035,630 $2.70 $1.46 $1.24 $0.78 $2.70 $1.18 $1.37 279,512 46,435 Closing Price & Trading Volume Statistics Romulus -56.3% Selected Companies 7.7% Russell 3000 Index 13.6% S&P 500 13.5% Volume Closing Price Relative Trading Performance Closing Price & Trading Volume Trading History (Jul 31, 2017 to Jul 31, 2018)
ROMULUS TRADING HISTORY Project Romulus 35.0% 40.0% 35.0% 30.0% 30.0% 25.0% 25.0% 20.0% 20.0% 15.0% 15.0% 10.0% 10.0% 5.0% 5.0% 2.0% 0.0% 0.0% 1.2% 1.2% 120.0% 50.0% 45.0% 100.0% 40.0% 00.0% 35.0% 80.0% 30.0% 60.0% 25.0% 20.0% 40.0% 15.0% 10.0% 20.0% 5.0% 0.0% 2.5% 0.0% 2.5% 0.4% 0.2% Sources of information: S&P Capital IQ. 10 47.0% 17.4% 15.3% 9.8% 4.2% 3.0% 9 6.4% 96.8% 9 7.0% 1 49.4% 4 5.1% 27.7% 1 2.4% Cumulative Volume at each Price Volume as % of Price Range 32.4% 21.3% 17.0% 11.9% 7.5% 5.1% 4.7% 34.0% 22.9% 13.0% 13.0% 8.3% 4.3% Trading Volume as % of Total Volume Closing Price as % of Price Range Volume and Trading Size (Jul 31, 2017 to Jul 31, 2018)
PRO FORMA OWNERSHIP OVERVIEW Project Romulus ($ and securities in thousands, except per security) Pro Forma Securities Outstanding at Close Capitalization Amount Common + Options Series A Converts ¹ Common Options Securities % Series A Securities % Hercules $ 7,000 - - - 4,828 4,828 0.0% 30.2% Romulus Common Stockholders na 11,156 - 11,156 100.0% - 11,156 69.8% Romulus Optionholders ² na - - - 0.0% - - 0.0% 11,156 - 11,156 4,828 15,984 100.0% 100.0% (1) In addition to holders' option to convert and share in percentage of equity value, after one year the Series A contains certain mandatory conversion features. (2) Romulus has 524 options are outstanding at an mean exercise price of $9.63, with 375 options currently exercisable at mean exercise price of $11.85. Sources of Information: Romulus management and the Merger Agreement. 11 New Romulus Pro Forma Ownership
FINANCIAL ANALYSES SUMMARY Project Romulus ($ and securities in thousands, except per security) (1) Based upon and assumes pro forma net debt of ($1,383) as of June 30, 2018. (2) Based upon and assumes pro forma securities outstanding of 15,984, which includes assumed conversion of Series A preferred stock. Please reference details of each analysis for assumptions and sources of information. No particular weight was given to any analysis relative to any other analysis. 12 Selected Range Discounted Cash Flow WACC21.0% - 19.0% Perpetual Growth Rate 1.5% - 3.5% NOL Tax Rate22.5% - 27.5% Selected Companies LTM Revenue (6/30)0.65x - 0.85x 2018 P Revenue0.65x - 0.85x 2019 P Revenue0.60x - 0.80x Selected Transactions LTM Revenue (6/30)0.65x - 0.85x Implied Enterprise Value Reference Range (Rounded) Implied Equity Value Reference Range ¹ Implied Merger Consideration Reference Range ² Illustrative Multiples based on Implied Enterprise Value Reference Range Discounted Cash Flow Selected Companies Selected Transactions Illustrative DCF with NOL $24,030 - $30,901 $24,000 - $30,900 $25,383 - $32,283 $1.59 - $2.02 $22,792 - $29,805 $21,894 - $28,631 $21,749 - $28,999 $22,100 - $29,100 $23,483 - $30,483 $1.47 - $1.91 $22,792 - $29,805 $22,800 - $29,800 $24,183 - $31,183 $1.51 - $1.95 $24,030 - $30,901 $4,475 - $6,062 $28,500 - $37,000 $29,883 - $38,383 $1.87 - $2.40 LTM Revenue (6/30) 2018 P Revenue 2019 P Revenue 2020 P Revenue LTM EBITDA (6/30) 2018 P EBITDA 2019 P EBITDA 2020 P EBITDA 0.68x - 0.88x 0.71x - 0.92x 0.66x - 0.85x 0.57x - 0.74x na - na na - na 17.6x - 22.6x 8.0x - 10.3x 0.63x - 0.83x 0.66x - 0.86x 0.61x - 0.80x 0.53x - 0.70x na - na na - na 16.2x - 21.3x 7.4x - 9.7x 0.65x - 0.85x 0.68x - 0.88x 0.63x - 0.82x 0.55x - 0.71x na - na na - na 16.7x - 21.8x 7.6x - 9.9x 0.81x - 1.06x 0.85x - 1.10x 0.79x - 1.02x 0.68x - 0.89x na - na na - na 20.8x - 27.1x 9.5x - 12.3x New Romulus Implied Value Reference Range
FINANCIAL ANALYSES SUMMARY Project Romulus ($ and securities in thousands, except per security) Discounted Cash Flow Selected Companies Selected Transactions Illustrative DCF with NOL $3.00 $2.50 $2.00 1 Year VWAP Closing Price per Romulus Share $1.37 $1.50 Going Private Offer Price per Share $1.27 $1.00 $0.50 $-$1.59 - $2.02 $1.47 - $1.91 $1.51 - $1.95 $1.51 - $1.95 WACC 21.0% - 19.0% Perpetual Growth Rate 1.5% - 3.5% LTM Revenue (6/30) 0.65x - 0.85x 2018 P Revenue 0.65x - 0.85x 2019 P Revenue 0.60x - 0.80x LTM Revenue (6/30) 0.65x - 0.85x WACC 21.0% - 19.0% Perpetual Growth Rate 1.5% - 3.5% NOL Tax Rate 22.5% - 27.5% Based upon and assumes pro forma net debt of ($1,383) as of June 30, 2018. Based upon and assumes pro forma securities outstanding of 15,984, which includes assumed conversion of Series A preferred stock. Please reference details of each analysis for assumptions and sources of information. No particular weight was given to any analysis relative to any other analysis. 13 Implied Merger Consideration Reference Range
Project Romulus I II III 14 APPENDIX ANALYSIS EXECUTIVE SUMMARY
DISCOUNTED CASH FLOW ANALYSIS Project Romulus ($ in thousands) Statistic Selected Range Enterprise Value WACC Terminal L-T Growth Rate 21.0% - 19.0% 1.5% - 3.5% $ 24,030 - $ 30,901 Implied Value Reference Range (Rounded) $ 24,000 - $ 30,900 plus: Illustrative NOL Benefit 22.5% - 27.5% $ 4,475 - $ 6,062 Illustrative Implied Value Reference Range with NOL (Rounded) $ 28,500 - $ 37,000 Illustrative Multiples based on Implied Enterprise Value Reference Range LTM Revenue (6/30) 2018 P Revenue 2019 P Revenue 2020 P Revenue LTM EBITDA (6/30) 2018 P EBITDA 2019 P EBITDA 2020 P EBITDA 0.81x 0.85x 0.79x 0.68x na na 20.8x 9.5x - - - - - - - - 1.06x 1.10x 1.02x 0.89x na na 27.1x 12.3x 15 Implied Value Reference Range
DISCOUNTED CASH FLOW ANALYSIS Project Romulus ($ in thousands) 2H 2018 P Terminal Perp. Growth 2019 P 2020 P 2021 P 2022 P 2023 P 2024 P Dec 31, ` ` ` Total Revenue Cost of Revenue Gross Profit Operating Expenses ¹ Normalized EBITDA Depreciation & Amortization plus: Restructuring & Transaction Expenses ² Normalized Unlevered Pre-Tax Income Income Tax @ 25.0% ³ Normalized Unlevered After-Tax Income plus: Depreciation & Amortization plus or less: Change in NWC (Non-Cash) less: Capital Expenditure Normalized Unlevered Free Cash Flows $ 17,605 7,992 $ 36,249 17,170 $ 41,751 20,400 $ 45,734 22,203 $ 50,444 24,432 $ 55,606 26,853 $ 61,642 29,904 9,613 8,583 19,079 17,712 21,351 18,351 23,531 18,781 26,011 19,127 28,753 19,776 31,738 20,195 1,030 1,165 202 1,367 1,560 431 3,001 1,260 180 4,750 940 - 6,884 793 - 8,976 780 - 11,543 780 - $ 11,832 278 - (336) - (624) - 1,561 390 3,811 953 6,091 1,523 8,197 2,049 10,764 2,691 11,554 2,888 (336) 1,165 (1,608) (365) (624) 1,560 (487) (652) 1,171 1,260 (13) (520) 2,858 940 (178) (442) 4,568 793 236 (374) 6,148 780 609 (323) 8,073 780 503 (278) 8,665 278 74 (278) $ (1,144) $ (203) $ 1,898 $ 3,178 $ 5,223 $ 7,213 $ 9,077 $ 8,739 Capitalization Rate Terminal Value 17.50% 49,938 $ Present Value @ 20.0% $ (1,093) $ (169) $ 1,318 $ 1,839 $ 2,519 $ 2,899 $ 3,040 $ 16,724 Implied Free Cash Flow Value Implied Terminal Value Implied Enterprise Value $ 10,351 16,724 38.2% 61.8% $ 27,075 (1) Excludes Depreciation & Amortization. (2) Excludes expenses assumed paid at closing. Such expenses reduce cash proceeds in the net debt calculation. (3) Based on discussions with Romulus management. Sources of information: Hercules projections. 16 Discount Rate L-T Growth Rate 1.5% 2.5% 3.5% 19.0% 20.0% 21.0% $ 28,134 $ 29,434 $ 30,901 $ 25,961 $ 27,075 $ 28,324 $ 24,030 $ 24,992 $ 26,063 Implied Enterprise Value Reference Range Implied Value Free Cash Flows and Analysis
DISCOUNTED CASH FLOW ANALYSIS Project Romulus ($ in thousands) 2H 2018 P 2019 P 2020 P 2021 P 2022 P 2023 P 2024 P 2025 P 2026 P 2027 P 2028 P Dec 31, Period Start Additions @ 80.0% Utilized Expired Period End $ 68,700 269 - - $ 68,969 499 - - $ 69,468 - (1,561) - $ 67,907 - (3,811) - $ 64,096 - (6,091) - $ 58,005 - (8,197) - $ 49,808 - (10,764) - $ 39,044 - (11,033) - $ 28,011 - (11,309) - $ 16,702 - (11,592) - $ 5,110 - (5,110) - $ 68,969 $ 69,468 $ 67,907 $ 64,096 $ 58,005 $ 49,808 $ 39,044 $ 28,011 $ 16,702 $ 5,110 $ - Normalized Unlevered Pre-Tax Income ¹ Growth % $ (336) $ (624) 85.70% $ 1,561 -350.30% $ 3,811 144.14% $ 6,091 59.84% $ 8,197 34.57% $ 10,764 31.32% $ 11,033 2.50% $ 11,309 2.50% $ 11,592 2.50% $ 11,881 2.50% NOL Utilized Tax Shield @ 25.0% ² $ $ - - $ $ - - $ $ 1,561 390 $ $ 3,811 953 $ $ 6,091 1,523 $ $ 8,197 2,049 $ $ 10,764 2,691 $ $ 11,033 2,758 $ $ 11,309 2,827 $ $ 11,592 2,898 $ $ 5,110 1,278 Time in years Present Value Factor 0.25 0.955 1.25 0.796 2.25 0.664 3.25 0.553 4.25 0.461 5.25 0.384 6.25 0.320 7.25 0.267 8.25 0.222 9.25 0.185 10.25 0.154 Present Value @ 20.0% $ - $ - $ 259 $ 527 $ 702 $ 787 $ 861 $ 735 $ 628 $ 537 $ 197 (1) 2019 P through 2024 P sourced from Hercules projections and subsequently assumed to grow at long term growth rate of 2.5%. (2) Based on discussions with Romulus management. Sources of information: Hercules projections and Romulus management. 17 Discount Rate Effective Tax Rate 22.5%25.0%27.5% 19.0% 20.0% 21.0% $ 4,960 $ 5,511 $ 6,062 $ 4,709 $ 5,233 $ 5,756 $ 4,475 $ 4,972 $ 5,469 Illustrative Implied NOL Value Reference Range Illustrative Implied Value of NOL Benefit NOL Balance Illustrative NOL Benefit Analysis
SELECTED COMPANIES ANALYSIS Project Romulus ($ in thousands) Statistic Selected Range Enterprise Value LTM Revenue (6/30) 2018 P Revenue 2019 P Revenue $ $ $ 35,065 33,684 36,249 0.65x 0.65x 0.60x - 0.85x - 0.85x - 0.80x $ $ $ 22,792 21,894 21,749 - - - $ $ $ 29,805 28,631 28,999 Implied Value Reference Range (Rounded) $ 22,100 - $ 29,100 Illustrative Multiples based on Implied Enterprise Value Reference Range LTM Revenue (6/30) 2018 P Revenue 2019 P Revenue 2020 P Revenue LTM EBITDA (6/30) 2018 P EBITDA 2019 P EBITDA 2020 P EBITDA 0.63x 0.66x 0.61x 0.53x na na 16.2x 7.4x - - - - - - - - 0.83x 0.86x 0.80x 0.70x na na 21.3x 9.7x 18 Implied Value Reference Range
SELECTED COMPANIES ANALYSIS Project Romulus - - - - - - - - - - Mean 1.15x Median 0.95x Mean 1.14x Median 0.80x 3.00x 3.00x 2.50x 2.50x .61x .35x 2.00x 2.00x .69x 1.50x 1.50x x 1.00x 1.00x .16x 1.09x 0.96x 0.50x 0.50x .63x 0.58x 0.52x .49x 0.44x 0.00x 0.00x AGYS LLNW BCOV PAR HLIT BTN AVID RTHM QUMU DAKT DAKT LYTS SOFO AGYS LLNW BCOV HLIT AVID QUMU RTHMDAKT LYTS CLRO - - - - - Mean 1.18x Median 0.99x 3.00x LLNW AGYS HLIT DAKT BCOV PAR RTHM Limelight Networks, Inc. Agilysys, Inc. Harmonic Inc. Daktronics, Inc. Brightcove Inc. PAR Technology Corporation RhythmOne plc AVID LYTS BTN CLRO QUMU SOFO Avid Technology, Inc. LSI Industries Inc. Ballantyne Strong, Inc ClearOne, Inc. Qumu Corporation Sonic Foundry, Inc. 2.50x 2.00x 1.50x 1.00x 0.50x 0.00x AGYS LLNW BCOV HLIT AVID DAKT RTHM LYTS May exclude special items, such as extraordinary and non-recurring expenses. Companies with metrics that are either not available or not meaningful are not presented in applicable chart. Market value equals price per share times number of diluted shares outstanding. Enterprise value equals market value plus debt, preferred stock, and non controlling interests, less cash. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings, S&P Capital IQ, and Hercules projections. 19 2.31x 2.14x 1.56x 1.04x 0.94x 0.51x 0.5x 0.43x Selected Companies EV / 2019 E Revenue 2 2 1 1 0 0 2 .76 x 2 .43 x 1 .74 x 1 .35 1 .22 x 0 .95 x 0 .86 x 0 .59 x 0 .52 x 0 .52 x 0.5x 0 .42 x EV / 2018 E Revenue EV / LTM Revenue Observed Multiples (as of Jul 31, 2018)
SELECTED COMPANIES ANALYSIS Project Romulus ($ in thousands) Size Size Leverage Growth Growth Growth LTM Revenue LTM EBITDA Debt & Pref. Stk. / TIC LTM Revenue Growth 2018 E Revenue Growth 2019 E Revenue Growth Selected Companies DAKT AVID HLIT LYTS RTHM PAR $ 610,530 412,833 382,275 342,033 255,073 222,401 DAKT LLNW AVID LYTS HLIT $ 29,763 22,897 20,196 19,417 10,135 AVID SOFO LYTS HLIT RTHM 47.3% 36.4% 26.4% 24.6% 19.5% RTHM HLIT LLNW 71.2% 6.7% 6.6% RTHM HLIT LLNW 49.2% 12.3% 10.1% RTHM AGYS LYTS HLIT 17.0% 12.8% 12.3% 11.5% LLNW AGYS HLIT DAKT BCOV PAR RTHM AVID LYTS BTN CLRO QUMU SOFO Limelight Networks, Inc. Agilysys, Inc. Harmonic Inc. Daktronics, Inc. Brightcove Inc. PAR Technology Corporation RhythmOne plc Avid Technology, Inc. LSI Industries Inc. Ballantyne Strong, Inc ClearOne, Inc. Qumu Corporation Sonic Foundry, Inc. BCOV DAKT LYTS AGYS 4.2% 4.1% 3.2% -0.2% BCOV CLRO 7.4% 7.0% LLNW 9.8% RTHM PAR 5,839 (1,227) QUMU 15.1% LLNW 196,618 AGYS LYTS DAKT AVID 5.8% 2.1% 0.6% -2.2% BCOV 8.0% BTN 3.0% BCOV AGYS BTN CLRO 162,436 127,360 70,548 37,415 CLRO SOFO (1,659) (1,665) SOFO AVID BTN -1.4% -1.5% -2.9% AVID DAKT 2.6% 2.3% PAR AGYS BCOV LLNW LLNW LLNW 1.4% 0.0% 0.0% 0.0% 0.0% 0.0% BTN AGYS QUMU BCOV (3,441) (7,422) (7,527) (8,987) QUMU -12.6% PAR QUMU CLRO -4.4% -6.7% -10.5% SOFO QUMU 35,488 26,287 Growth Growth Growth Profitability Profitability Profitability LYTS LLNW DAKT 30.7% 27.5% -14.2% RTHM 685.8% BCOV 296.4% LLNW LYTS AVID DAKT HLIT RTHM PAR 11.6% 5.7% 4.9% 4.9% 2.7% 2.3% -0.6% LLNW RTHM AVID AGYS HLIT 18.1% 12.1% 9.9% 9.2% 9.1% LLNW RTHM HLIT AGYS 20.5% 14.1% 11.9% 11.8% LLNW AVID 104.3% 63.5% HLIT AGYS RTHM 45.2% 44.3% 36.5% AVID -18.7% LYTS DAKT 7.0% 1.2% PAR BTN -201.2% -330.3% DAKT LLNW AVID 32.5% 24.3% 15.0% AVID DAKT BCOV 11.1% 6.4% 4.7% LYTS DAKT BCOV 5.9% 4.9% 1.3% CLRO SOFO BTN BCOV AGYS -4.4% -4.7% -4.9% -5.5% -5.8% QUMU -14.1% QUMU -28.6% May exclude special items, such as extraordinary and non-recurring expenses. Romulus estimates from Hercules projections and not analyst estimates. Companies with metrics that are either not available or not meaningful are not presented in applicable table. Mean and Median calculations exclude Romulus. Market value equals price per share times number of diluted shares outstanding. Enterprise value equals market value plus debt, preferred stock, and non controlling interests, less cash. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings, S&P Capital IQ, and Hercules projections. 20 Romulus -7.4% Romulus -3.3% Romulus 3.8% Median -0.6% Mean -1.7% Median 9.1% Mean 6.3% Median 36.5% Mean -84.4% Median 11.8% Mean 11.5% Median 63.5% Median -16.4% Mean 70.6% Mean 172.3% 2019 E EBITDA Margin 2018 E EBITDA Margin LTM EBITDA Margin 2019 E EBITDA Growth 2018 E EBITDA Growth LTM EBITDA Growth Romulus 35,558 Romulus -4.0% Romulus -9.1% Romulus (2,637) Median 3.0% Romulus 7.6% Median -0.2% Median (1,227) Median 196,618 Mean 13.4% Mean 9.5% Median 6.4% Mean 221,638 Romulus 16.8% Mean 5,871 Median 10.6% Mean 8.0% Mean 5.3% Relative Rankings (as of Jul 31, 2018)
SELECTED COMPANIES ANALYSIS Project Romulus ($ in thousands, except per security) % Above/Below 52-week Low-High Values ¹ EV as a Multiple of Stock Price (SP) Market (MV) Enterprise (EV) Revenue EBITDA Company Ticker Exchange LTM 2018 E 2019 E 2020 E LTM 2018 E 2019 E 2020 E Limelight Networks, Inc. Agilysys, Inc. LLNW AGYS NasdaqGS NasdaqGS $ $ 4.46 16.45 38.9% - 26.3% 67.9% - 2.1% $ 522,794 391,474 $ 477,224 351,708 2.43x 2.76 2.35x 2.61 2.14x 2.31 1.89x 2.01 20.8x na 13.0x nm 10.5x 19.6 7.8x 14.6 Harmonic Inc. Daktronics, Inc. HLIT DAKT NasdaqGS NasdaqGS $ $ 4.60 8.59 64.3% - 4.2% 9.4% - 20.9% 391,995 383,016 465,640 318,767 1.22 0.52 1.16 0.52 1.04 0.51 na na nm 10.7 12.7 10.6 8.7 8.0 na na Brightcove Inc. PAR Technology Corporation BCOV PAR NasdaqGS NYSE $ $ 8.55 18.68 35.7% - 20.5% 155.6% - 2.2% 310,047 300,788 282,629 299,308 1.74 1.35 1.69 na 1.56 na na na na na nm na nm na na na RhythmOne plc Avid Technology, Inc. RTHM AVID AIM NasdaqGS $ $ 2.66 5.61 31.6% - 51.7% 40.6% - 26.7% 207,575 232,826 220,623 393,945 0.86 0.95 0.58 0.96 0.50 0.94 na na nm 19.5 4.8 9.7 3.5 8.4 na na LSI Industries Inc. Ballantyne Strong, Inc LYTS BTN NasdaqGS AMEX $ $ 4.89 5.40 1.9% - 44.9% 36.7% - 21.6% 126,530 78,019 169,764 77,091 0.50 1.09 0.49 na 0.43 na na na 8.7 na 8.2 na na na na na ClearOne, Inc. Qumu Corporation CLRO QUMU NasdaqCM NasdaqCM $ $ 3.40 2.45 9.3% - 65.8% 72.5% - 25.3% 28,224 23,343 19,515 15,404 0.52 0.59 0.44 0.63 na na na na na na na na na na na na Sonic Foundry, Inc. SOFO NasdaqCM $ 2.16 7.4% - 45.5% 10,139 14,765 0.42 na na na na na na na High Mean Median Low $ 522,794 231,290 232,826 10,139 $ 477,224 238,953 282,629 14,765 2.76x 1.15 0.95 0.42 2.61x 1.14 0.80 0.44 2.31x 1.18 0.99 0.43 2.01x 1.95 1.95 1.89 20.8x 15.0 15.1 8.7 13.0x 9.8 10.1 4.8 19.6x 9.8 8.6 3.5 14.6x 11.2 11.2 7.8 Romulus NasdaqCM $ 1.18 56.9% - 56.9% $ 13,130 $ 14,347 0.40x na na na na na na na (1) Market value equals price per share times number of diluted shares outstanding. Enterprise value equals market value plus debt, preferred stock, and non controlling interests, less cash. May exclude special items, such as extraordinary and non-recurring expenses. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings, S&P Capital IQ, and Hercules projections. 21 Observed Multiples (as of Jul 31, 2018)
SELECTED TRANSACTIONS ANALYSIS Project Romulus ($ in thousands) Statistic Selected Range Enterprise Value LTM Revenue (6/30) $35,065 0.65x - 0.85x $ 22,792 - $29,805 Implied Value Reference Range (Rounded) $ 22,800 - $29,800 Illustrative Multiples based on Implied Enterprise Value Reference Range LTM Revenue (6/30) 2018 P Revenue 2019 P Revenue 2020 P Revenue LTM EBITDA (6/30) 2018 P EBITDA 2019 P EBITDA 2020 P EBITDA 0.65x 0.68x 0.63x 0.55x na na 16.7x 7.6x - - - - - - - - 0.85x 0.88x 0.82x 0.71x na na 21.8x 9.9x 22 Implied Value Reference Range
SELECTED TRANSACTIONS ANALYSIS Project Romulus - - - - - Mean 1.38x Median 0.83x 7.00x 6.55x 6.00x 5.00x 4.00x 4.20x 3.00x 3.03x 2.00x 2.19x 2.02x 2.00x 1.73x 1.53x 1.00x 1.00x 0.94x 0.88x 0.84x 0.82x 0.73x 0.71x 0.43x 0.35x 0.52x 0.34x 0.41x 0.44x 0.68x 0.46x 0.40x 0.00x Enterprise value equals total price paid (common equity value assuming 100% interest acquired) plus total debt, preferred stock, and non-controlling interests, less cash. No selected transaction or acquistion target used in this analysis is identical or directly comparable to the Merger, Romulus, or New Romulus. Sources of information: SEC Edgar Filings, Press Releases and S&P Capital IQ. 23 WebDam, Inc. / Bynder, LLC LiquidHub, Inc. / Capgemini SE (ENXTPA: CAP) Bazaarvoice, Inc. / Marlin Equity & related parties. YuMe, Inc. / RhythmOne plc (AIM:RTHM) MaxPoint Interactive, Inc. / Harland Clarke Holdings Corp. ScanScout, Inc. Buyer Platform / Taptical Ltd Rocket Fuel, Inc. / Sizmek, Inc. Blazer & Flip Flops, Inc. (aka The Experience Engine) / Lo-Q Inc GENBAND US LLC / Sonus Networks, Inc. (nka Ribbon Communications) Visable Measures Corporation / AcuityAds US Inc. United States Traffic Network LLC / GTN Limited (ASX:GTN) Sizmek Inc. (Nasdaq:SZMK) / Vector Capital ReachLocal, Inc. / Gannett Co., Inc. (NYSE:GCI) mBlox, Inc. / CLX Communications AB (OM:CLX) Daegis Inc. / Open Text Corporation (Nasdaq: OTEX) Premier Global Services, Inc. / Siris Capital Group Et. Al RAMP, Inc. Media Business / Cxense ASA (OB:CXENSE) Millennial Media, Inc. (NYSE:MM) / Oath, Inc. Planar Systems, Inc. / Leyard American Corporation Lyris, Inc. / Aurea Software, Inc. Orad Hi Tec Systems Ltd / Avid Technology, Inc. (Nasdaq:AVID) X20 Media, Inc. / Barco NV (ENXTBR:BAR) Internet Broadcasting Systems (nka:LAKANA LLC) / Nexstar Broadcasting Group, Inc. Convergent Media Systems Corp / Ballantyne Strong, Inc. (AMEX:BTN) EV / TTM Revenue Observed Multiples
Project Romulus I II III 24 APPENDIX ANALYSIS EXECUTIVE SUMMARY
APPENDIX – FINANCIAL OVERVIEW Project Romulus ($ in thousands) 6 ME Jun 30, Prelim. LTM 30-Jun-18 2H 2018 P Dec 31, 2015 2016 2017 2017 2018 2018 P 2019 P 2020 P 2021 P 2022 P 2023 P 2024 P Products Maintenance & Content Services Professional Services SaaS Total Revenue Cost of Revenue Gross Profit Operating Expenses Sales & Marketing R&D G&A Depreciation & Amortization Total Operating Expenses Normalized Operating Income (Loss) Interest (Expense) & Other Income Normalized Pre-Tax Income (Loss) Income Tax (Benefit) Normalized After-Tax Income (Loss) Loss from Discontinued Operations Normalized Net Income (Loss) $ 17,874 14,618 8,110 - $ 16,246 13,888 7,467 - $ 16,350 13,545 7,147 - $ 7,737 6,589 3,730 - $ 6,694 6,631 2,754 - $ 15,307 13,587 6,171 - $ 7,296 6,251 3,788 269 $ 13,990 12,882 6,542 269 $ 15,949 11,517 7,702 1,081 $ 19,054 10,365 9,144 3,188 $ 19,374 9,329 10,606 6,425 $ 19,863 8,315 12,378 9,887 $ 20,211 7,386 14,862 13,147 $ 20,360 6,565 18,488 16,229 40,602 18,060 37,601 15,480 37,042 15,909 18,056 7,491 16,079 7,356 35,065 15,774 17,605 7,992 33,684 15,348 36,249 17,170 41,751 20,400 45,734 22,203 50,444 24,432 55,606 26,853 61,642 29,904 22,542 22,121 21,133 10,565 8,723 19,291 9,613 18,336 19,079 21,351 23,531 26,011 28,753 31,738 9,106 3,346 16,084 3,756 8,522 2,568 12,495 3,147 8,985 2,728 11,226 3,074 4,534 1,312 5,554 1,562 4,188 1,443 5,237 1,498 8,639 2,859 10,909 3,010 3,211 1,510 3,862 1,165 7,399 2,953 9,099 2,663 7,026 3,200 7,486 1,560 7,956 3,320 7,075 1,260 8,326 3,380 7,075 940 8,612 3,440 7,075 793 8,916 3,785 7,075 780 9,260 3,860 7,075 780 32,292 26,732 26,013 12,962 12,366 25,417 9,747 22,113 19,272 19,611 19,721 19,920 20,556 20,974 (9,750) (205) (9,955) 122 (4,611) 244 (4,367) 143 (4,880) (261) (5,141) 52 (2,397) (77) (2,474) (12) (3,643) (68) (3,711) - (6,126) (252) (6,378) 64 (134) (183) (317) - (3,777) (251) (4,028) - (192) (306) (498) - 1,741 (374) 1,367 - 3,811 (362) 3,448 - 6,091 (221) 5,871 - 8,197 (124) 8,073 - 10,764 (124) 10,640 - (10,077) (1,654) (4,510) (260) (5,193) - (2,462) - (3,711) - (6,442) - (317) - (4,028) - (498) - 1,367 - 3,448 - 5,871 - 8,073 - 10,640 - $ (11,731) $ (4,770) $ (5,193) $ (2,462) $ (3,711) $ (6,442) $ (317) $ (4,028) $ (498) $ 1,367 $ 3,448 $ 5,871 $ 8,073 $ 10,640 Normalized Operating Income (Loss) plus: Depreciation & Amortization Normalized EBITDA $ (9,750) $ 3,756 (4,611) $ 3,147 (4,880) 3,074 $ (2,397) $ 1,562 (3,643) 1,498 $ (6,126) 3,010 $ (134) 1,165 $ (3,777) $ 2,663 (192) $ 1,560 1,741 1,260 $ 3,811 940 $ 6,091 793 $ 8,197 780 $ 10,764 780 $ (5,994) $ (1,464) $ (1,806) $ (835) $ (2,145) $ (3,116) $ 1,030 $ (1,115) $ 1,367 $ 3,001 $ 4,750 $ 6,884 $ 8,976 $ 11,543 Capital Expenditures, net $ 381 $ 348 $ 120 $ 52 $ 27 $ 95 365 $ 392 $ 652 $ 520 $ 442 $ 374 $ 323 $ 278 Management EBITDA less: Stock Based Compensation Normalized EBITDA $ (4,431) $ (1,563) (559) $ (905) (1,359) (447) $ (688) $ (147) (2,108) (37) $ (2,779) (337) 1,030 - (1,078) (37) 1,367 - 3,001 - 4,750 - 6,884 - 8,976 - 11,543 - $ (5,994) $ (1,464) $ (1,806) $ (835) $ (2,145) $ (3,116) $ 1,030 $ (1,115) $ 1,367 $ 3,001 $ 4,750 $ 6,884 $ 8,976 $ 11,543 Reported / Projected Net Income (Loss) plus: Restructuring & Transaction Expenses plus: Preferred Dividend Normalized Net Income (Loss) $ (11,731) $ - - (4,770) $ - - (5,193) - - $ (2,462) $ - - (5,002) 1,291 - $ (7,733) 1,291 - $ (4,868) 4,446 105 $ (9,870) $ 5,737 105 (1,350) $ 431 420 767 180 420 $ 3,028 - 420 $ 5,451 - 420 $ 7,653 - 420 $ 10,220 - 420 $ (11,731) $ (4,770) $ (5,193) $ (2,462) $ (3,711) $ (6,442) $ (317) $ (4,028) $ (498) $ 1,367 $ 3,448 $ 5,871 $ 8,073 $ 10,640 Sources of information: Romulus historical financial statements, Hercules projections, and Hercules for adjustments. 25 Hercules Projections Romulus Historical Comparative Summary Income Statements
APPENDIX – FINANCIAL OVERVIEW Project Romulus ($ in thousands) Preliminary 30-Jun-18 Assets Current Assets Cash Accounts Receivable Inventory Prepaid Assets 2015 2016 2017 2018 P 2019 P 2020 P 2021 P 2022 P 2023 P 2024 P Dec 31, $ 3,206 10,626 1,055 1,154 $ 5,142 10,381 830 762 $ 1,538 10,961 771 977 $ 1,737 9,404 792 966 $ 3,224 8,924 823 1,190 $ 4,109 10,174 848 1,190 $ 6,085 10,988 873 1,190 $ 8,400 11,862 900 1,190 $ 11,177 12,699 927 1,190 $ 19,885 13,772 955 1,190 $ 31,098 15,071 985 1,190 Total Current Assets 16,041 17,115 14,247 12,899 14,161 16,321 19,136 22,353 25,994 35,802 48,343 Property & Equipment, net Intangibles Other Assets 4,340 8,988 349 3,710 6,780 294 2,895 4,572 234 2,524 3,468 328 2,749 1,827 1,744 2,622 1,047 1,744 2,362 567 1,744 2,024 407 1,744 1,619 393 1,744 1,162 393 1,744 661 393 1,744 $ 29,718 $ 27,899 $ 21,948 $ 19,219 $ 20,481 $ 21,734 $ 23,809 $ 26,527 $ 29,750 $ 39,101 $ 51,141 Liabilities & Equity Current Liabilities Accounts Payable Accrued Expenses Deferred Revenue Other Current Liabilities Line of Credit Subordinated Debt Total Current Liabilities $ 3,080 4,236 7,507 616 400 - $ 3,231 3,392 7,327 - 1,274 - $ 2,504 2,409 7,949 - 1,250 - $ 2,048 2,793 7,986 - 1,100 2,010 $ 4,116 - 9,511 (14) 2,065 - $ 4,508 - 9,907 (14) 3,879 - $ 4,807 - 10,435 (14) 4,360 - $ 5,088 - 10,876 (14) 3,328 - $ 5,342 - 11,721 (14) - - $ 5,696 - 13,076 (14) - - $ 6,100 - 14,503 (14) - - 15,839 15,224 14,112 15,937 15,677 18,279 19,588 19,278 17,050 18,759 20,590 Deferred L-T Revenue Other L-T Liabilities 1,519 2,031 655 1,935 700 1,431 1,243 1,309 - 1,349 - 1,349 - 1,349 - 1,349 - 1,349 - 1,349 - 1,349 Total Liabilities 19,389 17,814 16,243 18,489 17,026 19,628 20,937 20,627 18,399 20,108 21,938 Equity 10,329 10,085 5,705 730 3,455 2,106 2,872 5,901 11,351 18,993 29,203 $ 29,718 $ 27,899 $ 21,948 $ 19,219 $ 20,481 $ 21,734 $ 23,809 $ 26,527 $ 29,750 $ 39,101 $ 51,141 NWC (Non-Cash) Debt (Excluding Series A) Net Debt (Excluding Series A) Total Capitalization $ $ $ $ (5,805) $ 400 $ (2,806) $ 10,729 $ (4,273) $ 1,274 $ (3,868) $ 11,359 $ (2,050) 1,250 (288) 6,955 $ $ $ $ (3,889) 3,110 1,373 3,840 $ $ $ $ (2,281) $ 2,065 $ (1,160) $ 5,520 $ (1,794) $ 3,879 $ (231) $ 5,984 $ (1,781) $ 4,360 $ (1,724) $ 7,233 $ (1,603) $ 3,328 $ (5,072) $ 9,228 $ (1,838) $ - $ (11,177) $ 11,351 $ (2,447) $ - $ (19,885) $ 18,993 $ (2,949) - (31,098) 29,203 Sources of information: Romulus historical financial statements and Hercules projections. 26 Hercules Projections Romulus Historical Comparative Summary Balance Sheets
APPENDIX – FINANCIAL OVERVIEW Project Romulus ($ in thousands) As of 30-Jun-18 Closing Adjustments Pro Forma as 30-Jun-18 Weighted Cost of Debt Rate Weighting Weighted Debt Line of Credit Subordinated Debt Debt (Excluding Series A) $ 1,100 2,010 $ - (2,010) $ 1,100 - 6.75% na 100.00% 0.00% 6.75% na 3,110 (2,010) 1,100 100.00% 6.75% less: Cash Net Debt 1,737 746 2,483 $ 1,373 $ (2,756) $ (1,383) Series A Proceeds less: Subordinated Debt Repayment less: Estimated Merger & Other Deal Expenses Paid at Closing Net Cash Available at Closing $ 7,000 (2,010) (4,244) $ 746 Sources of information: Romulus historical financial statements, Hercules projections, and Romulus management. 27 Net Debt
APPENDIX – FINANCIAL OVERVIEW Project Romulus ($ in thousands) 2018 P 2019 P 2020 P 2021 P 2022 P 2023 P 2024 P CAGR 2018 P 2019 P 2020 P 2021 P 2022 P CAGR Dec 31, Total Revenue Growth $ 55,606 10.2% $ 61,642 10.9% 10.6% 7.9% Gross Profit Growth Margin $ 28,753 10.5% 51.7% $ 31,738 10.4% 51.5% 9.6% 8.3% Operating Exp. (Excl. D&A) Growth % of Revenue $ 19,776 3.4% 35.6% $ 20,195 2.1% 32.8% 0.6% 2.2% EBITDA Growth Margin $ 8,976 30.4% 16.1% $ 11,543 28.6% 18.7% Total Revenue Variance $ (4,807) -12.5% $ (4,926) -13.6% $ (1,763) -4.2% $ (1,759) -3.8% $ (1,760) -3.4% Gross Profit Variance $ (2,110) -10.3% $ (2,969) -13.5% $ (1,815) -7.8% $ (2,080) -8.1% $ (2,078) -7.4% Operating Exp. (Excl. D&A) Variance $ 3,911 16.7% $ 6,679 27.4% $ 6,102 25.0% $ 6,313 25.2% $ 6,394 25.1% EBITDA Variance $ 1,802 61.8% $ 3,710 158.3% $ 4,288 333.2% $ 4,234 820.6% $ 4,315 168.0% (1) As previously filed with the SEC. Sources of information: Hercules projections and Romulus projections. 28 Variance $ 38,491 $ 41,175 $ 43,514 $ 47,493 $ 52,204 7.0% 5.7% 9.1% 9.9% $ 20,446 $ 22,048 $ 23,166 $ 25,611 $ 28,089 7.8% 5.1% 10.6% 9.7% 53.1% 53.5% 53.2% 53.9% 53.8% $ 23,362 $ 24,391 $ 24,453 $ 25,094 $ 25,521 4.4% 0.3% 2.6% 1.7% 60.7% 59.2% 56.2% 52.8% 48.9% $(2,917) $(2,343) $(1,287) $516 $2,569 -19.7% -45.1% -140.1% 397.9% -7.6% -5.7% -3.0% 1.1% 4.9% $ 33,684 $ 36,249 $ 41,751 $ 45,734 $ 50,444 7.6% 15.2% 9.5% 10.3% $ 18,336 $ 19,079 $ 21,351 $ 23,531 $ 26,011 4.1% 11.9% 10.2% 10.5% 54.4% 52.6% 51.1% 51.5% 51.6% $ 19,451 $ 17,712 $ 18,351 $ 18,781 $ 19,127 -8.9% 3.6% 2.3% 1.8% 57.7% 48.9% 44.0% 41.1% 37.9% $(1,115) $1,367 $3,001 $4,750 $6,884 -222.6% 119.5% 58.3% 44.9% -3.3% 3.8% 7.2% 10.4% 13.6% Romulus Projections ¹ Hercules Projections Summary Financial Projections Comparison
APPENDIX – DISCOUNTED CASH FLOW ANALYSIS Project Romulus ($ in thousands) Preliminary 30-Jun-18 Dec 31, 2015 2016 2017 2018 P 2019 P 2020 P 2021 P 2022 P 2023 P 2024 P Working Capital Assets (Non-Cash) Accounts Receivable Inventory Prepaid Assets Other Assets less: Working Capital Liabilities: Accounts Payable Accrued Expenses Deferred Revenue Other Current Liabilities Deferred L-T Revenue Other L-T Liabilities Net Working Capital (Non-Cash) NWC (Non-Cash) % of Total Revenue 10,626 1,055 1,154 349 10,381 830 762 294 10,961 771 977 234 9,404 792 966 328 8,924 823 1,190 1,744 10,174 848 1,190 1,744 10,988 873 1,190 1,744 11,862 900 1,190 1,744 12,699 927 1,190 1,744 13,772 955 1,190 1,744 15,071 985 1,190 1,744 3,080 4,236 7,507 616 1,519 2,031 3,231 3,392 7,327 - 655 1,935 2,504 2,409 7,949 - 700 1,431 2,048 2,793 7,986 - 1,243 1,309 4,116 - 9,511 (14) - 1,349 4,508 - 9,907 (14) - 1,349 4,807 - 10,435 (14) - 1,349 5,088 - 10,876 (14) - 1,349 5,342 - 11,721 (14) - 1,349 5,696 - 13,076 (14) - 1,349 6,100 - 14,503 (14) - 1,349 $ (5,805) $ (4,273) $ (2,050) $ (3,889) $ (2,281) $ (1,794) $ (1,781) $ (1,603) $ (1,838) $ (2,447) $ (2,949) -14.30% -11.36% -5.53% -11.09% -6.77% -4.95% -4.27% -3.50% -3.64% -4.40% -4.78% Change in NWC (Non-Cash) $ (1,608) $ (487) $ (13) $ (178) $ 236 $ 609 $ 503 Accounts Receivable Days Outstanding Accounts Receivable-% of Revenue Inventory Days Outstanding Inventory-% of Revenue Prepaid Assets-% of Opex Other Assets-% of Revenue 96 26.2% 9 2.6% 3.6% 0.9% 101 27.6% 8 2.2% 2.9% 0.8% 108 29.6% 8 2.1% 3.8% 0.6% 98 26.8% 8 2.3% 3.8% 0.9% 97 26.5% 9 2.4% 5.4% na 102 28.1% 9 2.3% 6.2% na 96 26.3% 8 2.1% 6.1% na 95 25.9% 7 2.0% 6.0% na 92 25.2% 7 1.8% 6.0% na 90 24.8% 6 1.7% 5.8% na 89 24.4% 6 1.6% 5.7% na Accounts Payable Days Outstanding Accounts Payable-% of COGS/Opex Accrued Expenses-% of COGS/Opex Deferred Revenue-% of Revenue Other Current Liabilities-% of Opex Deferred L-T Revenue-% of Revenue Other L-T Liabilities-% of Revenue 22 6.1% 8.4% 18.5% 1.9% 3.7% 5.0% 28 7.7% 8.0% 19.5% 0.0% 1.7% 5.1% 22 6.0% 5.7% 21.5% 0.0% 1.9% 3.9% 18 5.0% 6.8% 22.8% 0.0% 3.5% 3.7% 40 11.0% 0.0% 28.2% -0.1% 0.0% 4.0% 45 12.4% 0.0% 27.3% -0.1% 0.0% 3.7% 44 12.0% 0.0% 25.0% -0.1% 0.0% 3.2% 44 12.1% 0.0% 23.8% -0.1% 0.0% 2.9% 44 12.0% 0.0% 23.2% -0.1% 0.0% 2.7% 44 12.0% 0.0% 23.5% -0.1% 0.0% 2.4% 44 12.0% 0.0% 23.5% -0.1% 0.0% 2.2% Sources of information: Romulus historical financial statements and Hercules projections. 29 Statistics Hercules Projections Romulus Historical Net Working Capital (NWC)
APPENDIX – DISCOUNTED CASH FLOW ANALYSIS Project Romulus Assumed % of Total Capital ¹ 5.00% 95.00% 100.00% Riskless 20-year U.S. Treasury Securities Yield Risk Equity Risk Premium Levered Beta Systematic Risk Premium Size Premium (7) Company Specific (8) Projection Risk Cost of Equity Nominal Rate 6.75% 20.31% Effective Tax Rate ² 25.00% Cost of Capital 5.06% 20.31% 3.05% WACC 0.25% 19.30% 19.55% Debt ³ Equity 5.70% 0.68 3.85% 8.41% WACC (Rounded) Less: Assumed L-T Growth Debt Free Net Cash Flow Capitalization Rate 20.00% 2.50% 17.50% 5.00% 20.31% Baa Moody Rated Corporates Avg. Bond Yield Romulus Weighted Cost of Debt 4.83% 6.75% Selected Unlevered Beta (9) Effective Tax Rate ² Debt/Total Capital ¹ Levered Beta 0.65 25.00% 5.00% 0.68 Selected Cost of Debt ³ 6.75% Duff & Phelps Supply Side ERP Damodaran Implied ERP 6.04% 5.37% Debt/Total Capital ¹ 7.16% 4.46% 5.00% Unlevered Beta 0.62 0.54 0.65 Selected Companies Mean Selected Companies Median Selected Selected ERP 5.70% (1) Based on the selected companies' capital structure. (2) Based on discussions with Romulus management. (3) Based on New Romulus's pro forma weighted cost of debt. Consideration was also given to the Baa Moody Rated Corporates Avg. Bond Yield as of July 26, 2018. (4) Based on discussions with management. (5) Based on the mean of the supply side ERP sourced from Duff & Phelps Cost of Capital Navigator and the Damodaran Implied ERP as of July 1, 2018. (6) Based on the 20-year U.S. Treasury Securities market yield on July 30, 2018. (7) Based on the 10b decile size premium sourced from the Duff & Phelps Cost of Capital Navigator. (8) Based on company specific characteristics including projection risk. (9) Based on the unlevered betas calculated for the selected companies. Sources of information: S&P Capital IQ, Duff & Phelps Cost of Capital Navigator, Damodaran Online, and Federal Reserve Board. 30 Industry Capital Structure and Risk Premium Equity Risk Premium (ERP) Levered Beta Cost of Debt Cost of Equity Weighted Average Cost of Capital (WACC) Cost of Capital
APPENDIX – DISCOUNTED CASH FLOW ANALYSIS Project Romulus 5-Year Mean (Jul 31, 2013 - Jul 31, 2018) Debt to Equity Debt to Total Capital Effective Tax Rate Adjusted Beta ¹ Company Ticker Exchange 1st Obs. Levered Unlevered Limelight Networks, Inc. Agilysys, Inc. Harmonic Inc. Daktronics, Inc. Brightcove Inc. PAR Technology Corporation RhythmOne plc Avid Technology, Inc. LSI Industries Inc. Ballantyne Strong, Inc ² ClearOne, Inc. Qumu Corporation Sonic Foundry, Inc. Romulus LLNW AGYS HLIT DAKT BCOV PAR RTHM AVID LYTS BTN CLRO QUMU SOFO NasdaqGS NasdaqGS NasdaqGS NasdaqGS NasdaqGS NYSE AIM NasdaqGS NasdaqGS AMEX NasdaqCM NasdaqCM NasdaqCM NasdaqCM 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 31-Jul-13 1.0% 0.1% 18.2% 0.0% 0.5% 2.8% 6.9% 47.1% 9.3% 1.9% 0.0% 6.6% 21.7% 8.4% 1.0% 0.1% 15.4% 0.0% 0.5% 2.7% 6.5% 32.0% 8.5% 1.8% 0.0% 6.2% 17.9% 7.8% 0.0% 0.0% 0.0% 37.9% 0.0% 36.7% 68.4% 16.4% 31.3% 17.3% 33.7% 0.0% 0.0% 0.0% 1.55 0.43 0.69 0.93 1.08 (0.04) 0.81 1.25 1.29 0.30 0.48 0.07 (0.15) 0.53 1.54 0.43 0.58 0.93 1.07 (0.03) 0.79 0.89 1.21 0.29 0.48 0.07 (0.12) 0.49 High Mean Median Low 47.1% 8.9% 4.7% 0.0% 32.0% 7.2% 4.5% 0.0% 68.4% 17.3% 8.2% 0.0% 1.55 0.66 0.61 (0.15) 1.54 0.62 0.54 (0.12) (1) Monthly price data utilized. (2) Utilizing a normalized tax rate as the actual effective tax rate was not meaningful due to the effective tax rate being unusually low or high. Set the normalized rate equal to the mean tax rate for LLNW, AGYS, HLIT, DAKT, BCOV, PAR, RTHM, AVID, LYTS, CLRO, QUMU, SOFO, and Romulus. No company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: S&P Capital IQ. 31 Unlevered Beta Calculation
APPENDIX – SELECTED COMPANIES ANALYSIS Project Romulus ($ in thousands, except per security) Market Value Net Debt & Debt EV & TIC Cash & Debt Debt & Cash Conversion Cycle Diluted Shares Stock Price Market Value Cash & Mrkt. Securities Preferred Debt Stock Total Debt Net Debt Enterprise Value TIC Value Free WC / Capex, net / Pref. Stk. / Days Outstanding Company LTM Rev. LTM Rev. TIC Sales Inventory Payable Limelight Networks, Inc. Agilysys, Inc. Harmonic Inc. Daktronics, Inc. 117,218 23,798 85,216 44,589 $ $ $ $ 4.46 16.45 4.60 8.59 $ 522,794 391,474 391,995 383,016 $ 45,570 39,943 54,098 64,249 $ - 177 127,743 - $ - - - - $ - 177 127,743 - $ (45,570) (39,766) 73,645 (64,249) $ 477,224 351,708 465,640 318,767 $ 522,794 391,651 519,738 383,016 6.4% -16.1% -3.2% 11.2% 8.3% 4.8% 2.3% 2.6% 0.0% 0.0% 24.6% 0.0% 58.3 53.9 80.7 50.0 na 14.2 67.1 79.7 29.4 47.7 61.9 37.3 28.9 20.4 85.9 92.4 Brightcove Inc. PAR Technology Corporation RhythmOne plc 36,263 16,102 77,983 $ $ $ 8.55 18.68 2.66 310,047 300,788 207,575 27,453 5,762 37,331 35 4,282 50,379 - - - 35 4,282 50,379 (27,418) (1,480) 13,048 282,629 299,308 220,623 310,082 305,070 257,954 -14.8% 11.5% 17.5% 0.9% 1.5% 0.4% 0.0% 1.4% 19.5% 52.6 53.0 47.3 na 50.7 na 31.4 32.8 58.5 21.2 70.9 (11.2) Avid Technology, Inc. LSI Industries Inc. Ballantyne Strong, Inc ClearOne, Inc. 41,502 25,875 14,448 8,301 $ $ $ $ 5.61 4.89 5.40 3.40 232,826 126,530 78,019 28,224 48,016 2,055 3,348 8,709 209,135 45,289 2,420 - - - - - 209,135 45,289 2,420 - 161,119 43,234 (928) (8,709) 393,945 169,764 77,091 19,515 441,961 171,819 80,439 28,224 -15.0% 19.0% 9.7% 43.5% 2.0% 1.1% 3.6% 1.4% 47.3% 26.4% 3.0% 0.0% 37.0 51.6 73.1 74.4 95.2 68.2 39.1 350.2 60.5 24.1 29.5 93.0 71.7 95.7 82.6 331.7 Qumu Corporation Sonic Foundry, Inc. 9,528 4,694 $ $ 2.45 2.16 23,343 10,139 12,091 1,180 4,152 3,932 - 1,874 4,152 5,806 (7,939) 4,626 15,404 14,765 27,495 15,945 -36.0% -10.5% 0.0% 1.4% 15.1% 36.4% 93.7 100.1 8.0 54.2 113.4 42.7 (11.7) 111.7 High Mean Median Low $ 522,794 231,290 232,826 10,139 $ 64,249 26,908 27,453 1,180 $ 209,135 34,426 3,932 - $ 1,874 144 - - $ 209,135 34,571 4,152 - $ 161,119 7,663 (1,480) (64,249) $ 477,224 238,953 282,629 14,765 $ 522,794 265,861 305,070 15,945 43.5% 1.8% 6.4% -36.0% 8.3% 2.3% 1.5% 0.0% 47.3% 13.4% 3.0% 0.0% 100.1 63.5 53.9 37.0 350.2 82.7 60.6 8.0 113.4 50.9 42.7 24.1 331.7 76.2 71.7 (11.7) Romulus 11,156 $ 1.18 $ 13,130 $ 1,433 $ 2,650 $ - $ 2,650 $ 1,217 $ 14,347 $ 15,780 -0.8% 0.3% 16.8% 109.5 19.1 68.4 60.2 Diluted shares include outstanding shares plus all vested ITM options, warrants & convertible debt. May exclude special items, such as extraordinary and non-recurring expenses. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings and S&P Capital IQ. 32 Capital Structure and Other Overview (as of Jul 31, 2018)
APPENDIX – SELECTED COMPANIES ANALYSIS Project Romulus LFY Period LTM Period Revenue EBITDA Company LFY-1 LFY LTM 2018 E 2019 E 2020 E LFY-1 LFY LTM 2018 E 2019 E 2020 E Limelight Networks, Inc. Agilysys, Inc. 31-Dec-17 31-Mar-18 30-Jun-18 31-Mar-18 -1.6% 6.1% 9.6% -0.2% 6.6% -0.2% 10.1% 5.8% 9.8% 12.8% 13.4% 15.1% na na 92.3% na 27.5% na 104.3% na 24.3% 44.3% 35.0% 34.0% Harmonic Inc. 31-Dec-17 29-Jun-18 7.7% -11.7% 6.7% 12.3% 11.5% na -32.9% -619.2% na na 45.2% na Daktronics, Inc. 28-Apr-18 28-Apr-18 2.9% 4.1% 4.1% 0.6% 2.3% na 78.4% -14.2% -14.2% 1.2% 32.5% na Brightcove Inc. PAR Technology Corporation RhythmOne plc Avid Technology, Inc. LSI Industries Inc. Ballantyne Strong, Inc 31-Dec-17 31-Dec-17 31-Mar-18 31-Dec-17 30-Jun-17 31-Dec-17 30-Jun-18 31-Mar-18 31-Mar-18 31-Mar-18 31-Mar-18 31-Mar-18 11.6% 0.3% 28.4% 1.3% 4.7% -2.3% 3.8% 1.3% 71.2% -18.2% 2.9% -4.7% 4.2% -4.4% 71.2% -1.5% 3.2% -2.9% 7.4% na 49.2% -2.2% 2.1% na 8.0% na 17.0% 2.6% 12.3% na na na na na na na -167.6% -35.5% na 265.4% 46.5% na na -78.9% na -75.3% -28.0% -78.6% na -201.2% na -18.7% 30.7% -330.3% na na 685.8% 63.5% 7.0% na 296.4% na 36.5% 15.0% na na na na na na na na ClearOne, Inc. 31-Dec-17 31-Mar-18 -15.8% -14.0% -10.5% 7.0% na na -52.5% -121.5% na na na na Qumu Corporation 31-Dec-17 31-Mar-18 -8.0% -11.1% -6.7% -12.6% na na na na na na na na Sonic Foundry, Inc. 30-Sep-17 31-Mar-18 4.2% -5.2% -1.4% na na na na na na na na na High Mean Median Low 28.4% 3.0% 2.9% -15.8% 71.2% 2.1% -0.2% -18.2% 71.2% 5.3% -0.2% -10.5% 49.2% 8.0% 6.4% -12.6% 17.0% 9.5% 10.6% 2.3% 15.1% 14.2% 14.2% 13.4% 265.4% 14.5% -32.9% -167.6% 92.3% -115.4% -77.0% -619.2% 30.7% -84.4% -16.4% -330.3% 685.8% 172.3% 63.5% 1.2% 296.4% 70.6% 36.5% 15.0% 35.0% 34.5% 34.5% 34.0% Romulus 31-Dec-17 31-Mar-18 -7.4% -1.5% -4.0% -9.1% 7.6% 15.2% na na na na na 119.5% May exclude special items, such as extraordinary and non-recurring expenses. Romulus estimates from Hercules projections and not analyst estimates. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings, S&P Capital IQ, and Hercules projections. 33 Growth Overview (as of Jul 31, 2018)
APPENDIX – SELECTED COMPANIES ANALYSIS Project Romulus LFY/LFY-1 Period LTM Period Gross Margin EBITDA Company LFY-2/LFY-3 LFY-1/LFY-2 LFY/LFY-1 LTM LFY-2/LFY-3 LFY-1/LFY-2 LFY/LFY-1 LTM 2018 E 2019 E 2020 E Limelight Networks, Inc. Agilysys, Inc. 31-Dec-17 31-Mar-17 30-Jun-18 31-Mar-18 50.4% 58.0% 53.1% 56.6% 57.5% 50.0% 58.2% 50.6% -3.2% -4.7% 5.6% -1.1% 9.7% -6.0% 11.6% -5.8% 18.1% 9.2% 20.5% 11.8% 24.4% 13.8% Harmonic Inc. Daktronics, Inc. Brightcove Inc. 31-Dec-17 29-Apr-17 31-Dec-17 29-Jun-18 28-Apr-18 30-Jun-18 53.8% 23.5% 65.5% 51.5% 21.2% 63.4% 48.9% 24.0% 58.6% 52.2% 23.9% 59.0% 2.2% 7.5% 1.1% 1.4% 3.4% -0.7% -8.1% 5.9% -9.2% 2.7% 4.9% -5.5% 9.1% 4.9% 1.3% 11.9% 6.4% 4.7% na na na PAR Technology Corporation 31-Dec-17 31-Mar-18 19.7% 20.3% 22.7% 22.3% 3.9% 2.5% 0.5% -0.6% na na na RhythmOne plc Avid Technology, Inc. LSI Industries Inc. 31-Mar-17 31-Dec-17 30-Jun-17 31-Mar-18 31-Mar-18 31-Mar-18 44.0% 61.8% 24.2% 37.4% 66.5% 26.0% 33.9% 59.6% 25.3% 40.7% 58.6% 26.4% -4.4% 5.4% 4.6% -15.4% 19.6% 6.4% -2.3% 5.9% 4.5% 2.3% 4.9% 5.7% 12.1% 9.9% 5.9% 14.1% 11.1% na na na na Ballantyne Strong, Inc ClearOne, Inc. Qumu Corporation 31-Dec-17 31-Dec-17 31-Dec-17 31-Mar-18 31-Mar-18 31-Mar-18 21.4% 64.4% 49.4% 27.7% 62.0% 61.4% 26.1% 59.0% 63.6% 24.6% 59.8% 62.8% -0.8% 22.2% -73.8% 9.2% 12.5% -27.6% 2.1% -3.1% -24.0% -4.9% -4.4% -28.6% na na -14.1% na na na na na na Sonic Foundry, Inc. 30-Sep-17 31-Mar-18 70.8% 73.7% 72.6% 72.6% -5.6% -0.5% -5.5% -4.7% na na na High Mean Median Low 70.8% 46.7% 50.4% 19.7% 73.7% 47.8% 53.1% 20.3% 72.6% 46.3% 50.0% 22.7% 72.6% 47.0% 52.2% 22.3% 22.2% -3.5% 1.1% -73.8% 19.6% 1.2% 2.5% -27.6% 9.7% -2.3% -2.3% -24.0% 11.6% -1.7% -0.6% -28.6% 18.1% 6.3% 9.1% -14.1% 20.5% 11.5% 11.8% 4.7% 24.4% 19.1% 19.1% 13.8% Romulus 31-Dec-17 31-Mar-18 54.4% 58.8% 57.1% 57.0% -16.9% -3.9% -4.9% -7.4% -3.3% 3.8% 7.2% May exclude special items, such as extraordinary and non-recurring expenses. Romulus estimates from Hercules projections and not analyst estimates. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings, S&P Capital IQ, and Hercules projections. 34 Margin Overview (as of Jul 31, 2018)
APPENDIX – SELECTED COMPANIES ANALYSIS Project Romulus ($ in thousands) LFY/LFY-1 Period LTM Period Revenue EBITDA Company LFY-2/LFY-3 LFY-1/LFY-2 LFY/LFY-1 LTM 2018 E 2019 E 2020 E LFY-2/LFY-3 LFY-1/LFY-2 LFY/LFY-1 LTM 2018 E 2019 E 2020 E Limelight Networks, Inc. Agilysys, Inc. Harmonic Inc. 31-Dec-17 31-Mar-17 31-Dec-17 30-Jun-18 31-Mar-18 29-Jun-18 $ 170,912 103,514 377,027 $ 168,234 120,366 405,911 $ 184,360 127,678 358,246 $ 196,618 127,360 382,275 $ 203,030 134,764 402,285 $ 222,847 151,975 448,362 $ 252,628 174,854 na $ (5,430) (4,860) 8,280 $ 9,339 (1,340) 5,557 $ 17,962 (7,622) (28,852) $ 22,897 (7,422) 10,135 $ 36,689 12,462 36,700 $ 45,615 17,984 53,274 $ 61,578 24,098 na Daktronics, Inc. Brightcove Inc. 29-Apr-17 31-Dec-17 28-Apr-18 30-Jun-18 615,942 134,706 570,168 150,266 586,539 155,913 610,530 162,436 614,474 167,508 628,322 180,902 na na 46,421 1,488 19,438 (1,006) 34,677 (14,339) 29,763 (8,987) 30,114 2,155 39,915 8,544 na na PAR Technology Corporation RhythmOne plc Avid Technology, Inc. 31-Dec-17 31-Mar-17 31-Dec-17 31-Mar-18 31-Mar-18 31-Mar-18 229,003 214,969 505,595 229,653 116,058 511,930 232,605 149,025 419,003 222,401 255,073 412,833 na 380,611 409,905 na 445,141 420,570 na na na 8,899 (9,434) 27,503 5,737 (17,865) 100,501 1,212 (3,496) 24,831 (1,227) 5,839 20,196 na 45,884 40,604 na 62,639 46,700 na na na LSI Industries Inc. Ballantyne Strong, Inc ClearOne, Inc. 30-Jun-17 31-Dec-17 31-Dec-17 31-Mar-18 31-Mar-18 31-Mar-18 307,857 78,059 57,796 322,196 76,254 48,637 331,392 72,646 41,804 342,033 70,548 37,415 349,203 na 44,730 392,010 na na na na na 14,086 (606) 12,816 20,633 6,995 6,092 14,855 1,494 (1,310) 19,417 (3,441) (1,659) 20,767 na na na na na na na na Qumu Corporation Sonic Foundry, Inc. 31-Dec-17 30-Sep-17 31-Mar-18 31-Mar-18 34,454 36,459 31,682 37,975 28,167 36,000 26,287 35,488 24,631 na na na na na (25,419) (2,029) (8,746) (175) (6,758) (1,981) (7,527) (1,665) (3,482) na na na na na High Mean Median Low $ 615,942 220,484 170,912 34,454 $ 570,168 214,564 150,266 31,682 $ 586,539 209,491 155,913 28,167 $ 610,530 221,638 196,618 26,287 $ 614,474 273,114 276,116 24,631 $ 628,322 361,266 406,290 151,975 $ 252,628 213,741 213,741 174,854 $ 46,421 5,517 1,488 (25,419) $ 100,501 11,166 5,737 (17,865) $ 34,677 2,359 (1,310) (28,852) $ 29,763 5,871 (1,227) (8,987) $ 45,884 24,655 30,114 (3,482) $ 62,639 39,239 45,615 8,544 $ 61,578 42,838 42,838 24,098 Romulus 31-Dec-17 31-Mar-18 $ 40,602 $ 37,601 $ 37,042 $ 35,558 $ 33,684 $ 36,249 $ 41,751 $ (6,880) $ (1,464) $ (1,806) $ (2,637) $ (1,115) $ 1,367 $ 3,001 May exclude special items, such as extraordinary and non-recurring expenses. Romulus estimates from Hercules projections and not analyst estimates. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings, S&P Capital IQ, and Hercules projections. 35 Income Statement Overview (as of Jul 31, 2018)
APPENDIX – SELECTED COMPANIES ANALYSIS Project Romulus LLNW Limelight Networks, Inc. provides content delivery and related services and solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers services and solutions for businesses to deliver their digital content across Internet, mobile, and social channels. It provides Orchestrate Platform, a suite of integrated services comprising content delivery, video content management, Website and Web application acceleration, Website and content security, and cloud storage services. The company also offers professional services and other infrastructure services, such as transit and rack space services. It serves media companies operating in the television, music, radio, newspaper, magazine, movie, game, software, and social media industries, as well as enterprises, technology companies, and government entities conducting business online. Limelight Networks, Inc. was founded in 2001 and is headquartered in Tempe, Arizona. AGYS Agilysys, Inc., together with its subsidiaries, operates as a developer and marketer of hardware and software products and services to the hospitality industry in North America, Europe, the Asia-Pacific, and India. The company offers point-of-sale, property management, reservation and table management, inventory and procurement, workforce management, analytics, document management, and mobile and wireless solutio streamline operations, and enhance efficiency and guest experience. It also provides support and maintenance of software and hardware products, and subscription services; and professional services. Agilysys, Inc. serves various sectors, including gaming; hotels, resorts, and cruise; foodservice management; and restaurants, universities, stadia, and healthcare. The company was formerly known as Pioneer-Standard Electronics, Inc. and changed its name to Agilysys, Inc. in 2003. Agilysys, Inc. was founded in 1963 and is headquartered in Alpharetta, Georgia. HLIT Harmonic Inc. designs, manufactures, and sells video infrastructure products and system solutions worldwide. Its products enable customers to create, prepare, and deliver a range of video and broadband services to consumer devices, including televisions, personal computers, laptops, tablets, and smart phones. The company operates in two segments, Video and Cable Edge. The Video segment sells video processing, and production and playout solutions and services to cable operators, and satellite and telecommunications Pay-TV service providers, as well as to broadcast and media companies, including streaming new media companies. This segment’s video processing solutions include network management and application software, and hardware products, such as cloud media processing, broadcast and distribution encoders, contribution encoders, multiscreen transcoders and stream processing systems, multiscreen delivery, decoders and descramblers, and video servers. This segment also provides video-optimized storage systems; and unified video playout and processing software-as-a-service solutions. The Cable Edge segment offers cable edge solutions and related services, including CableOS software-based converged cable access platform solutions; and narrowcast services gateway products primarily to cable operators. The company also provides technical support and professional services, such as maintenance and support, consulting, implementation, program managem technical design and planning, building and site preparation, integration and equipment installation, system testing, and training. Harmonic Inc. sells its products through its direct sales force, as well as through independent resellers and systems integrators. The company was founded in 1988 and is headquartered in San Jose, California. DAKT Daktronics, Inc. designs, manufactures, and sells a range of electronic display systems and related products worldwide. It operates through five segments: Commercial, Live Events, High School Park and Recreation, Transportation, and International. The company offers video display systems, such as displays to show various levels of video, graphics, and animation; LED ribbon board displays; mobile and modular display systems; freeform LED displays, which include architectural lighting and display products; indoor and outdoor scoreboards for various sports, digit displays, scoring and timing controllers, statistics software, and other related products; and timing systems for sports events primarily aquatics and track competitions, as well as swimming touchpads, race start systems, and relay take-off platforms. It also provides message displays; ITS dynamic message signs, including LED displays for road management, mass transit, and aviation applications; digit and directional displays for use in parking facilities; and audio systems for outdoor sports venues. In addition, the company offers digital billboards and street furniture displays used to display images, which change at regular intervals for the out-of-home (OOH) advertising industry comprising Visiconn system and Venus Control Suite, a software application for controlling content and playback loops for digital billboard applications; and street furniture for digital OOH campaigns. Further, it provides digit and price displays, such as outdoor time and temperature displays, as well as Fuelight digit displays for the petroleum industry; and dynamic messaging systems for retailers, convenience stores, and other businesses, as well as maintenance and professional services related to its products. The company sells its products through direct sales and resellers. Daktronics, Inc. was founded in 1968 and is based in Brookings, South Dakota. BCOV Brightcove Inc. provides cloud-based services for video. The company offers Video Cloud, an online video platform that enables its customers to publish and distribute video to Internet-connected devices. Its Video Cloud platform offers various features and functionalities, such as uploading and encoding, content management, video player technology, multi-platform video experiences, live video streaming, distribution and syndication, social media, advertising and monetization, and analytics, as well as APIs, SDKs, and developer resources. The company also provides Zencoder, a cloud-based video encoding service with various features and functionalities, including file support, quality and control, speed and reliability, platform and security, and account and integration; SSAI, a cloud-based ad insertion and video stitching service; and Player, a cloud-based service for creating and managing video player experiences. In addition, it offers Video Marketing Suite, a suite of video technologies designed to address the needs of marketers to drive awareness, engagement, and conversion; OTT Flow, a service for media companies and content owners; and Enterprise video suite, an enterprise-class platform for internal communications, employee training, live streaming, marketing, and e-commerce videos. Further, the company provides account management, professional services, support, and online and onsite training services. Brightcove Inc. offers its products to media companies, broadcasters, publishers, brands, and corporations; and governments, educational institutions, and non-profit organizations through direct sales, referral partners, channel partners, and resellers in North America, Europe, Japan, the Asia Pacific, and internationally, as well as sells its products online. The company was formerly known as Video Marketplace, Inc. and changed its name to Brightcove Inc. in March 2005. Brightcove Inc. was founded in 2004 and is headquartered in Boston, Massachusetts. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings and S&P Capital IQ. 36 Company Descriptions
APPENDIX – SELECTED COMPANIES ANALYSIS Project Romulus PAR Technology Corporation, together with its subsidiaries, provides management technology solutions worldwide. The company operates through two segments, Restaurant/Retail and Government. The Restaurant/Retail segment offers cloud and on-premise software applications and hardware platforms, as well as related installation, technical, and maintenance support services. This segment’s hardware offerings include POS terminals, tablets, kitchen systems utilizing printers and/or video monitors, and food safety monitoring and task management hardware products; and software offerings comprise front-of-store POS software applications, operations management software applications, and enterprise software applications for content management and business intelligence. This segment serves restaurants, grocery stores, and specialty retail outlets. The Government segment offers intelligence, surveillance, and reconnaissance; systems engineering and evaluation; satellite and telecommunications; satellite operation, management, and maintenance; and PAR RTHM RhythmOne plc operates as a technology media company that connects consumers and brands through premium content online. The company provides digital advertising and content distribution solutions for advertisers, including RhythmImpact that enable brands and publishers to engage consumers with sight, sound, and motion across connected devices using video, rich media, display, and native ad units; RhythmInfluence, which helps marketers connect with influencers that weave branded stories into content and social platforms; and RhythmMax that provides marketplace for digital advertising. It also offers RhythmOne for Publishers, an integrated monetization platform that helps build consumers and enhance business. The company was formerly known as blinkx plc and changed its name to RhythmOne plc in June 2016. RhythmOne plc was founded in 2004 and is headquartered in San Francisco, California. AVID Avid Technology, Inc. develops, markets, sells, and supports software, hardware, and integrated solutions for video and audio content creation, management, and distribution worldwide. The company’s video products and solutions include the Media Composer product line that is used to edit film, television programming, news broadcasts, commercials, and other video content; Avid shared storage systems and Avid Interplay asset management solutions, which provide complete network, storage, and database solutions to enable users to simultaneously share and manage media assets throughout a project or organization. Its audio products and solutions include Pro Tools digital audio software and workstation solutions to facilitate the audio production process, including music and sound creation, recording, editing, signal processing, integrated surround mixing and mastering, and reference video playback; and a range of complementary control surfaces and consoles, including the System 5 and System 6 modular consoles, as well as the VENUE live-sou systems and Sibelius-branded notation software. The company also provides various professional services, such as workflow design and consulting; program and project management; system installation and commissioning; custom development and role-based product level training; public and private training to customers and alliance partners; and service contracts and support plans, as well as develops and licenses curriculum content for use by third party Avid Learning partners to deliver training to customers, users, and alliance partners. It offers its products and solutions to customers in broadcast and media, video and audio post, and professional markets through a network of sales representatives, independent distributors, value-added resellers, dealers, retailers, and digital sales channels. The company was founded in 1987 and LYTS LSI Industries Inc. provides corporate visual image solutions in the United States, Canada, Australia, and Latin America. It operates in three segments: Lighting, Graphics, and Technology. The Lighting segment manufactures and markets outdoor and indoor lighting and lighting controls for the commercial, industrial, and multi-site retail markets, including the petroleum/convenience store, quick-service, and automotive markets. It primarily offers exterior area, interior, canopy, and landscape lightings, as well as lighting controls, light poles, and photometric layouts; lighting system design services; and solid-state LED solutions. The Graphics segment manufactures and sells exterior and interior visual image elements used in graphics displays and visual image programs in various markets that include the petroleum/convenience store market, quick-service restaurant, grocery, and multi-site retail operations. Its products comprise signage and canopy graphics, pump dispenser graphics, building fascia graphics and ACM systems, electrical signage, decals, interior signage and marketing graphics, aisle markers, wall mural graphics, fleet graphics, prototype program graphics, video boards, and digital signage and media content management products. Ballantyne Strong, Inc. designs, integrates, and installs technology solutions for the cinema, retail, financial, advertising, and government markets worldwide. It operates in two segments, Cinema and Digital Media. The Cinema segment provides audio-visual products and accessories, such as digital projectors, projection screens, servers, library management systems, menu boards, flat panel displays, and sound systems, as well as network monitoring and on-site service for cinema equipment. This segment markets and sells its products directly to theatre exhibitors, as well as through value added resellers. The Digital Media segment offers digital signage solutions, including hardware, software, content distribution, management, network monitoring, and field services. It also offers video communication services and solutions, such as design, integration, monitoring, maintenance, and installation for the government and corporate markets. This segment’s solutions provide enterprises with the infrastructure necessary to communicate, collaborate, train, and educate employees. In addition, the company provides advertising services. Ballantyne Strong, Inc. was founded in 1932 and is headquartered in Omaha, Nebraska. BTN No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings and S&P Capital IQ. 37 Company Descriptions (Continued)
APPENDIX – SELECTED COMPANIES ANALYSIS Project Romulus ClearOne, Inc., together with its subsidiaries, designs, develops, and sells conferencing, collaboration, streaming, and digital signage solutions for voice and visual communications in the United States and internationally. The company offers various professional audio communication products, including professional conferencing and sound-reinforcement products for use in enterprise, healthcare, education and distance learning, government, legal, and finance organizations; mid-tier premium conferencing products for smaller rooms, and small and medium businesses, which interface with video and Web conferencing systems; and professional microphones for use in various applications. It also provides unified communications audio end points comprising traditional tabletop conferencing phones used in conference rooms and offices; and personal conferencing products that could be used with PCs, laptops, tablets, smartphones, and other portable devices. The company’s audio communication products and unified communications audio end points enhance communication during a conference call by eliminating echo and background noise. In addition, it offers visual communication products, such as video conferencing products; streaming products, which deliver the Internet protocol (IP) A/V experience by streaming time sensitive high definition audio and video and control over TCP/IP networks; and digital signage systems. The company sells its commercial products to a network of independent audiovisual, information technology, and telecommunications distributors, as well as independent systems integrators, dealers, value-added resellers, and end-users. ClearOne, Inc. was founded in 1983 and is headquartered in Salt Lake City, Utah. CLRO QUMU Qumu Corporation provides tools to create, manage, secure, distribute, and deliver live and on-demand video content for the enterprises. It offers Qumu Qx Enterprise Video Platform, an end-to-end video creation, management, and delivery solution through the sale of software licenses and hardware, software on server appliance, software-enabled devices, and a cloud-hosted software-as-a-service platform. The company also provides maintenance and support, professional, and other services. The company markets its products to customers in the banking, finance and insurance, manufacturing, services and consulting, telecom and technology, and biotech and health care markets through direct sales and channel partners in North America, Europe, and Asia. The company was formerly known as Rimage Corporation and changed its name to Qumu Corporation in September 2013. Qumu Corporation was founded in 1978 and is headquartered in Minneapolis, Minnesota. SOFO Sonic Foundry, Inc. provides enterprise solutions and services for the Web communications market in the United States and internationally. It offers Mediasite Video Platform, an on-premises solution to publish, stream, manage, search, and analyze videos; and Mediasite Video Cloud, a solution, which provides hosting and management of content. The company also provides Mediasite Capture Solutions comprising My Mediasite that makes a snap for instructors, employees, and students to create videos, screencasts, and slideshows from their computers or mobile devices; Mediasite RL Recorders that are a series of built-in room appliances for use in recording video and content; Mediasite RL Mini, which builds/expands an automated lecture capture programs in community colleges, vocational-tech schools, small departments, and K12 classrooms; Mediasite Catch, a video capture solution to extend video capture to various classrooms on campus; Mediasite ML Recorders, a video producer with portable recording solutions to capture and stream broadcast-quality video; and Mediasite Join that captures and preserves video calls or meetings. In addition, it provides Mediasite Events, which offers live and on-demand Webcasting for conferences, hybrid events, and high-profile broadcasts; Mediasite Services comprising advanced integration, installation, and training services; and Mediasite Customer care that provides software upgrades and updates, technical support assistance, hardware warranty extension, Mediasite Recorder replacement, and access to the Mediasite Customer care Portal and Mediasite Community. The company markets its products to educational institutions, corporations, and government entities through reseller networks, direct sales, and partnerships with system integrators. Sonic Foundry, Inc. was founded in 1991 and is headquartered in Madison, Wisconsin. No selected company used in this analysis is identical or directly comparable to Romulus or New Romulus. Sources of information: SEC filings and S&P Capital IQ. 38 Company Descriptions (Continued)
APPENDIX – SELECTED TRANSACTIONS ANALYSIS Project Romulus ($ in thousands) Total Price Paid (TPP) ¹ Enterprise Value (EV) ² TTM EV Multiple of Date EBITDA Margin Annc. Closed Target Acquirer Target Description Revenue EBITDA Revenue EBITDA 16-Feb-18 26-Feb-18 WebDam, Inc. Bynder, LLC Provides a cloud based digital asset management, brand management and marketing fulfillment solutions, to retrieve and share digital files, create and share marketing files, etc. $ 49,100 $ 49,100 $ 16,200 na na 3.03x na 26-Nov-17 1-Jan-18 Bazaarvoice, Inc. Marlin Equity & related parties. Provides Saas based marketing tools to retailers and brand clients to capture, manage, display online consumer generated content and integrate to social platforms and deliver through multiple applications including websites, mobile, social networks, in-store displays and email. 516,060 450,860 206,300 880 0.4% 2.19 nm 28-Aug-17 6-Oct-17 MaxPoint Interactive, Inc. Harland Clarke Holdings Corp. Provides a business intelligence and marketing automation cloud based software platform that enable national brands to drive local in-store sales. 95,090 104,980 144,420 (8,890) -6.2% 0.73 na 18-Jul-17 5-Sep-17 Rocket Fuel, Inc. Sizmek, Inc. Provides digital advertising solutions including a platform to purchase and deliver highly-automated digital advertising campaigns. The platform also enables marketers to analyze and share customer data for CRM, email marketing and third parties. 126,630 147,250 420,470 (16,550) -3.9% 0.35 na (1) Total price paid equals common equity value assuming 100% interest acquired. (2) Enterprise value equals total price paid plus total debt, preferred stock, and minority interests, less cash. No selected transaction or acquistion target used in this analysis is identical or directly comparable to the Merger, Romulus, or New Romulus. Sources of information: SEC Edgar Filings, Press Releases and S&P Capital IQ. 39 12-Jul-17 21-Jul-17 Blazer & Flip Flops, Lo-Q Inc Provides a web-based platform that allows marketers and 83,200 83,200 12,700 (4,600) -36.2% 6.55 na Inc. (aka The developers to manage, build and measure contextual consumer Experience Engine) experiences. 7-Aug-17 7-Aug-17 ScanScout, Inc. Taptical Ltd Brand performance software for buyers. 50,000 50,000 115,000 (1,300) -1.1% 0.43 na Buyer Platform 5-Sep-17 1-Jan-18 YuMe, Inc. RhythmOne plc Provides digital video brand advertising solutions to target 185,190 112,680 159,780 10,080 6.3% 0.71 11.2 (AIM:RTHM) audiences across multiple devices and types of digital media. Also provides software to produce content. 5-Feb-18 TBD LiquidHub, Inc. Capgemini SE Develops digital customer engagement solutions for marketing 500,000 500,000 247,700 na na 2.02 na (ENXTPA: CAP) campaigns, CRM needs, and brand management. Transactions Overview
APPENDIX – SELECTED TRANSACTIONS ANALYSIS Project Romulus ($ in thousands) Total Price Paid (TPP) ¹ Enterprise Value (EV) ² TTM EV Multiple of Date EBITDA Margin Annc. Closed Target Acquirer Target Description Revenue EBITDA Revenue EBITDA 23-May-17 27-Oct-17 GENBAND US LLC Sonus Networks, Inc. (nka Ribbon Communications) Provides real time communications software solutions including the Telephony Application Server that integrates voice, video, instant messaging, mobility, conferencing and collaboration over any network or any device. $ 412,000 $ 425,200 $ 427,100 $ 23,600 5.5% 1.00x 18.0x 5-Dec-16 5-Dec-16 United States Traffic Network LLC GTN Limited (ASX:GTN) Provides software and services that enable local media and businesses to find and capture audiences including TrafficOne (map and traffic planning services), Radiate360 (online tools for businesses) and Marketplace. 15,000 15,000 44,710 1,190 2.7% 0.34 12.6 27-Jun-16 8-Aug-16 ReachLocal, Inc. Gannett Co., Inc. (NYSE:GCI) Provides a suite of online marketing and reporting solutions. 139,290 157,870 361,740 (9,000) -2.5% 0.44 na 8-Oct-15 23-Nov-15 Daegis Inc. Open Text Corporation (Nasdaq: OTEX) Enterprise software company for information governance, application migration, data management and application development. 13,440 20,790 23,670 840 3.5% 0.88 24.8 (1) Total price paid equals common equity value assuming 100% interest acquired. (2) Enterprise value equals total price paid plus total debt, preferred stock, and minority interests, less cash. No selected transaction or acquistion target used in this analysis is identical or directly comparable to the Merger, Romulus, or New Romulus. Sources of information: SEC Edgar Filings, Press Releases and S&P Capital IQ. 40 10-Sep-15 8-Dec-15 Premier Global Siris Capital Group Provides collaboration software that enable businesses to connect 657,550 978,300 566,170 74,380 13.1% 1.73 13.2 Services, Inc. Et. Al and share ideas and manage projects in the cloud including web, video, audio conferencing. 13-May-16 11-Jul-16 mBlox, Inc. CLX Provides business to consumer engagement solutions including 117,000 117,000 140,000 6,900 4.9% 0.84 17.0 Communications AB mobile application engagement, campaign management to PC or (OM:CLX) tablet. 3-Aug-16 26-Sep-16 Sizmek Inc. Vector Capital Operates an online ad campaign management and distribution 113,650 76,480 185,180 8,990 4.9% 0.41 8.5 (Nasdaq:SZMK) platform across multiple media channels and platforms. 9-Mar-17 31-Mar-17 Visable Measures AcuityAds US Inc. Provides advertising technology software that enables brands to 10,300 10,300 20,000 na na 0.52 na Corporation compete for consumer engagement using video content advertising. Transactions Overview (Continued)
APPENDIX – SELECTED TRANSACTIONS ANALYSIS Project Romulus ($ in thousands) Total Price Paid (TPP) ¹ Enterprise Value (EV) ² TTM EV Multiple of Date EBITDA Margin Annc. Closed Target Acquirer Target Description Revenue EBITDA Revenue EBITDA 7-Sep-15 22-Oct-15 RAMP, Inc. Media Business Cxense ASA (OB:CXENSE) Provides live and on-demand video management Saas based solutions. $ 10,000 $ 10,000 $ 5,000 na na 2.00x na 12-Aug-15 27-Nov-15 Planar Systems, Inc. Leyard American Corporation Develops, manufactures and markets display systems for digital signage market. 153,250 136,890 201,050 7,410 3.7% 0.68 18.5 12-Apr-15 23-Jun-15 Orad Hi Tec Systems Ltd Avid Technology, Inc. (Nasdaq:AVID) Provides real time 3D broadcast graphic, video server, and media asset management solutions. 71,789 59,354 38,690 6,010 15.5% 1.53 9.9 13-Mar-14 2-Apr-14 Internet Broadcasting Systems (nka:LAKANA LLC) Nexstar Broadcasting Group, Inc. Delivers Saas based content management platforms that integrate with a suite of marketing related products, partners and services. 16,300 18,800 19,900 (2,820) -14.2% 0.94 na High Mean Median Low $ 657,550 151,712 89,145 8,520 $ 978,300 158,550 79,840 10,000 $ 566,170 154,749 127,500 4,512 $ 74,380 3,128 860 (41,330) 15.5% -0.9% 2.2% -36.2% 6.55x 1.38 0.83 0.34 25.6x 15.9 15.1 8.5 (1) Total price paid equals common equity value assuming 100% interest acquired. (2) Enterprise value equals total price paid plus total debt, preferred stock, and minority interests, less cash. No selected transaction or acquistion target used in this analysis is identical or directly comparable to the Merger, Romulus, or New Romulus. Sources of information: SEC Edgar Filings, Press Releases and S&P Capital IQ. 41 1-Oct-131-Oct-13 Convergent MediaBallantyne Strong,Offers digital media solutions for applications such as digital signage,16,00016,00040,000nana0.40na Systems CorpInc. (AMEX:BTN)video walls, social media. 19-Mar-14 18-Mar-14 X20 Media, Inc.Barco NVDevelops channel creation and management platforms that enable18,95018,9504,512nana4.20na (ENXTBR:BAR)users to create channels of video and graphic rich content and publish to any device. 4-May-15 22-Jun-15 Lyris, Inc.Aurea Software, Inc. Provides Saas based digital marketing software solutions and8,52013,06028,4205101.8%0.4625.6 services that enable customers to build, deliver and manage permission-based, online direct marketing campaigns and other communications. 3-Sep-15 22-Oct-15 Millennial Media,Oath, Inc.Provides mobile advertising solutions to advertisers and developers262,780233,140285,270(41,330)-14.5%0.82na Inc. (NYSE:MM)that enable better reach and engagement with targeted audiences across mobile devices. Transactions Overview (Continued)
