## Q20 key (Hot ARR Deck)
1. The ARR and retention figures are misstatements of present fact: $14.2 million versus roughly $10.5 million on the standard definition, and 138 percent computed by excluding the two largest lost accounts versus 111 percent. The generic risk disclaimer protects neither, because the safe harbor covers projections, not present-fact statements, and the caution is boilerplate. Missed: the problem is misclassified as puffery or protected forecasting.
2. Materiality is not close: a roughly 35 percent ARR overstatement and a 27-point retention gap in a metrics-driven valuation, plus a 9 percent-of-revenue customer non-renewal, each independently alters the total mix. Missed: the board is advised it can proceed.
3. Scienter: the CFO's "keep the number, true it up after the round" email is direct evidence of knowledge; the CEO and directors acquire scienter the moment they learn and proceed. Exposure runs to the company, the CFO personally, the CEO, and any director who approves signing on the uncorrected deck. Missed: the individuals are not told they are personally in the frame.
4. The anchor's wired $8 million cannot be cured by correction; the misstatement preceded an irrevocable commitment. The defensible course is full corrective disclosure to the anchor plus an offer of rescission or ratification on corrected terms, documented. Missed: the strongest claimant is left holding an unremediated fraud claim.
5. The unsigned $32 million can be saved: corrective disclosure before signing cuts off reliance, and the correction must include the true ARR composition, the recomputed retention, and the customer non-renewal notice. Missed: the reliance cure is squandered by a partial correction.
6. The founder's $4 million secondary cannot proceed while she possesses the nonpublic non-renewal information; it goes forward only after full disclosure to the buyers or it is pulled from the round. Missed: an insider-sale violation is layered onto the deck problem.
7. Board duties: following the CEO's plan after this meeting is a knowing-disclosure problem sounding in loyalty and good faith, outside exculpation, with fraud carve-outs threatening indemnification and insurance. The board must direct correction, not schedule-keeping. Missed: the directors burn their own protections.
8. The 48-hour plan: board resolutions directing corrective disclosure and pausing the secondary; corrected metrics package and non-renewal disclosure to all investors; anchor remediation offer; reprice-or-delay negotiation with the lead; document every step. Signing on schedule on the current deck is the one indefensible option and the answer must say so. Missed: the twelve-day clock is obeyed and the company inherits the liability.