1008-00003 · Client 1008 · Term Sheets

term-sheet-ridgeline.docx DOCUMENT Funds

24 / 35 ← → ✕

NON-BINDING TERM SHEET

Simple Agreement for Future Equity (SAFE) Financing

September 15, 2023

This term sheet summarizes the principal terms of a proposed SAFE investment in Lumos Analytics Inc. This term sheet is for discussion purposes only and is not binding on either party except as expressly set forth herein. This term sheet does not constitute an offer to sell or a solicitation of an offer to buy any securities and is subject in all respects to the execution of a definitive Simple Agreement for Future Equity in form and substance satisfactory to both parties.

1. Parties

1.1 Issuer / Company

Principal Business. The Company develops and operates an AI-driven financial analytics platform marketed under the brand name "Lumos Prism." Lumos Prism provides real-time regulatory compliance dashboards and predictive risk scoring capabilities to mid-market financial institutions, including community and regional banks, credit unions, and specialty lenders. The platform leverages proprietary machine learning models to aggregate, normalize, and analyze regulatory data streams, enabling customers to monitor compliance posture continuously and anticipate areas of emerging risk.

1.2 Investor.

Existing Relationship. Ridgeline Angel Fund, L.P. is an existing investor in the Company. Ridgeline participated in the Company's August 2022 pre-seed SAFE round, in which Ridgeline invested Five Hundred Thousand Dollars ($500,000) pursuant to a Post-Money SAFE at an Eight Million Dollar ($8,000,000) post-money valuation cap. The pre-seed SAFE remains outstanding and has not been amended or converted as of the date of this term sheet. The proposed investment described herein is a separate and additional investment by Ridgeline in the Company and shall not affect the rights, obligations, or terms of Ridgeline's pre-seed SAFE except as may otherwise be agreed in writing by the parties.

2. Proposed Investment

2.1 Instrument. The proposed investment will be structured as a Post-Money SAFE (Simple Agreement for Future Equity), based on the standard form published by Calderon Partners LLC, as modified to reflect the specific terms set forth herein and in the definitive SAFE agreement. The SAFE terms applicable to the Investor will be substantially identical in all material respects to those of the lead investor SAFE executed on September 12, 2023 by and between the Company and Vantage Peak Ventures Fund II, L.P. (the "Lead Investor SAFE"). To the extent that any provision of this term sheet is inconsistent with the terms of the Lead Investor SAFE, the parties will negotiate in good faith to resolve such inconsistency, with the understanding that economic parity across all SAFE holders in this round is a guiding principle.

2.2 Purchase Amount

One Million Two Hundred Thousand Dollars ($1,200,000), payable in a single lump sum at the time of execution of the definitive SAFE, by wire transfer of immediately available funds to the Company's designated operating account.

2.3 Post-Money Valuation Cap

Twenty-Eight Million Dollars ($28,000,000). The post-money valuation cap represents the maximum effective valuation at which the SAFE will convert into equity upon an Equity Financing (as defined below), and shall be used to calculate the SAFE Price per the formula set forth in the Calderon Partners LLC Post-Money SAFE form.

2.4 discount Rate

None. The SAFE will not include a discount rate. Conversion will be determined solely by reference to the post-money valuation cap.

2.5 Pro Forma Ownership at Conversion

Upon conversion of the SAFE in connection with a qualifying Equity Financing, the Investor's pro forma ownership in the Company shall be calculated as follows:

$1,200,000 ÷ $28,000,000 = approximately 4.29%

(expressed on a fully diluted, as-converted basis, and assuming the full round of $6,800,000 in aggregate SAFE investments is completed at the $28,000,000 post-money valuation cap)

This pro forma ownership percentage is provided for illustrative purposes only and is subject to adjustment based on the actual aggregate SAFE amounts outstanding at the time of conversion, the terms of the Equity Financing, and the Company's capitalization at the time of conversion.

3. Total Round Summary

The proposed SAFE investment by the Investor is part of a broader seed-stage SAFE financing round being conducted by the Company. A summary of the anticipated round is set forth below:

All SAFEs issued in this round will be on the same economic terms, including the same $28,000,000 post-money valuation cap, no discount rate, and a Most Favored Nation (MFN) provision. The Company will be responsible for identifying and securing commitments from additional co-investors for the remaining balance of Two Million One Hundred Thousand Dollars ($2,100,000). The Investor acknowledges that the Company may close individual SAFEs on a rolling basis and that there is no assurance that the full round target will be achieved.

4. Key Terms of the SAFE

4.1 Conversion Events

The SAFE will convert into equity securities of the Company upon the occurrence of any of the following conversion events, as more fully described in the definitive SAFE agreement:

(a) Equity Financing. The SAFE will automatically convert into shares of the Company's preferred stock (or such other class of equity securities issued to investors in the Equity Financing) upon the closing of a bona fide equity financing in which the Company issues and sells shares of its preferred stock and receives aggregate gross proceeds of at least One Million Dollars ($1,000,000) (excluding the conversion of SAFEs, convertible notes, and other convertible instruments) (an "Equity Financing"). The conversion price will be the lower of (i) the price per share of the preferred stock sold in the Equity Financing and (ii) the price obtained by dividing the post-money valuation cap by the Company Capitalization (as such term is defined in the Calderon Partners LLC Post-Money SAFE form).

(b) Liquidity Event. In the event of a Change of Control (as defined in the definitive SAFE agreement) or an initial public offering of the Company's common stock, the SAFE holder will be entitled to receive, at the holder's election, either (i) a cash payment equal to the Purchase Amount or (ii) a number of shares of common stock of the Company determined by dividing the Purchase Amount by the Liquidity Price (as defined in the definitive SAFE agreement).

(c) Dissolution Event. In the event of a voluntary or involuntary dissolution, winding up, or liquidation of the Company, the SAFE holder will be entitled to receive a cash payment equal to the Purchase Amount, paid out of the Company's remaining assets prior to distributions to holders of common stock, but after satisfaction of all creditor claims and obligations having priority over the SAFE by operation of law.

4.2 Most Favored Nation (MFN) Provision

The SAFE will include a Most Favored Nation provision in favor of the Investor. If, at any time prior to the conversion or termination of the SAFE, the Company issues any subsequent SAFE, convertible note, or other convertible instrument on terms that are more favorable to the holder thereof than the terms of the Investor's SAFE (including, without limitation, a lower valuation cap, a discount rate, or additional investor protections), the Investor shall have the right to elect, by written notice to the Company, to amend its SAFE to incorporate any or all of such more favorable terms. The mechanics and timing of such election will be as set forth in the definitive SAFE agreement, consistent with the standard Calderon Partners LLC Post-Money SAFE MFN provision.

4.3 Pro Rata Rights

The Investor will receive standard pro rata participation rights in the next equity financing following conversion of the SAFE, entitling the Investor to purchase its pro rata share of securities being offered in such subsequent equity financing, subject to customary exceptions (including, without limitation, issuances pursuant to the Company's equity incentive plan, issuances in connection with strategic transactions approved by the Board, and issuances of securities having the same terms as those previously issued). The specific terms and conditions of such pro rata rights will be consistent with the pro rata rights offered to the lead investor, Vantage Peak Ventures Fund II, L.P.

4.4 Information Rights

Upon execution of the definitive SAFE and continuing for so long as the Investor holds the SAFE or any equity securities of the Company issued upon conversion thereof, the Company shall provide the Investor with the following information:

(i) Annual Financial Statements. Unaudited annual financial statements of the Company, including a balance sheet, income statement, and statement of cash flows, prepared in accordance with generally accepted accounting principles applied on a consistent basis, delivered within ninety (90) days following the end of each fiscal year of the Company.

(ii) Quarterly Financial Statements. Unaudited quarterly financial statements of the Company, including a balance sheet and income statement, delivered within forty-five (45) days following the end of each fiscal quarter.

(iii) Ad Hoc Information. Such other information regarding the Company's financial condition, business, or operations as may be reasonably requested by the Investor from time to time, subject to the Company's reasonable ability to provide such information without undue burden.

The information rights described above shall be consistent in all material respects with the information rights granted to the lead investor. The Company's obligation to provide information shall be subject to the Investor's execution of a customary confidentiality and non-disclosure agreement, if requested by the Company.

5. Capitalization Summary (Pre-Round)

The following table summarizes the Company's capitalization as of the date of this term sheet, prior to giving effect to the proposed SAFE investments in this round. The Company represents that the information set forth below is accurate and complete in all material respects as of the date hereof:

Authorized Common Stock:

Issued and Outstanding Common Stock:

2022 Equity Incentive Plan:

Outstanding Pre-Seed SAFEs (August 2022):

All pre-seed SAFEs were issued at a post-money valuation cap of $8,000,000, with no discount rate.

The Company confirms that, other than the securities described above and the Lead Investor SAFE, there are no outstanding options, warrants, convertible instruments, or other rights to acquire equity securities of the Company.

6. Company Representations (Expected in Definitive Agreement)

The definitive SAFE agreement is expected to contain representations and warranties by the Company that are customary for transactions of this type, including but not limited to the following:

(a) The Company is duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is qualified to do business in each jurisdiction in which the nature of its business or the ownership of its properties requires such qualification.

(b) The Company has all requisite corporate power and authority to execute, deliver, and perform its obligations under the SAFE, and the execution, delivery, and performance of the SAFE have been duly authorized by all necessary corporate action on the part of the Company.

(c) The execution and delivery of the SAFE, and the consummation of the transactions contemplated thereby, will not conflict with, result in a breach of, or constitute a default under the Company's Certificate of Incorporation, Bylaws, or any material agreement, contract, or instrument to which the Company is a party or by which it is bound.

(d) The capitalization of the Company is as described in Section 5 of this term sheet, and all outstanding shares of common stock have been duly authorized, validly issued, fully paid, and non-assessable.

(e) The Company owns or has the right to use all intellectual property necessary for the operation of its business as currently conducted, including without limitation U.S. Provisional Patent Application No. 63/987,214, titled "Systems and Methods for Predictive Regulatory Compliance Risk Scoring Using Adaptive Machine Learning Models," filed with the United States Patent and Trademark Office on June 15, 2023. To the Company's knowledge, the conduct of the Company's business does not infringe, misappropriate, or otherwise violate the intellectual property rights of any third party.

7. Use of Proceeds

The proceeds of the SAFE investment will be used by the Company for general corporate purposes, including without limitation:

• Continued development and enhancement of the Lumos Prism platform, including expansion of machine learning capabilities and integration of additional regulatory data sources;

• Hiring of additional engineering, product, data science, and go-to-market personnel;

• General working capital and operating expenses of the Company.

The Company will have sole discretion over the allocation and deployment of proceeds, consistent with the fiduciary duties of its Board of Directors.

8. Governing Law

This term sheet and the definitive SAFE agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law that would result in the application of the laws of any other jurisdiction. Any dispute arising under or in connection with this term sheet or the definitive SAFE shall be subject to the exclusive jurisdiction of the state and federal courts located in the State of Delaware.

9. Issuer's Counsel

Calderwood & Harkness LLP represents the Company in connection with the proposed SAFE financing and will be responsible for the preparation of the definitive SAFE agreement and ancillary transaction documents. Calderwood & Harkness LLP does not represent the Investor, and the Investor is advised to retain independent legal counsel.

10. Investor's Counsel

To be designated by Ridgeline Angel Fund, L.P. The Investor may elect to retain independent outside legal counsel to review the definitive SAFE agreement and related documentation or, alternatively, may elect to rely on its own internal review conducted by Ridgeline Angel Management LLC. The Company shall provide the definitive SAFE agreement and all ancillary documentation to the Investor (and its counsel, if designated) in a timely manner to permit adequate review prior to the target execution date.

11. Confidentiality

This provision is binding on both parties upon execution of this term sheet.

Each party agrees to keep the terms and conditions of this term sheet, the existence and substance of the proposed transaction, and all non-public information exchanged in connection with the negotiations contemplated hereby strictly confidential, and neither party shall disclose such information to any third party without the prior written consent of the other party, except:

(a) as may be required by applicable law, regulation, or legal process (provided that the disclosing party shall, to the extent permitted by law, provide the other party with prompt written notice of such requirement prior to making any such disclosure);

(b) to such party's respective officers, directors, employees, advisors, legal counsel, accountants, and other professional consultants, in each case who have a need to know such information for purposes of evaluating and consummating the proposed transaction and who are bound by obligations of confidentiality at least as restrictive as those set forth herein; and

(c) in the case of the Investor, to the limited partners of Ridgeline Angel Fund, L.P. and to Ridgeline Angel Management LLC, in each case on a confidential basis consistent with the terms of Ridgeline's limited partnership agreement.

12. Non-Binding Nature / Binding Provisions

This term sheet is non-binding and does not constitute a commitment, obligation, or agreement by either party to consummate the proposed investment or to enter into a definitive SAFE agreement. The terms set forth herein are intended solely as a basis for further discussion and are subject in all respects to the negotiation, execution, and delivery of a definitive SAFE agreement in form and substance satisfactory to both parties and their respective counsel.

Notwithstanding the foregoing, the provisions of Section 8 (Governing Law) and Section 11 (Confidentiality) of this term sheet shall be binding on the parties upon execution hereof and shall survive the termination or expiration of this term sheet.

Nothing in this term sheet shall be construed as creating an obligation on the part of either party to negotiate in good faith, to enter into a definitive SAFE, or to refrain from pursuing alternative transactions. Either party may terminate discussions relating to the proposed transaction at any time, for any reason or no reason, without liability to the other party. No legally binding obligations (other than with respect to the binding provisions identified above) shall arise unless and until a definitive SAFE agreement is executed and delivered by both parties.

13. Exclusivity / No-Shop

None. The Company expressly retains the right to solicit, receive, evaluate, negotiate, and accept investment commitments from additional investors for this SAFE round on the same economic terms set forth herein. This term sheet does not grant the Investor any exclusivity right with respect to the proposed transaction or any future financing of the Company. The Investor acknowledges and agrees that the Company intends to seek additional co-investors to achieve the total round target of $6,800,000 and that the Company may close additional SAFEs with such co-investors at any time before, concurrently with, or following the execution of the Investor's SAFE.

14. Expenses

Each party shall bear its own costs and expenses (including, without limitation, attorneys' fees, due diligence expenses, and other professional fees) incurred in connection with the negotiation, preparation, and execution of this term sheet, the definitive SAFE agreement, and all ancillary documentation. In the event the proposed transaction is not consummated for any reason, neither party shall have any obligation to reimburse the other party for any costs or expenses incurred.

15. Target Timeline

The parties acknowledge the following target timeline for the proposed transaction:

Funding shall be wired by the Investor upon execution of the definitive SAFE agreement to the Company's operating account at Silicon Valley Commerce Bank, pursuant to wire instructions to be provided by the Company. The timeline set forth above is indicative only and is not binding on either party.

[Signature Page Follows]

SIGNATURE PAGE TO NON-BINDING TERM SHEET Simple Agreement for Future Equity (SAFE) Financing Lumos Analytics Inc.

The undersigned parties hereby acknowledge and agree to the terms set forth in this Non-Binding Term Sheet as of the date first written above, subject to the limitations on binding effect set forth in Section 12.

ISSUER:

LUMOS ANALYTICS INC.

By: ________

Name: Priya Narasimhan

Title: Co-Founder, CEO & President

Date: September 15, 2023

ACKNOWLEDGED AND AGREED — INVESTOR:

RIDGELINE ANGEL FUND, L.P.

By: Ridgeline Angel Management LLC, its General Partner

By: ________

Name: David Choi

Title: Managing Partner

Date: September 15, 2023

This term sheet is non-binding except as expressly set forth in Sections 8 and 11 hereof. This term sheet is confidential and is not to be reproduced or distributed to any person other than the parties hereto and their respective advisors without the prior written consent of both parties.

Legal Name:	Lumos Analytics Inc., a Delaware C-corporation
Headquarters:	340 Folsom Street, Suite 1100, San Francisco, CA 94105
State of Incorporation:	Delaware
Employer Identification Number (EIN):	87-3491026
Date of Incorporation:	January 2022
Chief Executive Officer:	Priya Narasimhan, Co-Founder, CEO & President
Legal Name:	Ridgeline Angel Fund, L.P., a Delaware limited partnership
Principal Office:	55 Liberty Street, Suite 800, New York, NY 10005
General Partner:	Ridgeline Angel Management LLC
Managing Partner:	David Choi
Investor	Amount	Status
Vantage Peak Ventures Fund II, L.P. (Lead)	$3,500,000	SAFE executed September 12, 2023
Ridgeline Angel Fund, L.P.	$1,200,000	Subject to this term sheet
Additional co-investors (TBD)	$2,100,000	To be identified by the Company
Total Round Target	$6,800,000

Authorized shares of common stock	10,000,000
Stockholder	Shares	Percentage of Outstanding
Priya Narasimhan (Co-Founder, CEO & President)	4,200,000	48.84%
Elliot Marsh (Co-Founder, CTO)	3,800,000	44.19%
Danielle Okoye (CFO)	600,000	6.98%
Total Issued and Outstanding	8,600,000	100.00%

Total shares reserved under the Plan	1,200,000
Shares subject to outstanding option grants	480,000
Shares available for future grants	720,000
SAFE Holder	Purchase Amount
Ridgeline Angel Fund, L.P.	$500,000
Angela Forsythe	$300,000
Dr. Naveen Iyer	$250,000
Sylvia Montero	$150,000
Total Outstanding Pre-Seed SAFEs	$1,200,000
Firm:	Calderwood & Harkness LLP
Address:	555 California Street, 30th Floor, San Francisco, CA 94104
Responsible Partner:	Patricia Dunmore
Lead Associate:	Omar Siddiqui
Milestone	Target Date
Execution of this Non-Binding Term Sheet	September 15, 2023
Delivery of draft definitive SAFE to Investor	September 18, 2023
Completion of Investor review and comment period	September 20, 2023
Target execution of the definitive SAFE	On or before September 22, 2023
Wire transfer of Purchase Amount	Upon execution of the SAFE

NON-BINDING TERM SHEET
Simple Agreement for Future Equity (SAFE) Financing
September 15, 2023
This term sheet summarizes the principal terms of a proposed SAFE investment in Lumos Analytics Inc. This term sheet is for discussion purposes only and is not binding on either party except as expressly set forth herein. This term sheet does not constitute an offer to sell or a solicitation of an offer to buy any securities and is subject in all respects to the execution of a definitive Simple Agreement for Future Equity in form and substance satisfactory to both parties.
1. Parties
1.1 Issuer / Company
Principal Business. The Company develops and operates an AI-driven financial analytics platform marketed under the brand name "Lumos Prism." Lumos Prism provides real-time regulatory compliance dashboards and predictive risk scoring capabilities to mid-market financial institutions, including community and regional banks, credit unions, and specialty lenders. The platform leverages proprietary machine learning models to aggregate, normalize, and analyze regulatory data streams, enabling customers to monitor compliance posture continuously and anticipate areas of emerging risk.
1.2 Investor.  
Existing Relationship. Ridgeline Angel Fund, L.P. is an existing investor in the Company. Ridgeline participated in the Company's August 2022 pre-seed SAFE round, in which Ridgeline invested Five Hundred Thousand Dollars ($500,000) pursuant to a Post-Money SAFE at an Eight Million Dollar ($8,000,000) post-money valuation cap. The pre-seed SAFE remains outstanding and has not been amended or converted as of the date of this term sheet. The proposed investment described herein is a separate and additional investment by Ridgeline in the Company and shall not affect the rights, obligations, or terms of Ridgeline's pre-seed SAFE except as may otherwise be agreed in writing by the parties.
2. Proposed Investment
2.1 Instrument.  The proposed investment will be structured as a Post-Money SAFE (Simple Agreement for Future Equity), based on the standard form published by Calderon Partners LLC, as modified to reflect the specific terms set forth herein and in the definitive SAFE agreement. The SAFE terms applicable to the Investor will be substantially identical in all material respects to those of the lead investor SAFE executed on September 12, 2023 by and between the Company and Vantage Peak Ventures Fund II, L.P. (the "Lead Investor SAFE"). To the extent that any provision of this term sheet is inconsistent with the terms of the Lead Investor SAFE, the parties will negotiate in good faith to resolve such inconsistency, with the understanding that economic parity across all SAFE holders in this round is a guiding principle.
2.2 Purchase Amount
One Million Two Hundred Thousand Dollars ($1,200,000), payable in a single lump sum at the time of execution of the definitive SAFE, by wire transfer of immediately available funds to the Company's designated operating account.
2.3 Post-Money Valuation Cap
Twenty-Eight Million Dollars ($28,000,000). The post-money valuation cap represents the maximum effective valuation at which the SAFE will convert into equity upon an Equity Financing (as defined below), and shall be used to calculate the SAFE Price per the formula set forth in the Calderon Partners LLC Post-Money SAFE form.
2.4 discount Rate
None. The SAFE will not include a discount rate. Conversion will be determined solely by reference to the post-money valuation cap.
2.5 Pro Forma Ownership at Conversion
Upon conversion of the SAFE in connection with a qualifying Equity Financing, the Investor's pro forma ownership in the Company shall be calculated as follows:
$1,200,000 ÷ $28,000,000 = approximately 4.29%
(expressed on a fully diluted, as-converted basis, and assuming the full round of $6,800,000 in aggregate SAFE investments is completed at the $28,000,000 post-money valuation cap)
This pro forma ownership percentage is provided for illustrative purposes only and is subject to adjustment based on the actual aggregate SAFE amounts outstanding at the time of conversion, the terms of the Equity Financing, and the Company's capitalization at the time of conversion.
3. Total Round Summary
The proposed SAFE investment by the Investor is part of a broader seed-stage SAFE financing round being conducted by the Company. A summary of the anticipated round is set forth below:
All SAFEs issued in this round will be on the same economic terms, including the same $28,000,000 post-money valuation cap, no discount rate, and a Most Favored Nation (MFN) provision. The Company will be responsible for identifying and securing commitments from additional co-investors for the remaining balance of Two Million One Hundred Thousand Dollars ($2,100,000). The Investor acknowledges that the Company may close individual SAFEs on a rolling basis and that there is no assurance that the full round target will be achieved.
4. Key Terms of the SAFE
4.1 Conversion Events
The SAFE will convert into equity securities of the Company upon the occurrence of any of the following conversion events, as more fully described in the definitive SAFE agreement:
(a) Equity Financing. The SAFE will automatically convert into shares of the Company's preferred stock (or such other class of equity securities issued to investors in the Equity Financing) upon the closing of a bona fide equity financing in which the Company issues and sells shares of its preferred stock and receives aggregate gross proceeds of at least One Million Dollars ($1,000,000) (excluding the conversion of SAFEs, convertible notes, and other convertible instruments) (an "Equity Financing"). The conversion price will be the lower of (i) the price per share of the preferred stock sold in the Equity Financing and (ii) the price obtained by dividing the post-money valuation cap by the Company Capitalization (as such term is defined in the Calderon Partners LLC Post-Money SAFE form).
(b) Liquidity Event. In the event of a Change of Control (as defined in the definitive SAFE agreement) or an initial public offering of the Company's common stock, the SAFE holder will be entitled to receive, at the holder's election, either (i) a cash payment equal to the Purchase Amount or (ii) a number of shares of common stock of the Company determined by dividing the Purchase Amount by the Liquidity Price (as defined in the definitive SAFE agreement).
(c) Dissolution Event. In the event of a voluntary or involuntary dissolution, winding up, or liquidation of the Company, the SAFE holder will be entitled to receive a cash payment equal to the Purchase Amount, paid out of the Company's remaining assets prior to distributions to holders of common stock, but after satisfaction of all creditor claims and obligations having priority over the SAFE by operation of law.
4.2 Most Favored Nation (MFN) Provision
The SAFE will include a Most Favored Nation provision in favor of the Investor. If, at any time prior to the conversion or termination of the SAFE, the Company issues any subsequent SAFE, convertible note, or other convertible instrument on terms that are more favorable to the holder thereof than the terms of the Investor's SAFE (including, without limitation, a lower valuation cap, a discount rate, or additional investor protections), the Investor shall have the right to elect, by written notice to the Company, to amend its SAFE to incorporate any or all of such more favorable terms. The mechanics and timing of such election will be as set forth in the definitive SAFE agreement, consistent with the standard Calderon Partners LLC Post-Money SAFE MFN provision.
4.3 Pro Rata Rights
The Investor will receive standard pro rata participation rights in the next equity financing following conversion of the SAFE, entitling the Investor to purchase its pro rata share of securities being offered in such subsequent equity financing, subject to customary exceptions (including, without limitation, issuances pursuant to the Company's equity incentive plan, issuances in connection with strategic transactions approved by the Board, and issuances of securities having the same terms as those previously issued). The specific terms and conditions of such pro rata rights will be consistent with the pro rata rights offered to the lead investor, Vantage Peak Ventures Fund II, L.P.
4.4 Information Rights
Upon execution of the definitive SAFE and continuing for so long as the Investor holds the SAFE or any equity securities of the Company issued upon conversion thereof, the Company shall provide the Investor with the following information:
(i) Annual Financial Statements. Unaudited annual financial statements of the Company, including a balance sheet, income statement, and statement of cash flows, prepared in accordance with generally accepted accounting principles applied on a consistent basis, delivered within ninety (90) days following the end of each fiscal year of the Company.
(ii) Quarterly Financial Statements. Unaudited quarterly financial statements of the Company, including a balance sheet and income statement, delivered within forty-five (45) days following the end of each fiscal quarter.
(iii) Ad Hoc Information. Such other information regarding the Company's financial condition, business, or operations as may be reasonably requested by the Investor from time to time, subject to the Company's reasonable ability to provide such information without undue burden.
The information rights described above shall be consistent in all material respects with the information rights granted to the lead investor. The Company's obligation to provide information shall be subject to the Investor's execution of a customary confidentiality and non-disclosure agreement, if requested by the Company.
5. Capitalization Summary (Pre-Round)
The following table summarizes the Company's capitalization as of the date of this term sheet, prior to giving effect to the proposed SAFE investments in this round. The Company represents that the information set forth below is accurate and complete in all material respects as of the date hereof:
Authorized Common Stock:
Issued and Outstanding Common Stock:
2022 Equity Incentive Plan:
Outstanding Pre-Seed SAFEs (August 2022):
All pre-seed SAFEs were issued at a post-money valuation cap of $8,000,000, with no discount rate.
The Company confirms that, other than the securities described above and the Lead Investor SAFE, there are no outstanding options, warrants, convertible instruments, or other rights to acquire equity securities of the Company.
6. Company Representations (Expected in Definitive Agreement)
The definitive SAFE agreement is expected to contain representations and warranties by the Company that are customary for transactions of this type, including but not limited to the following:
(a) The Company is duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is qualified to do business in each jurisdiction in which the nature of its business or the ownership of its properties requires such qualification.
(b) The Company has all requisite corporate power and authority to execute, deliver, and perform its obligations under the SAFE, and the execution, delivery, and performance of the SAFE have been duly authorized by all necessary corporate action on the part of the Company.
(c) The execution and delivery of the SAFE, and the consummation of the transactions contemplated thereby, will not conflict with, result in a breach of, or constitute a default under the Company's Certificate of Incorporation, Bylaws, or any material agreement, contract, or instrument to which the Company is a party or by which it is bound.
(d) The capitalization of the Company is as described in Section 5 of this term sheet, and all outstanding shares of common stock have been duly authorized, validly issued, fully paid, and non-assessable.
(e) The Company owns or has the right to use all intellectual property necessary for the operation of its business as currently conducted, including without limitation U.S. Provisional Patent Application No. 63/987,214, titled "Systems and Methods for Predictive Regulatory Compliance Risk Scoring Using Adaptive Machine Learning Models," filed with the United States Patent and Trademark Office on June 15, 2023. To the Company's knowledge, the conduct of the Company's business does not infringe, misappropriate, or otherwise violate the intellectual property rights of any third party.
7. Use of Proceeds
The proceeds of the SAFE investment will be used by the Company for general corporate purposes, including without limitation:
•  Continued development and enhancement of the Lumos Prism platform, including expansion of machine learning capabilities and integration of additional regulatory data sources;
•  Hiring of additional engineering, product, data science, and go-to-market personnel;
•  General working capital and operating expenses of the Company.
The Company will have sole discretion over the allocation and deployment of proceeds, consistent with the fiduciary duties of its Board of Directors.
8. Governing Law
This term sheet and the definitive SAFE agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law that would result in the application of the laws of any other jurisdiction. Any dispute arising under or in connection with this term sheet or the definitive SAFE shall be subject to the exclusive jurisdiction of the state and federal courts located in the State of Delaware.
9. Issuer's Counsel
Calderwood & Harkness LLP represents the Company in connection with the proposed SAFE financing and will be responsible for the preparation of the definitive SAFE agreement and ancillary transaction documents. Calderwood & Harkness LLP does not represent the Investor, and the Investor is advised to retain independent legal counsel.
10. Investor's Counsel
To be designated by Ridgeline Angel Fund, L.P. The Investor may elect to retain independent outside legal counsel to review the definitive SAFE agreement and related documentation or, alternatively, may elect to rely on its own internal review conducted by Ridgeline Angel Management LLC. The Company shall provide the definitive SAFE agreement and all ancillary documentation to the Investor (and its counsel, if designated) in a timely manner to permit adequate review prior to the target execution date.
11. Confidentiality
This provision is binding on both parties upon execution of this term sheet.
Each party agrees to keep the terms and conditions of this term sheet, the existence and substance of the proposed transaction, and all non-public information exchanged in connection with the negotiations contemplated hereby strictly confidential, and neither party shall disclose such information to any third party without the prior written consent of the other party, except:
(a) as may be required by applicable law, regulation, or legal process (provided that the disclosing party shall, to the extent permitted by law, provide the other party with prompt written notice of such requirement prior to making any such disclosure);
(b) to such party's respective officers, directors, employees, advisors, legal counsel, accountants, and other professional consultants, in each case who have a need to know such information for purposes of evaluating and consummating the proposed transaction and who are bound by obligations of confidentiality at least as restrictive as those set forth herein; and
(c) in the case of the Investor, to the limited partners of Ridgeline Angel Fund, L.P. and to Ridgeline Angel Management LLC, in each case on a confidential basis consistent with the terms of Ridgeline's limited partnership agreement.
12. Non-Binding Nature / Binding Provisions
This term sheet is non-binding and does not constitute a commitment, obligation, or agreement by either party to consummate the proposed investment or to enter into a definitive SAFE agreement. The terms set forth herein are intended solely as a basis for further discussion and are subject in all respects to the negotiation, execution, and delivery of a definitive SAFE agreement in form and substance satisfactory to both parties and their respective counsel.
Notwithstanding the foregoing, the provisions of Section 8 (Governing Law) and Section 11 (Confidentiality) of this term sheet shall be binding on the parties upon execution hereof and shall survive the termination or expiration of this term sheet.
Nothing in this term sheet shall be construed as creating an obligation on the part of either party to negotiate in good faith, to enter into a definitive SAFE, or to refrain from pursuing alternative transactions. Either party may terminate discussions relating to the proposed transaction at any time, for any reason or no reason, without liability to the other party. No legally binding obligations (other than with respect to the binding provisions identified above) shall arise unless and until a definitive SAFE agreement is executed and delivered by both parties.
13. Exclusivity / No-Shop
None. The Company expressly retains the right to solicit, receive, evaluate, negotiate, and accept investment commitments from additional investors for this SAFE round on the same economic terms set forth herein. This term sheet does not grant the Investor any exclusivity right with respect to the proposed transaction or any future financing of the Company. The Investor acknowledges and agrees that the Company intends to seek additional co-investors to achieve the total round target of $6,800,000 and that the Company may close additional SAFEs with such co-investors at any time before, concurrently with, or following the execution of the Investor's SAFE.
14. Expenses
Each party shall bear its own costs and expenses (including, without limitation, attorneys' fees, due diligence expenses, and other professional fees) incurred in connection with the negotiation, preparation, and execution of this term sheet, the definitive SAFE agreement, and all ancillary documentation. In the event the proposed transaction is not consummated for any reason, neither party shall have any obligation to reimburse the other party for any costs or expenses incurred.
15. Target Timeline
The parties acknowledge the following target timeline for the proposed transaction:
Funding shall be wired by the Investor upon execution of the definitive SAFE agreement to the Company's operating account at Silicon Valley Commerce Bank, pursuant to wire instructions to be provided by the Company. The timeline set forth above is indicative only and is not binding on either party.
[Signature Page Follows]
SIGNATURE PAGE TO NON-BINDING TERM SHEET Simple Agreement for Future Equity (SAFE) Financing Lumos Analytics Inc.
The undersigned parties hereby acknowledge and agree to the terms set forth in this Non-Binding Term Sheet as of the date first written above, subject to the limitations on binding effect set forth in Section 12.
ISSUER:
LUMOS ANALYTICS INC.
By: ________
Name: Priya Narasimhan
Title: Co-Founder, CEO & President
Date: September 15, 2023
ACKNOWLEDGED AND AGREED — INVESTOR:
RIDGELINE ANGEL FUND, L.P.
By: Ridgeline Angel Management LLC, its General Partner
By: ________
Name: David Choi
Title: Managing Partner
Date: September 15, 2023
This term sheet is non-binding except as expressly set forth in Sections 8 and 11 hereof. This term sheet is confidential and is not to be reproduced or distributed to any person other than the parties hereto and their respective advisors without the prior written consent of both parties.
Legal Name: | Lumos Analytics Inc., a Delaware C-corporation
Headquarters: | 340 Folsom Street, Suite 1100, San Francisco, CA 94105
State of Incorporation: | Delaware
Employer Identification Number (EIN): | 87-3491026
Date of Incorporation: | January 2022
Chief Executive Officer: | Priya Narasimhan, Co-Founder, CEO & President
Legal Name: | Ridgeline Angel Fund, L.P., a Delaware limited partnership
Principal Office: | 55 Liberty Street, Suite 800, New York, NY 10005
General Partner: | Ridgeline Angel Management LLC
Managing Partner: | David Choi
Investor | Amount | Status
Vantage Peak Ventures Fund II, L.P. (Lead) | $3,500,000 | SAFE executed September 12, 2023
Ridgeline Angel Fund, L.P. | $1,200,000 | Subject to this term sheet
Additional co-investors (TBD) | $2,100,000 | To be identified by the Company
Total Round Target | $6,800,000
Shares
Authorized shares of common stock | 10,000,000
Stockholder | Shares | Percentage of Outstanding
Priya Narasimhan (Co-Founder, CEO & President) | 4,200,000 | 48.84%
Elliot Marsh (Co-Founder, CTO) | 3,800,000 | 44.19%
Danielle Okoye (CFO) | 600,000 | 6.98%
Total Issued and Outstanding | 8,600,000 | 100.00%
Shares
Total shares reserved under the Plan | 1,200,000
Shares subject to outstanding option grants | 480,000
Shares available for future grants | 720,000
SAFE Holder | Purchase Amount
Ridgeline Angel Fund, L.P. | $500,000
Angela Forsythe | $300,000
Dr. Naveen Iyer | $250,000
Sylvia Montero | $150,000
Total Outstanding Pre-Seed SAFEs | $1,200,000
Firm: | Calderwood & Harkness LLP
Address: | 555 California Street, 30th Floor, San Francisco, CA 94104
Responsible Partner: | Patricia Dunmore
Lead Associate: | Omar Siddiqui
Milestone | Target Date
Execution of this Non-Binding Term Sheet | September 15, 2023
Delivery of draft definitive SAFE to Investor | September 18, 2023
Completion of Investor review and comment period | September 20, 2023
Target execution of the definitive SAFE | On or before September 22, 2023
Wire transfer of Purchase Amount | Upon execution of the SAFE

NON-BINDING TERM SHEET

ISSUER:

LUMOS ANALYTICS INC.

RIDGELINE ANGEL FUND, L.P.

Record

Parties

Dates

Amounts