1008-00002 · Lumos Analytics Inc · Withdrawal

engagement-closing-letter.docx DOCUMENT Capital Markets

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1 Market Street, Spear Tower, Suite 3600 San Francisco, California 94105 Telephone: (415) 442-7000	Facsimile: (415) 442-7001
425 Lexington Avenue, 42nd Floor New York, New York 10017 Telephone: (212) 558-3000	Facsimile: (212) 558-3001

www.calderwoodharkness.com

June 24, 2022

Matter Number: 1008-00002

Via Email (nfeinberg@lumosanalytics.com) and Ostrander Technologies Feinberg, Esq. General Counsel & Corporate Secretary Lumos Analytics Inc. 450 Folsom Street, Suite 1200 San Francisco, California 94105

Re: Formal Closing of Engagement — Proposed Initial Public Offering of Class A Common Stock of Lumos Analytics Inc. (the "Company" or "Lumos"); Calderwood & Harkness LLP Matter No. 1008-00002

Dear Naomi:

I. Introduction and Purpose

This letter is written in connection with the engagement letter dated November 8, 2021 (the "Engagement Letter"), pursuant to which Calderwood & Harkness LLP ("C&H" or the "Firm") was retained by Lumos Analytics Inc. (the "Company" or "Lumos") as issuer's counsel in connection with the proposed initial public offering (the "IPO" or the "Offering") of shares of Class A Common Stock, par value $0.0001 per share (the "Class A Common Stock"), of the Company on the Nasdaq Global Select Market under the proposed ticker symbol "LMSA." The Offering contemplated target gross proceeds of approximately $220,000,000, inclusive of both primary and secondary shares offered by the Company and certain selling stockholders.

Robert Adeyemi served as Responsible Partner for the engagement, and Jennifer Kwon served as Billing Partner. The broader engagement team included Audrey Zhou (Lead Associate), Brendan Walsh (Working Associate), and Sylvia Hartwell (Specialist Partner, Tax), among other personnel within the Firm's Capital Markets Group.

The purpose of this letter is to formally confirm the closing of our engagement with the Company in connection with this matter, effective as of June 24, 2022. As you are aware, the Board of Directors of the Company (the "Board") determined at its meeting held on June 6, 2022 to withdraw the Offering in light of then-prevailing market conditions and related considerations. In furtherance of that decision, the Company, acting through C&H, filed an Application for Withdrawal of Registration Statement on Form RW with the U.S. Securities and Exchange Commission (the "SEC") on June 10, 2022, pursuant to Rule 477 under the Securities Act of 1933, as amended (the "Securities Act"). The SEC granted the withdrawal effective June 15, 2022. The engagement accordingly spanned from November 8, 2021 through June 24, 2022.

This letter provides a comprehensive summary of the work performed, the status of all workstreams, a financial summary of fees and expenses, observations regarding future liquidity alternatives, and certain housekeeping matters relating to document retention and the potential for re-engagement. We encourage you to review this letter carefully and to contact us with any questions or corrections.

II. Summary of Engagement Background

For context and as a matter of complete recordkeeping, we provide the following summary of the background of the engagement and the key milestones in the Offering process.

The Board of Directors of Lumos adopted a resolution on July 15, 2021, authorizing the Company's management to explore an initial public offering of the Company's equity securities. Following that authorization, the Company commenced discussions with prospective underwriters, financial advisors, and legal counsel regarding the structure, timing, and feasibility of a public offering.

An organizational meeting with the proposed underwriting syndicate — consisting of Pinnacle Securities LLC ("Pinnacle") and Whitfield & Company LLC ("Whitfield") — was held on September 22, 2021. That meeting included senior representatives of Lumos management, including Priya Subramanian (Chief Executive Officer and Co-Founder), Marcus Henley (Chief Technology Officer and Co-Founder), David Lau (Chief Financial Officer), and you, in your capacity as General Counsel. The organizational meeting addressed the proposed offering structure, timeline, due diligence requirements, and allocation of responsibilities among the working group.

Following the organizational meeting and a period of evaluation, the Company executed the Engagement Letter with C&H on November 8, 2021. An all-hands kickoff meeting was held on November 15, 2021, at which the full working group convened, including representatives of issuer's counsel (C&H), underwriters' counsel (Hargrove & Liddell LLP ("Hargrove & Liddell"), led by Michael Sorrentino), the independent auditor (Meridian & Howe LLP ("Meridian & Howe"), audit partner Gregory Simmons), and the underwriting syndicate.

The Offering as contemplated in the draft Registration Statement and related materials was structured as follows:

• Primary Shares: 12,941,176 shares of Class A Common Stock to be offered and sold by the Company.

• Secondary Shares: 3,500,000 shares of Class A Common Stock to be offered and sold by selling stockholders, consisting of 2,000,000 shares to be sold by Velthryn Venture Partners Fund IV, L.P. ("Velthryn") and 1,500,000 shares to be sold by Arclight Equity Group Fund VII, L.P. ("Arclight").

• Total Base Offering: 16,441,176 shares of Class A Common Stock.

• Overallotment Option: An option granted to the underwriters to purchase up to an additional 2,466,176 shares of Class A Common Stock (representing 15% of the total base offering) within 30 days of pricing, solely to cover overallotments.

• Preliminary Price Range: $16.00 to $18.00 per share.

• Proposed Underwriting discount: 6.5% of the public offering price, yielding an estimated underwriting discount of approximately $14,300,000 on the primary shares and estimated net proceeds to the Company of approximately $205,700,000 before offering expenses.

The underwriting syndicate comprised the following:

• Lead Left Book-Running Manager: Pinnacle Securities LLC

• Joint Book-Running Manager: Whitfield & Company LLC

• Co-Manager: Graystone Capital Markets Inc. ("Graystone")

In addition to the parties referenced above, the following external advisors and service providers were engaged in connection with the Offering:

• Underwriters' Counsel: Hargrove & Liddell LLP (Michael Sorrentino, lead partner)

• Independent Auditor: Meridian & Howe LLP (Gregory Simmons, audit partner)

• Financial Printer and EDGAR Filing Agent: Hennessy Consulting Group LLC (Martin Royce)

• Proposed Transfer Agent and Registrar: Broadleaf Transfer Services Inc.

• Proposed D&O Insurance Broker/Carrier: Terrace Hill Insurance Group Ltd. (Julia Brennan)

III. Status of Workstreams

Set forth below is a detailed summary of the status of each principal workstream as of the date of this letter. We have organized this summary to provide the Company with a clear picture of what was accomplished, what was not completed or executed, and what materials may be available for use in a future transaction.

A. Registration Statement and SEC Review

A first draft of the Company's Registration Statement on Form S-1 under the Securities Act (the "Registration Statement") was circulated to the working group on December 6, 2021. Following multiple rounds of drafting, comment, and revision involving all members of the working group, the Company submitted a confidential Draft Registration Statement (the "DRS") to the SEC pursuant to Section 6(e) of the Securities Act on January 10, 2022. The DRS was assigned SEC File Number 333-264518 and CIK 0001923847.

The SEC Staff of the Division of Corporation Finance issued its first comment letter on February 14, 2022. The initial comment letter contained forty-two (42) comments, addressing, among other things, the Company's revenue recognition policies, risk factor disclosures, use of non-GAAP financial measures, related-party transaction disclosures, and the presentation of the Company's dual-class stock structure. C&H prepared a comprehensive response letter in coordination with the Company, Meridian & Howe, and underwriters' counsel, and the Company filed an amended DRS with the SEC on March 4, 2022.

The SEC Staff issued a second comment letter on March 18, 2022, containing twelve (12) follow-up comments. C&H again coordinated the preparation of the Company's response, and the Company filed a second amended DRS with the SEC on March 28, 2022. On April 8, 2022, the SEC Staff indicated that it had no further comments on the DRS. This represented a significant milestone and cleared the path for the Company to proceed with a public filing.

The Company publicly filed Registration Statement on Form S-1/A (Amendment No. 1) on the SEC's EDGAR system on April 14, 2022, transitioning the previously confidential submission to a publicly available filing.

Following the Board's decision on June 6, 2022 to withdraw the Offering, C&H prepared and filed an Application for Withdrawal of Registration Statement on Form RW with the SEC on June 10, 2022, pursuant to Rule 477 under the Securities Act. The Application was filed on the basis that no securities had been sold pursuant to the Registration Statement and that the withdrawal was consistent with the public interest and the protection of investors. The SEC granted the withdrawal effective June 15, 2022.

Status: The Registration Statement has been withdrawn. No securities were offered or sold pursuant to the Registration Statement. The confidential treatment of the non-public DRS submissions has been preserved, as the withdrawal was granted prior to any further public disclosure beyond the April 14, 2022 filing. The Company's CIK number and filing history remain on EDGAR, but the withdrawn Registration Statement is no longer pending.

B. Underwriting Arrangements

The principal underwriting documentation consisted of the following:

Underwriting Agreement. C&H and Hargrove & Liddell negotiated the form of underwriting agreement (the "Underwriting Agreement") among the Company, the selling stockholders (Velthryn and Arclight), and the underwriters, with Pinnacle Securities LLC acting as representative of the several underwriters. The Underwriting Agreement was negotiated to execution-ready form and addressed customary provisions including representations and warranties of the Company and selling stockholders, conditions to closing, indemnification and contribution obligations, termination provisions, and the mechanics of pricing and settlement.

Status: The Underwriting Agreement was never executed by any party and has no binding effect. The underwriting arrangements have been terminated. No commitment or obligation exists on the part of the Company, the selling stockholders, or the underwriters under the Underwriting Agreement.

Lock-Up Agreements. C&H prepared and the parties negotiated the form of lock-up agreement providing for a 180-day lock-up period in favor of Pinnacle Securities LLC, applicable to all directors and officers of the Company and holders of more than 1% of the outstanding shares of capital stock of the Company. The form was finalized but was not executed by any party.

Status: No lock-up agreements are in effect. No officer, director, or stockholder of the Company is subject to any contractual restriction on transfer of securities arising from this Offering.

Agreement Among Underwriters. C&H reviewed the form of Agreement Among Underwriters ("AAU") among the members of the underwriting syndicate.

Status: No further action is required with respect to the AAU.

C. Corporate Governance Documents

In connection with the IPO, C&H prepared the following corporate governance documents, each of which was designed to become effective upon the closing of the Offering:

Amended and Restated Certificate of Incorporation (IPO Form). C&H drafted the Company's Amended and Restated Certificate of Incorporation (the "IPO Charter") in final form. The IPO Charter reflected the following key provisions:

• A dual-class common stock structure consisting of Class A Common Stock (one vote per share) and Class B Common Stock (ten votes per share), with Class B Common Stock held exclusively by the Company's co-founders, Priya Subramanian and Marcus Henley;

• An automatic conversion (sunset) provision under which all outstanding shares of Class B Common Stock would automatically convert into shares of Class A Common Stock on a one-for-one basis on the seventh anniversary of the closing of the IPO, or upon certain triggering events;

• Authorized share capital of 500,000,000 shares, consisting of 400,000,000 shares of Class A Common Stock, par value $0.0001 per share; 50,000,000 shares of Class B Common Stock, par value $0.0001 per share; and 50,000,000 shares of Preferred Stock, par value $0.0001 per share (undesignated);

• An exculpation provision consistent with Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL"), limiting the personal liability of directors to the fullest extent permitted by law; and

• Such other customary provisions as are appropriate for a publicly traded Delaware corporation.

Status: The IPO Charter was not filed with the Secretary of State of the State of Delaware. It remains in draft form. The Company's existing certificate of incorporation, as currently on file with the Delaware Secretary of State, remains in full force and effect.

Amended and Restated Bylaws (IPO Form). C&H drafted the Company's Amended and Restated Bylaws (the "IPO Bylaws") in final form. The IPO Bylaws included advance notice provisions governing stockholder nominations and proposals, a forum selection clause designating the Court of Chancery of the State of Delaware as the exclusive forum for certain intra-corporate disputes, and provisions designed to comply with Nasdaq listing requirements.

Status: The IPO Bylaws were not adopted by the Board or otherwise put into effect. They remain in draft form. The Company's existing bylaws remain in effect.

Written Consent of Stockholders. In preparation for the Offering, C&H coordinated the execution of a written consent of stockholders (the "Stockholder Consent") approving the adoption of the IPO Charter. The Stockholder Consent was executed by holders of a majority of the voting power of the Company's outstanding capital stock, including Velthryn, Arclight, Priya Subramanian, and Marcus Henley. By its terms, the Stockholder Consent was expressly conditioned upon, and would become effective only upon, the closing of the IPO.

Status: Because the IPO did not close, the condition to effectiveness of the Stockholder Consent was not satisfied, and the Stockholder Consent has no operative effect. No amendment to the Company's certificate of incorporation has been adopted or filed as a result of the Stockholder Consent.

D. Board and Committee Charters

C&H prepared draft charters for each of the three standing committees of the Board that were to be constituted in connection with the Offering, as follows:

Audit Committee Charter. The draft Audit Committee Charter was prepared to comply with the requirements of Nasdaq Listing Rule 5605(c) and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The charter designated Samuel Adebayo as Chair of the Audit Committee and as the committee's financial expert within the meaning of Item 407(d)(5) of Regulation S-K. The proposed membership of the Audit Committee consisted of Samuel Adebayo, Diane Ochoa, and Catherine Mercer, each of whom was determined to satisfy the independence requirements of the Nasdaq listing rules and Rule 10A-3.

Compensation Committee Charter. The draft Compensation Committee Charter was prepared to comply with the requirements of Nasdaq Listing Rule 5605(d). The proposed membership consisted of Catherine Mercer (Chair), Diane Ochoa, and Samuel Adebayo, each of whom was determined to qualify as an independent director under applicable Nasdaq listing standards and as a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act.

Nominating and Corporate Governance Committee Charter. The draft Nominating and Corporate Governance Committee Charter was prepared in accordance with Nasdaq listing standards. The proposed membership consisted of Diane Ochoa (Chair), Samuel Adebayo, and Catherine Mercer.

Status: All three committee charters remain in draft form and were not formally adopted by the Board. These charters are available for use if the Company elects to pursue a future offering or listing, and they may be adapted with relatively modest updates to reflect any changes in applicable listing standards or the composition of the Board at that time.

E. Insider Trading Policy

C&H prepared a draft insider trading compliance policy (the "Insider Trading Policy") for the Company, addressing trading blackout windows (including quarterly blackout periods), pre-clearance procedures for transactions by directors, officers, and designated insiders, and guidelines governing the adoption, modification, and termination of trading plans under Rule 10b5-1 of the Exchange Act.

Status: The Insider Trading Policy was not adopted by the Board and remains in draft form. We note, however, that best practices — and the expectations of institutional investors, potential acquirers, and regulatory bodies — strongly support the adoption of an insider trading policy by private companies with a significant number of stockholders and active secondary trading markets for their equity. We recommend that the Company consider adopting the Insider Trading Policy (or a substantially similar policy) independently of any future IPO or public offering process.

F. Testing-the-Waters and Road Show

In April 2022, following the SEC's clearance of the DRS and the public filing of the Registration Statement, the Board authorized management and the underwriters to conduct testing-the-waters ("TTW") meetings with qualified institutional buyers and institutional accredited investors, pursuant to Section 5(d) of the Securities Act. TTW meetings commenced on April 18, 2022 and were conducted over a period of approximately one week.

The formal road show was launched on April 25, 2022, at which time the preliminary prospectus (the "Red Herring") was distributed to prospective investors. The road show included in-person presentations in New York, Boston, San Francisco, and Chicago, as well as virtual presentations and one-on-one meetings facilitated by the underwriting syndicate.

The road show was paused on May 9, 2022, in response to a significant and sustained decline in the Nasdaq Composite Index and broader deterioration in market conditions for technology company IPOs. At a Board meeting held on May 16, 2022, the Board determined to delay pricing of the Offering pending an assessment of market stabilization. At a subsequent Board meeting held on June 6, 2022, the Board determined that market conditions did not support proceeding with the Offering at valuations consistent with the Company's objectives and resolved to withdraw the Offering.

Status: All testing-the-waters and marketing activities have been terminated. No indications of interest were converted to orders. No securities were sold. No pricing occurred.

G. Comfort Letter and Auditor Consent

C&H prepared and transmitted a draft comfort letter request to Meridian & Howe LLP, addressed to Gregory Simmons, the Company's audit partner, in anticipation of the pricing of the Offering. The comfort letter was intended to cover customary matters, including the auditor's independence, the financial statements included in the Registration Statement, and certain financial data and statistical information derived from the Company's accounting records.

Status: No comfort letter was issued by Meridian & Howe, as the Offering did not proceed to pricing. The consent of Meridian & Howe as independent registered public accounting firm, consenting to the incorporation by reference of its audit report in the Registration Statement, was filed with the public Form S-1 on April 14, 2022, but is no longer operative given the withdrawal of the Registration Statement.

H. Tax Analysis

Sylvia Hartwell, a specialist partner in C&H's Tax Group, prepared a comprehensive tax structure memorandum (the "Tax Memorandum") addressing the following matters:

• Analysis of the corporate reorganization steps contemplated in connection with the IPO, including consideration of the requirements of Sections 368 and 351 of the Internal Revenue Code of 1986, as amended (the "Code");

• State tax nexus analysis addressing the Company's filing obligations and exposure in California, New York, Texas, and Illinois;

• Qualified Small Business Stock ("QSBS") analysis under Section 1202 of the Code, including the impact of the proposed IPO on existing QSBS eligibility for certain stockholders; and

• Payroll tax implications of stock option exercises by Company employees, including federal, state, and local withholding and reporting obligations.

Status: The Tax Memorandum was delivered to the Company in January 2022. The analysis contained therein remains applicable to the Company's current and future tax planning, subject to any intervening changes in applicable law or regulations. We recommend that the Company retain the Tax Memorandum for future reference and consult with tax advisors as appropriate in connection with any future liquidity event.

I. Blue Sky Survey

C&H, through the efforts of Brendan Walsh, prepared a comprehensive state-by-state securities law compliance survey (the "Blue Sky Survey") covering all fifty (50) states, the District of Columbia, the Commonwealth of Puerto Rico, and the U.S. Virgin Islands. The Blue Sky Survey identified the applicable registration exemptions, notice filing requirements, and fee obligations in each jurisdiction in connection with the proposed offering of Class A Common Stock.

Status: The Blue Sky Survey has been completed and is on file. No notice filings were made in any jurisdiction, as the Offering did not proceed to pricing or closing. The Blue Sky Survey is available for reference in connection with any future offering, although it should be updated at that time to reflect any changes in applicable state securities laws or regulations.

J. Ancillary Matters

Directors' and Officers' Liability Insurance. In connection with the Offering, the Company engaged Terrace Hill Insurance Group Ltd. ("Terrace Hill"), through Julia Brennan, to obtain proposals for directors' and officers' liability insurance coverage suitable for a publicly traded company. Terrace Hill had proposed a directors' and officers' liability insurance policy (the "D&O Policy") with an aggregate limit of $30,000,000, including a six-year tail provision, at an estimated annual premium of approximately $2,400,000.

Status: The D&O Policy was not bound, and no premium obligation was incurred by the Company. The Company's existing directors' and officers' insurance coverage remains in effect. Should the Company pursue a future public offering, it will need to revisit the D&O insurance market at that time, as pricing and availability may differ materially from the terms quoted in 2022.

Transfer Agent. Broadleaf Transfer Services Inc. ("Broadleaf") was designated as the proposed transfer agent and registrar for the Class A Common Stock in connection with the Offering.

Status: The transfer agent agreement with Broadleaf was not executed. No setup fees were incurred by the Company beyond the initial engagement fee of $25,000 paid in connection with preliminary setup and account configuration work. The Company should confirm directly with Broadleaf whether any additional amounts are outstanding.

Financial Printer and EDGAR Filing Agent. Hennessy Consulting Group LLC ("Hennessy"), through Martin Royce, provided typesetting, printing, and EDGAR filing agent services in connection with the Registration Statement, including the confidential DRS submissions, the public filing of the Form S-1, the preliminary prospectus (Red Herring), and the Form RW withdrawal application.

Status: Hennessy's services through the public filing and the filing of Form RW have been completed. Fees for Hennessy's services are included in the expense summary set forth in Section IV below. No additional services from Hennessy are anticipated in connection with this engagement.

IV. Financial Summary — Fees and Expenses

A. Calderwood & Harkness LLP Fees and Expenses

Pursuant to Section 4 of the Engagement Letter, the total fees for C&H's legal services in connection with the Offering were subject to a fee cap of $1,950,000, exclusive of disbursements and out-of-pocket expenses. Set forth below is a summary of the fees billed by C&H through the close of the engagement:

The total fees billed reflect the time and effort of the engagement team, allocated approximately as follows:

• Robert Adeyemi (Responsible Partner): Overall supervision and strategic direction of the engagement; lead responsibility for SEC comment letter strategy and Board presentations; analysis and advice regarding the withdrawal decision and Form RW filing.

• Jennifer Kwon (Billing Partner): Billing oversight, fee management, client relationship coordination, and engagement administration.

• Audrey Zhou (Lead Associate): Primary drafter of the Registration Statement on Form S-1, including all amendments and confidential submissions; preparation of responses to SEC Staff comment letters; drafting of corporate governance documents (IPO Charter, IPO Bylaws, committee charters, insider trading policy); preparation of disclosure backup memorandum and verification materials.

• Brendan Walsh (Working Associate): Legal due diligence coordination and review; preparation of the Blue Sky Survey; review and analysis of the Agreement Among Underwriters; preparation of the corporate structure chart and capitalization analysis; drafting and review of ancillary offering documents.

• Sylvia Hartwell (Specialist Partner, Tax): Preparation of the Tax Memorandum, including Sections 368/351 analysis, state tax nexus analysis, QSBS analysis under Section 1202, and payroll tax analysis of stock option exercises.

All outstanding invoices have been submitted to the Company. The final invoice, dated June 20, 2022, covers fees and disbursements through the conclusion of the engagement. We respectfully request prompt payment of any outstanding amounts in accordance with the payment terms set forth in the Engagement Letter (net thirty (30) days from the date of invoice).

B. Summary of Third-Party Offering Expenses Incurred

For the Company's reference and recordkeeping purposes, the following is a summary of estimated third-party expenses incurred in connection with the Offering. The Company should confirm these amounts directly with the respective service providers, as certain amounts may be subject to adjustment:

We note the following with respect to certain of these items:

• Hargrove & Liddell LLP: The fees of underwriters' counsel were to be billed directly to the underwriters, with reimbursement by the Company pursuant to the terms of the Underwriting Agreement. Because the Underwriting Agreement was never executed, the allocation of responsibility for Hargrove & Liddell's fees should be confirmed between the Company and the underwriters. We understand that certain arrangements may have been addressed in separate letter agreements between the Company and Pinnacle.

• SEC Registration Fee: The Company paid a registration fee of $20,394 in connection with the filing of the public Registration Statement. The Company may be eligible to request a credit toward the registration fee payable in connection with a future registration statement for the unused portion of the fee under Rule 457(p) under the Securities Act, provided that the future registration statement is filed within the applicable time period (generally five years from the date of payment of the original fee). We recommend that the Company consult with counsel at the time of any future filing to confirm eligibility and the mechanics for claiming such credit.

• Nasdaq Listing Fee: The Company paid an initial listing fee of $295,000 to The Nasdaq Stock Market LLC. Because the listing never became effective, Nasdaq's fee schedule may provide for a partial or full refund of the listing fee. We recommend that the Company inquire directly with Nasdaq's Listing Qualifications Department regarding the availability and process for obtaining any refund.

• D&O Insurance Premium: As noted in Section III.J above, the proposed D&O insurance premium of approximately $2,400,000 was not incurred, as the D&O Policy was not bound. This amount is accordingly excluded from the expense summary above.

• Underwriting discount: The proposed underwriting discount of 6.5% (estimated at approximately $14,300,000 on primary shares) was not payable, as the Offering did not close. No underwriting discount or commission has been paid or is owed.

V. Observations Regarding Future Offering or Liquidity Event

While the decision to withdraw the Offering was driven by market conditions that made proceeding inadvisable at this time, we wish to emphasize that the Company retains full flexibility to pursue a future IPO, direct listing, SPAC transaction, or other liquidity event at a time of the Board's choosing. We set forth below certain observations that may be useful to the Company and its advisors in evaluating and planning any such future transaction.

Preservation of Confidential Treatment. The withdrawal of the Registration Statement under Rule 477 preserves the confidential treatment of the non-public DRS submissions made prior to the public filing on April 14, 2022. The publicly filed Form S-1/A remains available on EDGAR (as a withdrawn filing), but the earlier confidential submissions are not publicly accessible. This preserves the Company's ability to control the timing and extent of disclosure in connection with any future process.

SEC Registration Fee Credit. As noted above, under Rule 457(p) under the Securities Act, the Company may be able to offset SEC registration fees previously paid ($20,394) against the registration fees payable in connection with a future registration statement, provided that the future registration statement is filed within five years of the date of payment of the original fee. The Company should maintain records of the fee payment and consult with counsel at the time of any future filing to confirm eligibility.

Leveraging Existing Work Product. A substantial body of work product was created during this engagement, including the Registration Statement drafts and all amendments, corporate governance documents (IPO Charter, IPO Bylaws, committee charters, insider trading policy), due diligence materials, the Tax Memorandum, the Blue Sky Survey, and related memoranda and analyses. This work product can be leveraged in a future IPO or other capital markets process, potentially reducing both the cost and the timeline required to prepare for a new offering. While updates will be necessary, the foundational work has been completed and represents a meaningful head start.

Key Considerations for a Future Offering. The Company and its advisors should be mindful of the following considerations in connection with any future offering:

• Financial Statement Staleness: The audited financial statements included in the Registration Statement covered the fiscal year ended December 31, 2021, and the unaudited interim financial statements covered the quarter ended March 31, 2022. These financial statements will become stale under the applicable requirements of Regulation S-X and will need to be updated (and, in the case of annual financial statements, re-audited) in connection with any future filing.

• Material Developments: Any material developments in the Company's business, operations, financial condition, or risk profile that have occurred since the date of the last filing will require new or updated disclosure in a future registration statement.

• Market Conditions and Valuation: Market conditions and investor appetite for technology company IPOs should be reassessed at the time of any future offering, and the Company's valuation expectations should be recalibrated in light of then-prevailing market multiples and comparable transactions.

• Regulatory Changes: Any changes in applicable securities laws, SEC rules, or Nasdaq listing standards that have occurred since the date of this engagement should be taken into account.

Governance Framework. The dual-class common stock structure (Class A and Class B), the seven-year sunset provision, and the broader corporate governance framework reflected in the draft IPO Charter and IPO Bylaws remain available for use in a future offering. These documents can be updated and adapted as needed without the necessity of starting from scratch.

Capital Structure. For reference, the following summarizes the Company's approximate capital structure as of the close of this engagement:

• Fully Diluted Pre-IPO Shares Outstanding: Approximately 118,200,000 shares.

• Employee Stock Option Pool: 14,800,000 shares authorized, of which approximately 11,300,000 options are outstanding at a weighted-average exercise price of $4.82 per share.

• Preferred Stock: Existing preferred stock (Series A, Series B, Series C, and Series D), totaling approximately 62,400,000 shares, remains outstanding and unconverted. The terms of conversion, liquidation preference, and other rights of the preferred stock are governed by the Company's existing certificate of incorporation and the applicable investor rights agreements.

• Class B Common Stock: 28,500,000 shares outstanding, held by Priya Subramanian (16,500,000 shares) and Marcus Henley (12,000,000 shares). The Class B Common Stock, which is currently the only class of common stock authorized under the existing certificate of incorporation, would have been reclassified in connection with the IPO pursuant to the IPO Charter.

Revolving Credit Facility. The Company's revolving credit facility with Ashford National Bank (the "Revolver"), providing for a $50,000,000 commitment, remains in place and is unaffected by the withdrawal of the Offering. As of March 31, 2022, approximately $15,000,000 was drawn under the Revolver. The Company should confirm the current status of the Revolver and any applicable covenants with its banking counsel.

VI. Document Retention and Return of Materials

C&H will retain in its files copies of all engagement work product generated in connection with this matter, including drafts, memoranda, correspondence, SEC filings, and related materials, in accordance with the Firm's standard document retention policy. Under that policy, engagement files are retained for a minimum of seven (7) years from the date of engagement close, or longer as may be required by applicable law, regulation, or professional obligation.

Originals and copies of Company documents provided to C&H during the course of due diligence and the engagement will be returned to the Company or securely destroyed, at the Company's direction. We request that you provide written instructions to the undersigned regarding your preference for the disposition of these materials. In the absence of instructions, we will retain such materials in our files in accordance with the retention policy described above.

All electronic files relating to this engagement are stored on C&H's secure document management systems and are accessible only to members of the engagement team and authorized Firm personnel. Access restrictions will remain in place following the close of the engagement.

We remind the Company that attorney-client privilege and work product protection attach to the communications, memoranda, and other materials generated during the course of this engagement. The Company, as holder of the attorney-client privilege, should take appropriate care to preserve such privilege in connection with any internal handling, distribution, or third-party disclosure of privileged materials. We recommend that any disclosure of privileged materials be reviewed by the Company's legal department prior to dissemination.

For completeness, the following categories of documents are in C&H's possession and are available for return or confirmation of disposition:

• Due diligence materials, including corporate records, material contracts, financial data, and employee-related documentation provided by the Company during the due diligence process;

• Board minutes and resolutions relating to the IPO;

• The executed Stockholder Consent (which, as noted in Section III.C, is conditional and non-operative);

• Copies of SEC correspondence, including the Staff comment letters and the Company's response letters; and

• Working group lists, contact sheets, and organizational materials.

Please direct any instructions regarding document return or destruction to the undersigned at the contact information provided below.

VII. Re-Engagement Provisions

Should Lumos elect to pursue a future initial public offering, direct listing, or other capital markets transaction, Calderwood & Harkness would welcome the opportunity to serve as issuer's counsel in connection with any such transaction. We believe the depth of institutional knowledge developed by our team during this engagement would provide meaningful continuity and efficiency in a future process.

Any future engagement of C&H would require the execution of a new engagement letter, completion of updated conflicts clearance procedures in accordance with the Firm's policies, and mutual agreement on the scope, staffing, and fee arrangements applicable to the new matter. The fee cap and billing arrangements set forth in the November 8, 2021 Engagement Letter applied solely to the engagement that is the subject of this letter and do not carry over to any future matter.

To facilitate a smooth and efficient restart in the event the Company elects to pursue a future transaction, we recommend that the Company maintain the following materials in readily accessible form:

• The draft corporate governance documents (IPO Charter, IPO Bylaws, committee charters);

• The draft Insider Trading Policy;

• The Tax Memorandum prepared by Sylvia Hartwell;

• The Blue Sky Survey;

• The most recent draft of the Registration Statement (as amended); and

• Due diligence files and corporate records.

For any questions regarding re-engagement or to initiate discussions regarding a future transaction, please contact:

• Robert Adeyemi (Responsible Partner): (415) 442-7100 / radeyemi@calderwoodharkness.com

• Jennifer Kwon (Billing Partner): (415) 442-7155 / jkwon@calderwoodharkness.com

• Audrey Zhou (Lead Associate): (415) 442-7220 / azhou@calderwoodharkness.com

VIII. Acknowledgments and Limitations

This letter confirms the termination of the attorney-client relationship between Calderwood & Harkness LLP and Lumos Analytics Inc. with respect to this specific matter, designated as Matter No. 1008-00002, only. Upon the close of this engagement, C&H does not represent Lumos in any other matter unless separately engaged in writing pursuant to a duly executed engagement letter.

Nothing in this letter constitutes a waiver of any rights or obligations of either party under the Engagement Letter dated November 8, 2021, except as specifically addressed herein. The terms and conditions of the Engagement Letter, including but not limited to the provisions regarding limitation of liability, dispute resolution, and governing law, survive the termination of the engagement to the extent provided therein.

The engagement was governed by the laws of the State of New York, consistent with Section 12 of the Engagement Letter. Any dispute arising out of or relating to this letter or the engagement shall be resolved in accordance with the dispute resolution provisions of the Engagement Letter.

IX. Closing

On behalf of the entire Calderwood & Harkness team, I wish to express our sincere appreciation for the opportunity to have worked with you, Priya, David, and the full Lumos team on this engagement. Despite the outcome, the process reflected the professionalism, diligence, and collaborative spirit of everyone involved, and the work product generated positions the Company well for a future transaction when the time is right.

We also wish to acknowledge the professionalism and dedication of all parties with whom we worked during the course of the engagement, including the teams at Pinnacle Securities LLC, Whitfield & Company LLC, Graystone Capital Markets Inc., Hargrove & Liddell LLP, and Meridian & Howe LLP. The quality of the collaborative effort across the working group was exceptional.

Should you have any questions regarding this letter, the status of any workstream, or any other matter relating to the engagement, please do not hesitate to contact me directly. Jennifer Kwon and Audrey Zhou are also available to assist with any follow-up items.

Robert Adeyemi Direct Line: (415) 442-7100

Email: radeyemi@calderwoodharkness.com

We wish Lumos continued success and look forward to the possibility of working together again in the future.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Robert Adeyemi Partner, Capital Markets Group

cc: (via email)

Priya Subramanian, Chief Executive Officer, Lumos Analytics Inc. David Lau, Chief Financial Officer, Lumos Analytics Inc. Jennifer Kwon, Partner, Calderwood & Harkness LLP Audrey Zhou, Associate, Calderwood & Harkness LLP

Enclosure:

Final Fee Statement Summary (as of June 24, 2022)

This letter and the information contained herein are confidential and may be subject to the attorney-client privilege and/or the work product doctrine. This letter is intended solely for the use of the addressee and the individuals identified in the "cc" line above. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact Robert Adeyemi at the number listed above and destroy all copies of this communication.

For the avoidance of doubt, the Client, Lumos Analytics Inc., is a portfolio company of Pinnacle Venture Fund II LP, and certain consents and reporting obligations to the sponsor may apply in connection with this matter.

Item	Amount
Fee Cap per Engagement Letter	$1,950,000
Total Fees Billed Through Engagement Close	$1,672,340
Amount Under Cap	$277,660
Expense Item	Estimated Amount
Hargrove & Liddell LLP (underwriters' counsel)	$750,000 (est.)
Meridian & Howe LLP (audit, comfort letter preparation, consent)	$680,000 (approx.)
SEC Registration Fee (filed with public S-1)	$20,394
Nasdaq Initial Listing Fee	$295,000
Hennessy Consulting Group LLC (EDGAR/printing)	$185,000 (approx.)
Broadleaf Transfer Services Inc. (transfer agent setup)	$25,000 (approx.)
Miscellaneous (road show expenses, travel, etc.)	$245,000 (approx.)
Calderwood & Harkness LLP (issuer's counsel)	$1,672,340
Total Estimated Offering Expenses Incurred	Approximately $3.9–$4.1 million

CALDERWOOD & HARKNESS LLP Attorneys at Law
1 Market Street, Spear Tower, Suite 3600 San Francisco, California 94105 Telephone: (415) 442-7000 | Facsimile: (415) 442-7001
425 Lexington Avenue, 42nd Floor New York, New York 10017 Telephone: (212) 558-3000 | Facsimile: (212) 558-3001
www.calderwoodharkness.com
June 24, 2022
Matter Number: 1008-00002
Via Email (nfeinberg@lumosanalytics.com) and Ostrander Technologies Feinberg, Esq. General Counsel & Corporate Secretary Lumos Analytics Inc. 450 Folsom Street, Suite 1200 San Francisco, California 94105
Re: Formal Closing of Engagement — Proposed Initial Public Offering of Class A Common Stock of Lumos Analytics Inc. (the "Company" or "Lumos"); Calderwood & Harkness LLP Matter No. 1008-00002
Dear Naomi:
I. Introduction and Purpose
This letter is written in connection with the engagement letter dated November 8, 2021 (the "Engagement Letter"), pursuant to which Calderwood & Harkness LLP ("C&H" or the "Firm") was retained by Lumos Analytics Inc. (the "Company" or "Lumos") as issuer's counsel in connection with the proposed initial public offering (the "IPO" or the "Offering") of shares of Class A Common Stock, par value $0.0001 per share (the "Class A Common Stock"), of the Company on the Nasdaq Global Select Market under the proposed ticker symbol "LMSA." The Offering contemplated target gross proceeds of approximately $220,000,000, inclusive of both primary and secondary shares offered by the Company and certain selling stockholders.
Robert Adeyemi served as Responsible Partner for the engagement, and Jennifer Kwon served as Billing Partner. The broader engagement team included Audrey Zhou (Lead Associate), Brendan Walsh (Working Associate), and Sylvia Hartwell (Specialist Partner, Tax), among other personnel within the Firm's Capital Markets Group.
The purpose of this letter is to formally confirm the closing of our engagement with the Company in connection with this matter, effective as of June 24, 2022. As you are aware, the Board of Directors of the Company (the "Board") determined at its meeting held on June 6, 2022 to withdraw the Offering in light of then-prevailing market conditions and related considerations. In furtherance of that decision, the Company, acting through C&H, filed an Application for Withdrawal of Registration Statement on Form RW with the U.S. Securities and Exchange Commission (the "SEC") on June 10, 2022, pursuant to Rule 477 under the Securities Act of 1933, as amended (the "Securities Act"). The SEC granted the withdrawal effective June 15, 2022. The engagement accordingly spanned from November 8, 2021 through June 24, 2022.
This letter provides a comprehensive summary of the work performed, the status of all workstreams, a financial summary of fees and expenses, observations regarding future liquidity alternatives, and certain housekeeping matters relating to document retention and the potential for re-engagement. We encourage you to review this letter carefully and to contact us with any questions or corrections.
II. Summary of Engagement Background
For context and as a matter of complete recordkeeping, we provide the following summary of the background of the engagement and the key milestones in the Offering process.
The Board of Directors of Lumos adopted a resolution on July 15, 2021, authorizing the Company's management to explore an initial public offering of the Company's equity securities. Following that authorization, the Company commenced discussions with prospective underwriters, financial advisors, and legal counsel regarding the structure, timing, and feasibility of a public offering.
An organizational meeting with the proposed underwriting syndicate — consisting of Pinnacle Securities LLC ("Pinnacle") and Whitfield & Company LLC ("Whitfield") — was held on September 22, 2021. That meeting included senior representatives of Lumos management, including Priya Subramanian (Chief Executive Officer and Co-Founder), Marcus Henley (Chief Technology Officer and Co-Founder), David Lau (Chief Financial Officer), and you, in your capacity as General Counsel. The organizational meeting addressed the proposed offering structure, timeline, due diligence requirements, and allocation of responsibilities among the working group.
Following the organizational meeting and a period of evaluation, the Company executed the Engagement Letter with C&H on November 8, 2021. An all-hands kickoff meeting was held on November 15, 2021, at which the full working group convened, including representatives of issuer's counsel (C&H), underwriters' counsel (Hargrove & Liddell LLP ("Hargrove & Liddell"), led by Michael Sorrentino), the independent auditor (Meridian & Howe LLP ("Meridian & Howe"), audit partner Gregory Simmons), and the underwriting syndicate.
The Offering as contemplated in the draft Registration Statement and related materials was structured as follows:
• Primary Shares: 12,941,176 shares of Class A Common Stock to be offered and sold by the Company.
• Secondary Shares: 3,500,000 shares of Class A Common Stock to be offered and sold by selling stockholders, consisting of 2,000,000 shares to be sold by Velthryn Venture Partners Fund IV, L.P. ("Velthryn") and 1,500,000 shares to be sold by Arclight Equity Group Fund VII, L.P. ("Arclight").
• Total Base Offering: 16,441,176 shares of Class A Common Stock.
• Overallotment Option: An option granted to the underwriters to purchase up to an additional 2,466,176 shares of Class A Common Stock (representing 15% of the total base offering) within 30 days of pricing, solely to cover overallotments.
• Preliminary Price Range: $16.00 to $18.00 per share.
• Proposed Underwriting discount: 6.5% of the public offering price, yielding an estimated underwriting discount of approximately $14,300,000 on the primary shares and estimated net proceeds to the Company of approximately $205,700,000 before offering expenses.
The underwriting syndicate comprised the following:
• Lead Left Book-Running Manager: Pinnacle Securities LLC
• Joint Book-Running Manager: Whitfield & Company LLC
• Co-Manager: Graystone Capital Markets Inc. ("Graystone")
In addition to the parties referenced above, the following external advisors and service providers were engaged in connection with the Offering:
• Underwriters' Counsel: Hargrove & Liddell LLP (Michael Sorrentino, lead partner)
• Independent Auditor: Meridian & Howe LLP (Gregory Simmons, audit partner)
• Financial Printer and EDGAR Filing Agent: Hennessy Consulting Group LLC (Martin Royce)
• Proposed Transfer Agent and Registrar: Broadleaf Transfer Services Inc.
• Proposed D&O Insurance Broker/Carrier: Terrace Hill Insurance Group Ltd. (Julia Brennan)
III. Status of Workstreams
Set forth below is a detailed summary of the status of each principal workstream as of the date of this letter. We have organized this summary to provide the Company with a clear picture of what was accomplished, what was not completed or executed, and what materials may be available for use in a future transaction.
A. Registration Statement and SEC Review
A first draft of the Company's Registration Statement on Form S-1 under the Securities Act (the "Registration Statement") was circulated to the working group on December 6, 2021. Following multiple rounds of drafting, comment, and revision involving all members of the working group, the Company submitted a confidential Draft Registration Statement (the "DRS") to the SEC pursuant to Section 6(e) of the Securities Act on January 10, 2022. The DRS was assigned SEC File Number 333-264518 and CIK 0001923847.
The SEC Staff of the Division of Corporation Finance issued its first comment letter on February 14, 2022. The initial comment letter contained forty-two (42) comments, addressing, among other things, the Company's revenue recognition policies, risk factor disclosures, use of non-GAAP financial measures, related-party transaction disclosures, and the presentation of the Company's dual-class stock structure. C&H prepared a comprehensive response letter in coordination with the Company, Meridian & Howe, and underwriters' counsel, and the Company filed an amended DRS with the SEC on March 4, 2022.
The SEC Staff issued a second comment letter on March 18, 2022, containing twelve (12) follow-up comments. C&H again coordinated the preparation of the Company's response, and the Company filed a second amended DRS with the SEC on March 28, 2022. On April 8, 2022, the SEC Staff indicated that it had no further comments on the DRS. This represented a significant milestone and cleared the path for the Company to proceed with a public filing.
The Company publicly filed Registration Statement on Form S-1/A (Amendment No. 1) on the SEC's EDGAR system on April 14, 2022, transitioning the previously confidential submission to a publicly available filing.
Following the Board's decision on June 6, 2022 to withdraw the Offering, C&H prepared and filed an Application for Withdrawal of Registration Statement on Form RW with the SEC on June 10, 2022, pursuant to Rule 477 under the Securities Act. The Application was filed on the basis that no securities had been sold pursuant to the Registration Statement and that the withdrawal was consistent with the public interest and the protection of investors. The SEC granted the withdrawal effective June 15, 2022.
Status: The Registration Statement has been withdrawn. No securities were offered or sold pursuant to the Registration Statement. The confidential treatment of the non-public DRS submissions has been preserved, as the withdrawal was granted prior to any further public disclosure beyond the April 14, 2022 filing. The Company's CIK number and filing history remain on EDGAR, but the withdrawn Registration Statement is no longer pending.
B. Underwriting Arrangements
The principal underwriting documentation consisted of the following:
Underwriting Agreement. C&H and Hargrove & Liddell negotiated the form of underwriting agreement (the "Underwriting Agreement") among the Company, the selling stockholders (Velthryn and Arclight), and the underwriters, with Pinnacle Securities LLC acting as representative of the several underwriters. The Underwriting Agreement was negotiated to execution-ready form and addressed customary provisions including representations and warranties of the Company and selling stockholders, conditions to closing, indemnification and contribution obligations, termination provisions, and the mechanics of pricing and settlement.
Status: The Underwriting Agreement was never executed by any party and has no binding effect. The underwriting arrangements have been terminated. No commitment or obligation exists on the part of the Company, the selling stockholders, or the underwriters under the Underwriting Agreement.
Lock-Up Agreements. C&H prepared and the parties negotiated the form of lock-up agreement providing for a 180-day lock-up period in favor of Pinnacle Securities LLC, applicable to all directors and officers of the Company and holders of more than 1% of the outstanding shares of capital stock of the Company. The form was finalized but was not executed by any party.
Status: No lock-up agreements are in effect. No officer, director, or stockholder of the Company is subject to any contractual restriction on transfer of securities arising from this Offering.
Agreement Among Underwriters. C&H reviewed the form of Agreement Among Underwriters ("AAU") among the members of the underwriting syndicate.
Status: No further action is required with respect to the AAU.
C. Corporate Governance Documents
In connection with the IPO, C&H prepared the following corporate governance documents, each of which was designed to become effective upon the closing of the Offering:
Amended and Restated Certificate of Incorporation (IPO Form). C&H drafted the Company's Amended and Restated Certificate of Incorporation (the "IPO Charter") in final form. The IPO Charter reflected the following key provisions:
• A dual-class common stock structure consisting of Class A Common Stock (one vote per share) and Class B Common Stock (ten votes per share), with Class B Common Stock held exclusively by the Company's co-founders, Priya Subramanian and Marcus Henley;
• An automatic conversion (sunset) provision under which all outstanding shares of Class B Common Stock would automatically convert into shares of Class A Common Stock on a one-for-one basis on the seventh anniversary of the closing of the IPO, or upon certain triggering events;
• Authorized share capital of 500,000,000 shares, consisting of 400,000,000 shares of Class A Common Stock, par value $0.0001 per share; 50,000,000 shares of Class B Common Stock, par value $0.0001 per share; and 50,000,000 shares of Preferred Stock, par value $0.0001 per share (undesignated);
• An exculpation provision consistent with Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL"), limiting the personal liability of directors to the fullest extent permitted by law; and
• Such other customary provisions as are appropriate for a publicly traded Delaware corporation.
Status: The IPO Charter was not filed with the Secretary of State of the State of Delaware. It remains in draft form. The Company's existing certificate of incorporation, as currently on file with the Delaware Secretary of State, remains in full force and effect.
Amended and Restated Bylaws (IPO Form). C&H drafted the Company's Amended and Restated Bylaws (the "IPO Bylaws") in final form. The IPO Bylaws included advance notice provisions governing stockholder nominations and proposals, a forum selection clause designating the Court of Chancery of the State of Delaware as the exclusive forum for certain intra-corporate disputes, and provisions designed to comply with Nasdaq listing requirements.
Status: The IPO Bylaws were not adopted by the Board or otherwise put into effect. They remain in draft form. The Company's existing bylaws remain in effect.
Written Consent of Stockholders. In preparation for the Offering, C&H coordinated the execution of a written consent of stockholders (the "Stockholder Consent") approving the adoption of the IPO Charter. The Stockholder Consent was executed by holders of a majority of the voting power of the Company's outstanding capital stock, including Velthryn, Arclight, Priya Subramanian, and Marcus Henley. By its terms, the Stockholder Consent was expressly conditioned upon, and would become effective only upon, the closing of the IPO.
Status: Because the IPO did not close, the condition to effectiveness of the Stockholder Consent was not satisfied, and the Stockholder Consent has no operative effect. No amendment to the Company's certificate of incorporation has been adopted or filed as a result of the Stockholder Consent.
D. Board and Committee Charters
C&H prepared draft charters for each of the three standing committees of the Board that were to be constituted in connection with the Offering, as follows:
Audit Committee Charter. The draft Audit Committee Charter was prepared to comply with the requirements of Nasdaq Listing Rule 5605(c) and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The charter designated Samuel Adebayo as Chair of the Audit Committee and as the committee's financial expert within the meaning of Item 407(d)(5) of Regulation S-K. The proposed membership of the Audit Committee consisted of Samuel Adebayo, Diane Ochoa, and Catherine Mercer, each of whom was determined to satisfy the independence requirements of the Nasdaq listing rules and Rule 10A-3.
Compensation Committee Charter. The draft Compensation Committee Charter was prepared to comply with the requirements of Nasdaq Listing Rule 5605(d). The proposed membership consisted of Catherine Mercer (Chair), Diane Ochoa, and Samuel Adebayo, each of whom was determined to qualify as an independent director under applicable Nasdaq listing standards and as a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act.
Nominating and Corporate Governance Committee Charter. The draft Nominating and Corporate Governance Committee Charter was prepared in accordance with Nasdaq listing standards. The proposed membership consisted of Diane Ochoa (Chair), Samuel Adebayo, and Catherine Mercer.
Status: All three committee charters remain in draft form and were not formally adopted by the Board. These charters are available for use if the Company elects to pursue a future offering or listing, and they may be adapted with relatively modest updates to reflect any changes in applicable listing standards or the composition of the Board at that time.
E. Insider Trading Policy
C&H prepared a draft insider trading compliance policy (the "Insider Trading Policy") for the Company, addressing trading blackout windows (including quarterly blackout periods), pre-clearance procedures for transactions by directors, officers, and designated insiders, and guidelines governing the adoption, modification, and termination of trading plans under Rule 10b5-1 of the Exchange Act.
Status: The Insider Trading Policy was not adopted by the Board and remains in draft form. We note, however, that best practices — and the expectations of institutional investors, potential acquirers, and regulatory bodies — strongly support the adoption of an insider trading policy by private companies with a significant number of stockholders and active secondary trading markets for their equity. We recommend that the Company consider adopting the Insider Trading Policy (or a substantially similar policy) independently of any future IPO or public offering process.
F. Testing-the-Waters and Road Show
In April 2022, following the SEC's clearance of the DRS and the public filing of the Registration Statement, the Board authorized management and the underwriters to conduct testing-the-waters ("TTW") meetings with qualified institutional buyers and institutional accredited investors, pursuant to Section 5(d) of the Securities Act. TTW meetings commenced on April 18, 2022 and were conducted over a period of approximately one week.
The formal road show was launched on April 25, 2022, at which time the preliminary prospectus (the "Red Herring") was distributed to prospective investors. The road show included in-person presentations in New York, Boston, San Francisco, and Chicago, as well as virtual presentations and one-on-one meetings facilitated by the underwriting syndicate.
The road show was paused on May 9, 2022, in response to a significant and sustained decline in the Nasdaq Composite Index and broader deterioration in market conditions for technology company IPOs. At a Board meeting held on May 16, 2022, the Board determined to delay pricing of the Offering pending an assessment of market stabilization. At a subsequent Board meeting held on June 6, 2022, the Board determined that market conditions did not support proceeding with the Offering at valuations consistent with the Company's objectives and resolved to withdraw the Offering.
Status: All testing-the-waters and marketing activities have been terminated. No indications of interest were converted to orders. No securities were sold. No pricing occurred.
G. Comfort Letter and Auditor Consent
C&H prepared and transmitted a draft comfort letter request to Meridian & Howe LLP, addressed to Gregory Simmons, the Company's audit partner, in anticipation of the pricing of the Offering. The comfort letter was intended to cover customary matters, including the auditor's independence, the financial statements included in the Registration Statement, and certain financial data and statistical information derived from the Company's accounting records.
Status: No comfort letter was issued by Meridian & Howe, as the Offering did not proceed to pricing. The consent of Meridian & Howe as independent registered public accounting firm, consenting to the incorporation by reference of its audit report in the Registration Statement, was filed with the public Form S-1 on April 14, 2022, but is no longer operative given the withdrawal of the Registration Statement.
H. Tax Analysis
Sylvia Hartwell, a specialist partner in C&H's Tax Group, prepared a comprehensive tax structure memorandum (the "Tax Memorandum") addressing the following matters:
• Analysis of the corporate reorganization steps contemplated in connection with the IPO, including consideration of the requirements of Sections 368 and 351 of the Internal Revenue Code of 1986, as amended (the "Code");
• State tax nexus analysis addressing the Company's filing obligations and exposure in California, New York, Texas, and Illinois;
• Qualified Small Business Stock ("QSBS") analysis under Section 1202 of the Code, including the impact of the proposed IPO on existing QSBS eligibility for certain stockholders; and
• Payroll tax implications of stock option exercises by Company employees, including federal, state, and local withholding and reporting obligations.
Status: The Tax Memorandum was delivered to the Company in January 2022. The analysis contained therein remains applicable to the Company's current and future tax planning, subject to any intervening changes in applicable law or regulations. We recommend that the Company retain the Tax Memorandum for future reference and consult with tax advisors as appropriate in connection with any future liquidity event.
I. Blue Sky Survey
C&H, through the efforts of Brendan Walsh, prepared a comprehensive state-by-state securities law compliance survey (the "Blue Sky Survey") covering all fifty (50) states, the District of Columbia, the Commonwealth of Puerto Rico, and the U.S. Virgin Islands. The Blue Sky Survey identified the applicable registration exemptions, notice filing requirements, and fee obligations in each jurisdiction in connection with the proposed offering of Class A Common Stock.
Status: The Blue Sky Survey has been completed and is on file. No notice filings were made in any jurisdiction, as the Offering did not proceed to pricing or closing. The Blue Sky Survey is available for reference in connection with any future offering, although it should be updated at that time to reflect any changes in applicable state securities laws or regulations.
J. Ancillary Matters
Directors' and Officers' Liability Insurance. In connection with the Offering, the Company engaged Terrace Hill Insurance Group Ltd. ("Terrace Hill"), through Julia Brennan, to obtain proposals for directors' and officers' liability insurance coverage suitable for a publicly traded company. Terrace Hill had proposed a directors' and officers' liability insurance policy (the "D&O Policy") with an aggregate limit of $30,000,000, including a six-year tail provision, at an estimated annual premium of approximately $2,400,000.
Status: The D&O Policy was not bound, and no premium obligation was incurred by the Company. The Company's existing directors' and officers' insurance coverage remains in effect. Should the Company pursue a future public offering, it will need to revisit the D&O insurance market at that time, as pricing and availability may differ materially from the terms quoted in 2022.
Transfer Agent. Broadleaf Transfer Services Inc. ("Broadleaf") was designated as the proposed transfer agent and registrar for the Class A Common Stock in connection with the Offering.
Status: The transfer agent agreement with Broadleaf was not executed. No setup fees were incurred by the Company beyond the initial engagement fee of $25,000 paid in connection with preliminary setup and account configuration work. The Company should confirm directly with Broadleaf whether any additional amounts are outstanding.
Financial Printer and EDGAR Filing Agent. Hennessy Consulting Group LLC ("Hennessy"), through Martin Royce, provided typesetting, printing, and EDGAR filing agent services in connection with the Registration Statement, including the confidential DRS submissions, the public filing of the Form S-1, the preliminary prospectus (Red Herring), and the Form RW withdrawal application.
Status: Hennessy's services through the public filing and the filing of Form RW have been completed. Fees for Hennessy's services are included in the expense summary set forth in Section IV below. No additional services from Hennessy are anticipated in connection with this engagement.
IV. Financial Summary — Fees and Expenses
A. Calderwood & Harkness LLP Fees and Expenses
Pursuant to Section 4 of the Engagement Letter, the total fees for C&H's legal services in connection with the Offering were subject to a fee cap of $1,950,000, exclusive of disbursements and out-of-pocket expenses. Set forth below is a summary of the fees billed by C&H through the close of the engagement:
The total fees billed reflect the time and effort of the engagement team, allocated approximately as follows:
• Robert Adeyemi (Responsible Partner): Overall supervision and strategic direction of the engagement; lead responsibility for SEC comment letter strategy and Board presentations; analysis and advice regarding the withdrawal decision and Form RW filing.
• Jennifer Kwon (Billing Partner): Billing oversight, fee management, client relationship coordination, and engagement administration.
• Audrey Zhou (Lead Associate): Primary drafter of the Registration Statement on Form S-1, including all amendments and confidential submissions; preparation of responses to SEC Staff comment letters; drafting of corporate governance documents (IPO Charter, IPO Bylaws, committee charters, insider trading policy); preparation of disclosure backup memorandum and verification materials.
• Brendan Walsh (Working Associate): Legal due diligence coordination and review; preparation of the Blue Sky Survey; review and analysis of the Agreement Among Underwriters; preparation of the corporate structure chart and capitalization analysis; drafting and review of ancillary offering documents.
• Sylvia Hartwell (Specialist Partner, Tax): Preparation of the Tax Memorandum, including Sections 368/351 analysis, state tax nexus analysis, QSBS analysis under Section 1202, and payroll tax analysis of stock option exercises.
All outstanding invoices have been submitted to the Company. The final invoice, dated June 20, 2022, covers fees and disbursements through the conclusion of the engagement. We respectfully request prompt payment of any outstanding amounts in accordance with the payment terms set forth in the Engagement Letter (net thirty (30) days from the date of invoice).
B. Summary of Third-Party Offering Expenses Incurred
For the Company's reference and recordkeeping purposes, the following is a summary of estimated third-party expenses incurred in connection with the Offering. The Company should confirm these amounts directly with the respective service providers, as certain amounts may be subject to adjustment:
We note the following with respect to certain of these items:
• Hargrove & Liddell LLP: The fees of underwriters' counsel were to be billed directly to the underwriters, with reimbursement by the Company pursuant to the terms of the Underwriting Agreement. Because the Underwriting Agreement was never executed, the allocation of responsibility for Hargrove & Liddell's fees should be confirmed between the Company and the underwriters. We understand that certain arrangements may have been addressed in separate letter agreements between the Company and Pinnacle.
• SEC Registration Fee: The Company paid a registration fee of $20,394 in connection with the filing of the public Registration Statement. The Company may be eligible to request a credit toward the registration fee payable in connection with a future registration statement for the unused portion of the fee under Rule 457(p) under the Securities Act, provided that the future registration statement is filed within the applicable time period (generally five years from the date of payment of the original fee). We recommend that the Company consult with counsel at the time of any future filing to confirm eligibility and the mechanics for claiming such credit.
• Nasdaq Listing Fee: The Company paid an initial listing fee of $295,000 to The Nasdaq Stock Market LLC. Because the listing never became effective, Nasdaq's fee schedule may provide for a partial or full refund of the listing fee. We recommend that the Company inquire directly with Nasdaq's Listing Qualifications Department regarding the availability and process for obtaining any refund.
• D&O Insurance Premium: As noted in Section III.J above, the proposed D&O insurance premium of approximately $2,400,000 was not incurred, as the D&O Policy was not bound. This amount is accordingly excluded from the expense summary above.
• Underwriting discount: The proposed underwriting discount of 6.5% (estimated at approximately $14,300,000 on primary shares) was not payable, as the Offering did not close. No underwriting discount or commission has been paid or is owed.
V. Observations Regarding Future Offering or Liquidity Event
While the decision to withdraw the Offering was driven by market conditions that made proceeding inadvisable at this time, we wish to emphasize that the Company retains full flexibility to pursue a future IPO, direct listing, SPAC transaction, or other liquidity event at a time of the Board's choosing. We set forth below certain observations that may be useful to the Company and its advisors in evaluating and planning any such future transaction.
Preservation of Confidential Treatment. The withdrawal of the Registration Statement under Rule 477 preserves the confidential treatment of the non-public DRS submissions made prior to the public filing on April 14, 2022. The publicly filed Form S-1/A remains available on EDGAR (as a withdrawn filing), but the earlier confidential submissions are not publicly accessible. This preserves the Company's ability to control the timing and extent of disclosure in connection with any future process.
SEC Registration Fee Credit. As noted above, under Rule 457(p) under the Securities Act, the Company may be able to offset SEC registration fees previously paid ($20,394) against the registration fees payable in connection with a future registration statement, provided that the future registration statement is filed within five years of the date of payment of the original fee. The Company should maintain records of the fee payment and consult with counsel at the time of any future filing to confirm eligibility.
Leveraging Existing Work Product. A substantial body of work product was created during this engagement, including the Registration Statement drafts and all amendments, corporate governance documents (IPO Charter, IPO Bylaws, committee charters, insider trading policy), due diligence materials, the Tax Memorandum, the Blue Sky Survey, and related memoranda and analyses. This work product can be leveraged in a future IPO or other capital markets process, potentially reducing both the cost and the timeline required to prepare for a new offering. While updates will be necessary, the foundational work has been completed and represents a meaningful head start.
Key Considerations for a Future Offering. The Company and its advisors should be mindful of the following considerations in connection with any future offering:
• Financial Statement Staleness: The audited financial statements included in the Registration Statement covered the fiscal year ended December 31, 2021, and the unaudited interim financial statements covered the quarter ended March 31, 2022. These financial statements will become stale under the applicable requirements of Regulation S-X and will need to be updated (and, in the case of annual financial statements, re-audited) in connection with any future filing.
• Material Developments: Any material developments in the Company's business, operations, financial condition, or risk profile that have occurred since the date of the last filing will require new or updated disclosure in a future registration statement.
• Market Conditions and Valuation: Market conditions and investor appetite for technology company IPOs should be reassessed at the time of any future offering, and the Company's valuation expectations should be recalibrated in light of then-prevailing market multiples and comparable transactions.
• Regulatory Changes: Any changes in applicable securities laws, SEC rules, or Nasdaq listing standards that have occurred since the date of this engagement should be taken into account.
Governance Framework. The dual-class common stock structure (Class A and Class B), the seven-year sunset provision, and the broader corporate governance framework reflected in the draft IPO Charter and IPO Bylaws remain available for use in a future offering. These documents can be updated and adapted as needed without the necessity of starting from scratch.
Capital Structure. For reference, the following summarizes the Company's approximate capital structure as of the close of this engagement:
• Fully Diluted Pre-IPO Shares Outstanding: Approximately 118,200,000 shares.
• Employee Stock Option Pool: 14,800,000 shares authorized, of which approximately 11,300,000 options are outstanding at a weighted-average exercise price of $4.82 per share.
• Preferred Stock: Existing preferred stock (Series A, Series B, Series C, and Series D), totaling approximately 62,400,000 shares, remains outstanding and unconverted. The terms of conversion, liquidation preference, and other rights of the preferred stock are governed by the Company's existing certificate of incorporation and the applicable investor rights agreements.
• Class B Common Stock: 28,500,000 shares outstanding, held by Priya Subramanian (16,500,000 shares) and Marcus Henley (12,000,000 shares). The Class B Common Stock, which is currently the only class of common stock authorized under the existing certificate of incorporation, would have been reclassified in connection with the IPO pursuant to the IPO Charter.
Revolving Credit Facility. The Company's revolving credit facility with Ashford National Bank (the "Revolver"), providing for a $50,000,000 commitment, remains in place and is unaffected by the withdrawal of the Offering. As of March 31, 2022, approximately $15,000,000 was drawn under the Revolver. The Company should confirm the current status of the Revolver and any applicable covenants with its banking counsel.
VI. Document Retention and Return of Materials
C&H will retain in its files copies of all engagement work product generated in connection with this matter, including drafts, memoranda, correspondence, SEC filings, and related materials, in accordance with the Firm's standard document retention policy. Under that policy, engagement files are retained for a minimum of seven (7) years from the date of engagement close, or longer as may be required by applicable law, regulation, or professional obligation.
Originals and copies of Company documents provided to C&H during the course of due diligence and the engagement will be returned to the Company or securely destroyed, at the Company's direction. We request that you provide written instructions to the undersigned regarding your preference for the disposition of these materials. In the absence of instructions, we will retain such materials in our files in accordance with the retention policy described above.
All electronic files relating to this engagement are stored on C&H's secure document management systems and are accessible only to members of the engagement team and authorized Firm personnel. Access restrictions will remain in place following the close of the engagement.
We remind the Company that attorney-client privilege and work product protection attach to the communications, memoranda, and other materials generated during the course of this engagement. The Company, as holder of the attorney-client privilege, should take appropriate care to preserve such privilege in connection with any internal handling, distribution, or third-party disclosure of privileged materials. We recommend that any disclosure of privileged materials be reviewed by the Company's legal department prior to dissemination.
For completeness, the following categories of documents are in C&H's possession and are available for return or confirmation of disposition:
• Due diligence materials, including corporate records, material contracts, financial data, and employee-related documentation provided by the Company during the due diligence process;
• Board minutes and resolutions relating to the IPO;
• The executed Stockholder Consent (which, as noted in Section III.C, is conditional and non-operative);
• Copies of SEC correspondence, including the Staff comment letters and the Company's response letters; and
• Working group lists, contact sheets, and organizational materials.
Please direct any instructions regarding document return or destruction to the undersigned at the contact information provided below.
VII. Re-Engagement Provisions
Should Lumos elect to pursue a future initial public offering, direct listing, or other capital markets transaction, Calderwood & Harkness would welcome the opportunity to serve as issuer's counsel in connection with any such transaction. We believe the depth of institutional knowledge developed by our team during this engagement would provide meaningful continuity and efficiency in a future process.
Any future engagement of C&H would require the execution of a new engagement letter, completion of updated conflicts clearance procedures in accordance with the Firm's policies, and mutual agreement on the scope, staffing, and fee arrangements applicable to the new matter. The fee cap and billing arrangements set forth in the November 8, 2021 Engagement Letter applied solely to the engagement that is the subject of this letter and do not carry over to any future matter.
To facilitate a smooth and efficient restart in the event the Company elects to pursue a future transaction, we recommend that the Company maintain the following materials in readily accessible form:
• The draft corporate governance documents (IPO Charter, IPO Bylaws, committee charters);
• The draft Insider Trading Policy;
• The Tax Memorandum prepared by Sylvia Hartwell;
• The Blue Sky Survey;
• The most recent draft of the Registration Statement (as amended); and
• Due diligence files and corporate records.
For any questions regarding re-engagement or to initiate discussions regarding a future transaction, please contact:
• Robert Adeyemi (Responsible Partner): (415) 442-7100 / radeyemi@calderwoodharkness.com
• Jennifer Kwon (Billing Partner): (415) 442-7155 / jkwon@calderwoodharkness.com
• Audrey Zhou (Lead Associate): (415) 442-7220 / azhou@calderwoodharkness.com
VIII. Acknowledgments and Limitations
This letter confirms the termination of the attorney-client relationship between Calderwood & Harkness LLP and Lumos Analytics Inc. with respect to this specific matter, designated as Matter No. 1008-00002, only. Upon the close of this engagement, C&H does not represent Lumos in any other matter unless separately engaged in writing pursuant to a duly executed engagement letter.
Nothing in this letter constitutes a waiver of any rights or obligations of either party under the Engagement Letter dated November 8, 2021, except as specifically addressed herein. The terms and conditions of the Engagement Letter, including but not limited to the provisions regarding limitation of liability, dispute resolution, and governing law, survive the termination of the engagement to the extent provided therein.
The engagement was governed by the laws of the State of New York, consistent with Section 12 of the Engagement Letter. Any dispute arising out of or relating to this letter or the engagement shall be resolved in accordance with the dispute resolution provisions of the Engagement Letter.
IX. Closing
On behalf of the entire Calderwood & Harkness team, I wish to express our sincere appreciation for the opportunity to have worked with you, Priya, David, and the full Lumos team on this engagement. Despite the outcome, the process reflected the professionalism, diligence, and collaborative spirit of everyone involved, and the work product generated positions the Company well for a future transaction when the time is right.
We also wish to acknowledge the professionalism and dedication of all parties with whom we worked during the course of the engagement, including the teams at Pinnacle Securities LLC, Whitfield & Company LLC, Graystone Capital Markets Inc., Hargrove & Liddell LLP, and Meridian & Howe LLP. The quality of the collaborative effort across the working group was exceptional.
Should you have any questions regarding this letter, the status of any workstream, or any other matter relating to the engagement, please do not hesitate to contact me directly. Jennifer Kwon and Audrey Zhou are also available to assist with any follow-up items.
Robert Adeyemi Direct Line: (415) 442-7100
Email: radeyemi@calderwoodharkness.com
We wish Lumos continued success and look forward to the possibility of working together again in the future.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Robert Adeyemi Partner, Capital Markets Group
cc: (via email)
Priya Subramanian, Chief Executive Officer, Lumos Analytics Inc. David Lau, Chief Financial Officer, Lumos Analytics Inc. Jennifer Kwon, Partner, Calderwood & Harkness LLP Audrey Zhou, Associate, Calderwood & Harkness LLP
Enclosure:
Final Fee Statement Summary (as of June 24, 2022)
This letter and the information contained herein are confidential and may be subject to the attorney-client privilege and/or the work product doctrine. This letter is intended solely for the use of the addressee and the individuals identified in the "cc" line above. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact Robert Adeyemi at the number listed above and destroy all copies of this communication.
For the avoidance of doubt, the Client, Lumos Analytics Inc., is a portfolio company of Pinnacle Venture Fund II LP, and certain consents and reporting obligations to the sponsor may apply in connection with this matter.
Item | Amount
Fee Cap per Engagement Letter | $1,950,000
Total Fees Billed Through Engagement Close | $1,672,340
Amount Under Cap | $277,660
Expense Item | Estimated Amount
Hargrove & Liddell LLP (underwriters' counsel) | $750,000 (est.)
Meridian & Howe LLP (audit, comfort letter preparation, consent) | $680,000 (approx.)
SEC Registration Fee (filed with public S-1) | $20,394
Nasdaq Initial Listing Fee | $295,000
Hennessy Consulting Group LLC (EDGAR/printing) | $185,000 (approx.)
Broadleaf Transfer Services Inc. (transfer agent setup) | $25,000 (approx.)
Miscellaneous (road show expenses, travel, etc.) | $245,000 (approx.)
Calderwood & Harkness LLP (issuer's counsel) | $1,672,340
Total Estimated Offering Expenses Incurred | Approximately $3.9–$4.1 million

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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