Exhibit 99.1
Lomond Therapeutics, Inc.
Financial Statements
As of and for the years ended December 31, 2023 and 2022
TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Lomond Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Lomond Therapeutics, Inc. (the “Company”) as of December 31, 2023 and 2022, and the related statements of operations, redeemable convertible preferred stock and stockholders’ deficit, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ EisnerAmper LLP
We have served as the Company’s auditor since 2024.
EISNERAMPER LLP
Philadelphia, Pennsylvania
November 7, 2024
| Lomond Therapeutics, Inc. |
| Balance Sheets |
| As of December 31, 2023 and 2022 |
| | | As of December 31, | |
| | | 2023 | | | 2022 | |
| Assets | | | | | | |
| Current assets: | | | | | | | | |
| Cash | | $ | 800,728 | | | $ | 507,437 | |
| Total assets | | $ | 800,728 | | | $ | 507,437 | |
| | | | | | | | | |
| Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Deficit | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accrued expenses and other current liabilities - related party | | $ | 856,144 | | | $ | 919,281 | |
| Total current liabilities | | | 856,144 | | | | 919,281 | |
| Notes payable - related party | | | - | | | | 3,840,000 | |
| Total liabilities | | | 856,144 | | | | 4,759,281 | |
| | | | | | | | | |
| Commitments and contingencies (Note 4) | | | | | | | | |
| | | | | | | | | |
| Redeemable convertible preferred stock: $0.0001 par value; 13,661,416 shares authorized, issued, and outstanding. Aggregate liquidation preference: $5,500,001 | | | 5,466,925 | | | | 5,466,925 | |
| | | | | | | | | |
| Stockholders’ Deficit | | | | | | | | |
| Common stock: $0.0001 par value; 19,000,000 shares authorized; and 758,967 shares issued and outstanding | | | 76 | | | | 76 | |
| Additional paid-in capital | | | 16,203,254 | | | | 2,065,542 | |
| Accumulated deficit | | | (21,725,671 | ) | | | (11,784,387 | ) |
| Total stockholders’ deficit | | | (5,522,341 | ) | | | (9,718,769 | ) |
| Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit | | $ | 800,728 | | | $ | 507,437 | |
The accompanying notes are an integral part of these financial statements.
| Lomond Therapeutics, Inc. |
| Statements of Operations |
| For the years ended December 31, 2023 and 2022 |
| | | Years Ended December 31, | |
| | | 2023 | | | 2022 | |
| Operating expenses: | | | | | | | | |
| Research and development - related party | | $ | 9,729,437 | | | $ | 4,164,438 | |
| General and administrative | | | 20,642 | | | | 75,982 | |
| Total operating expenses | | | 9,750,079 | | | | 4,240,420 | |
| Loss from operations | | | (9,750,079 | ) | | | (4,240,420 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest expense - related party | | | (191,205 | ) | | | (114,879 | ) |
| Total other expense, net | | | (191,205 | ) | | | (114,879 | ) |
| Net loss | | $ | (9,941,284 | ) | | $ | (4,355,299 | ) |
| Net loss per share attributable to common stockholders, basic and diluted | | $ | (13.10 | ) | | $ | (5.74 | ) |
| Weighted-average shares of common stock outstanding, basic and diluted | | | 758,967 | | | | 758,967 | |
The accompanying notes are an integral part of these financial statements.
| Lomond Therapeutics, Inc. |
| Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit |
For the years ended December 31, 2023 and 2022 |
| | | Redeemable Convertible
Preferred | | | Common Stock | | | Additional Paid-In | | | Accumulated | | | Total
Stockholders’ | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Deficit | |
| Balance at January 1, 2022 | | 13,661,416 | | | $5,466,925 | | | 758,967 | | | $ | 76 | | | $54,930 | | | $(7,429,088) | | | $ | (7,374,082) | |
| Cash contribution from parent | | | - | | | | - | | | | - | | | | - | | | | 1,996,000 | | | | - | | | | 1,996,000 | |
| Stock-based compensation | | | - | | | | - | | | | - | | | | - | | | | 29,165 | | | | - | | | | 29,165 | |
| Reimbursement of equity issuance cost to parent | | | - | | | | - | | | | - | | | | - | | | | (14,553 | ) | | | - | | | | (14,553 | ) |
| Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (4,355,299 | ) | | | (4,355,299 | ) |
| Balance at December 31, 2022 | | | 13,661,416 | | | $ | 5,466,925 | | | | 758,967 | | | $ | 76 | | | $ | 2,065,542 | | | $ | (11,784,387 | ) | | $ | (9,718,769 | ) |
| Cash contribution from parent | | | - | | | | - | | | | - | | | | - | | | | 8,711,966 | | | | - | | | | 8,711,966 | |
| Assumption of promissory notes and related accrued interest by parent | | | - | | | | - | | | | - | | | | - | | | | 5,426,120 | | | | - | | | | 5,426,120 | |
| Stock-based compensation | | | - | | | | - | | | | - | | | | - | | | | 5,428 | | | | - | | | | 5,428 | |
| Reimbursement of equity issuance cost to parent | | | - | | | | - | | | | - | | | | - | | | | (5,802 | ) | | | - | | | | (5,802 | ) |
| Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (9,941,284 | ) | | | (9,941,284 | ) |
| Balance at December 31, 2023 | | | 13,661,416 | | | $ | 5,466,925 | | | | 758,967 | | | $ | 76 | | | $ | 16,203,254 | | | $ | (21,725,671 | ) | | $ | (5,522,341 | ) |
The accompanying notes are an integral part of these financial statements.
| Lomond Therapeutics, Inc. |
| Statements of Cash Flows |
For the years ended December 31, 2023 and 2022 |
| | | For the Year Ended
December 31, | |
| | | 2023 | | | 2022 | |
| Cash flows from operating activities: | | | | | | |
| Net loss | | $ | (9,941,284 | ) | | $ | (4,355,299 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Stock-based compensation | | | 5,428 | | | | 29,165 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accrued expenses and other current liabilities - related party | | | 1,522,983 | | | | 2,809,281 | |
| Net cash used in operating activities | | | (8,412,873 | ) | | | (1,516,853 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from capital contribution by parent | | | 8,711,966 | | | | 1,996,000 | |
| Reimbursement of equity issuance cost to parent | | | (5,802 | ) | | | (14,553 | ) |
| Net cash provided by financing activities | | | 8,706,164 | | | | 1,981,447 | |
| | | | | | | | | |
| Net increase in cash | | | 293,291 | | | | 464,594 | |
| Cash, beginning of year | | | 507,437 | | | | 42,843 | |
| Cash, end of year | | $ | 800,728 | | | $ | 507,437 | |
| | | | | | | | | |
| Supplemental non-cash financing activities: | | | | | | | | |
| Issuance of promissory notes to settle accrued expenses | | $ | 1,280,036 | | | $ | 3,840,000 | |
| Assumption of promissory notes and related accrued interest by parent | | $ | 5,426,120 | | | $ | - | |
The accompanying notes are an integral part of these financial statements.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
| 1 | Organization and Description of Business |
Lomond Therapeutics, Inc. (the “Company”) is a biopharmaceutical company involved in the discovery and development of small molecule inhibitors that target escape mutations in hematologic cancers. The Company was incorporated on January 22, 2020, pursuant to the laws of the State of Delaware. On July 1, 2022, shareholders of the Company contributed and transferred all outstanding common stock, stock options, and redeemable convertible preferred stock of the Company to Eilean Therapeutics, LLC (“Eilean”, or the “Parent”) in exchange for common unit ownership in Eilean (the “Eilean transaction”). After the Eilean transaction, Eilean became the sole shareholder of the Company.
Liquidity
Since inception, the Company has been primarily performing research and development activities, establishing and maintaining its intellectual property, and raising capital to support and expand its operations. The Company has funded its operations primarily through the sale of its series seed redeemable convertible preferred stock and contributions from it’s Parent. The Company does not yet have a product that has been approved by the FDA, has not generated any product sales revenues and has not yet achieved profitable operations, nor has it ever generated positive cash flows from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, the Company’s future operations are dependent on the success of the Company’s efforts to raise additional capital, its research and commercialization efforts, regulatory approval, and, ultimately, the market acceptance of the Company’s products.
In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of December 31, 2023, the Company had cash of $0.8 million. In August and October 2024, the Company issued Simple Agreement for Future Equity (“SAFE instruments”) resulting in net proceeds of $11.0 million. In November 2024, the Company completed a merger with Venetian-1 Acquisition Corp (“Venetian”) (the “Merger”). Upon closing, the Company completed a private placement offering (the “Offering”) resulting in net proceeds of approximately $29.0 million, net of placement agent fees and estimated offering expenses payable by the Company. See Note 10 for further discussion.
Additionally, the Company had an accumulated deficit of $21.7 million at December 31, 2023, and during the year ended December 31, 2023, the Company incurred a net loss of $9.9 million. The Company expects to continue to generate operating losses for the foreseeable future. The Company believes that its cash and cash equivalents of $0.8 million as of December 31, 2023, together with the aggregate net proceeds of approximately $40.0 million from the Offering and issuance of SAFE instruments, will be sufficient to fund its operating expenses for at least the next 12 months from issuance of these financial statements.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
In addition, to finance its future operations, the Company will likely seek additional funding through public financings or government programs and will seek funding or development program cost-sharing through collaboration agreements or licenses with larger pharmaceutical or biotechnology companies. If the Company does not obtain additional funding or development program cost-sharing, or exceeds its current spending forecasts, the Company has the ability and would be forced to delay, reduce or eliminate certain clinical trials or research and development programs, reduce or eliminate discretionary operating expenses, and delay company and pipeline expansion, any of which could adversely affect its business prospects. The inability to obtain funding, as and when needed, could have a material adverse effect on the Company’s financial condition and ability to pursue its business strategies.
The Company’s financial statements have been prepared on the basis of the Company continuing as a going concern, which assumes the continuity of operations, the realization of assets and the settlement of liabilities and commitments as they come due in the normal course of business.
| 2 | Significant accounting policies and basis of presentation |
Basis of presentation
The financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the Company’s accounts.
Use of estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting periods. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates. The most significant estimates relate to the accrual of research and development expenses, and valuation of stock option awards for share-based compensation.
Cash
Cash is comprised of cash deposits held with financial institutions.
Concentrations and risks and uncertainties
Concentration of credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. Substantially all of the Company’s cash deposits are maintained at one financial institution domiciled in the United States. Amounts on deposit with this financial institution may, from time to time, exceed the federally insured limit. The Company is exposed to credit risk in the event of default by the financial institution holding its cash to the extent recorded in the balance sheet. The Company has not experienced any losses on its deposits.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Business risks
The Company’s future results of operations involve a number of other risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current and potential future product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole-source suppliers.
The Company’s product candidates require approvals from the U.S. Food and Drug Administration and comparable foreign regulatory agencies prior to commercial sales in their respective jurisdictions. There can be no assurance that any product candidates will receive the necessary approvals. If the Company was denied approval, approval was delayed, or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company.
Research and development costs
Research and development costs consist primarily of cost of subcontractors and materials used for research and development activities, including preclinical studies, clinical trials, materials and supplies, and professional services. The costs of services performed by others in connection with the research and development activities of the Company, including research and development conducted by others on behalf of the Company, is included in research and development costs and expensed as the contracted work is performed. The Company accrues for costs incurred as the services are being provided by monitoring the status of the project and the invoices received from its external service providers. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone results are probable to be achieved.
Income taxes
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered or settled. Realization of deferred tax assets is dependent upon future taxable income. A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings. As of December 31, 2023 and 2022, management believes it is more likely than not that no benefits will be derived from the Company’s deferred tax assets.
The Company recognizes an uncertain tax position in its financial statements when it concludes that a tax position is more likely than not to be sustained upon examination based solely on its technical merits. Only after a tax position passes the first step of recognition will measurement be required. Under the measurement step, the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs. As of December 31, 2023 and 2022, the Company has not recorded any uncertain tax positions.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
The tax years from 2021 and forward are subject to examination by federal tax and state tax authorities. In addition, tax years with net operating loss carryforwards are subject to examination, three years following the year they are utilized. The Company has not been informed by any tax authorities for any jurisdiction that any of its tax years is under examination.
The Company elected to record any interest or penalties related to income taxes as part of its income tax expense. There were no interest or penalties related to income taxes for the years ended December 31, 2023 or 2022.
Redeemable convertible preferred stock
The Company records shares of its redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The Company classifies its preferred stock outside of total stockholders’ deficit because, in the event of certain “liquidation events” (including a merger, acquisition or sale of all or substantially all of the Company’s assets) that are not solely within the control of the Company, the shares would become redeemable at the option of the holders. The Company did not adjust the carrying values of the preferred stock to the deemed liquidation values of the shares since a liquidation event was not probable at any of the reporting dates. Subsequent adjustments to increase or decrease the carrying values to the liquidation values will be made only if and when it becomes probable that such liquidation event will occur.
Share-based compensation
The Company measures its share-based awards, including grants issued by the Company or Eilean to the Company’s employees and non-employees, based on their grantdate fair value. The Company’s share-based awards currently include common units in its parent, Eilean. The Company records compensation expense for these service-based awards beginning on the grant date over the requisite service period in which the awards are expected to vest on a straight-line basis, subject to a minimum expense amount based on the awards that have vested to date. The common stock issued to option holders upon the exercise of option awards are authorized and previously unissued common stock of Eilean. Forfeitures are recognized as they occur.
The grant date fair value of employee and non-employee awards are determined using the Black-Scholes option pricing model, which includes inputs such as the fair value of the Company’s common stock, expected term, risk-free rate, expected stock price volatility over the expected term, and expected dividend yield. For all options granted, the Company calculated the expected term based on the simplified method. The Company has no publicly available stock information and therefore, the Company used the historical volatility of the stock price of similar publicly traded peer companies. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company does not anticipate that dividends will be distributed in the near future.
The absence of an active market for the Company’s common stock requires the Company’s Board of Directors to determine the fair value of its common stock for purposes of granting options. The Company obtains third-party valuations to assist the Board of Directors in determining the fair value of the Company’s common stock.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Net loss per share attributable to common stockholders
Net loss per share attributable to common stockholders is computed using the two-class method required for participating securities based upon their respective rights to receive dividends as if all income for the period has been distributed.
The Company’s participating securities include the Company’s redeemable convertible preferred stock. The holders of redeemable convertible preferred stock do not have a contractual obligation to share in losses of the Company, and, therefore, during periods of loss there is no allocation required under the two-class method.
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period.
Diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period using the treasury stock method or the if-converted method based on the nature of such securities. For periods in which the Company reports net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because potentially dilutive shares of common stock are not assumed to have been issued if their effect is anti-dilutive.
As of December 31, 2023 and 2022, 13,661,416 potential shares of common stock from the Company’s redeemable convertible preferred stock were excluded from the computation of diluted net loss per share attributable to common stockholders, because including them would have had an anti-dilutive effect.
Segments
Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to such individual segment and in assessing performance. The Company’s CODM is its President. To date, the Company operates and manages its business as one operating and reportable segment. All the Company’s assets are located in the United States.
Forward stock split
On September 20, 2024, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware, which effected a 3.794838-for-1 forward stock split (the “stock split”) of the Company’s issued and outstanding shares of common stock and series seed redeemable convertible preferred stock. As a result of the stock split, (i) every share of common stock issued and outstanding was converted into 3.794838 shares of common stock, and (ii) every share of redeemable convertible preferred stock issued and outstanding was converted into 3.794838 shares of redeemable convertible preferred stock. The stock split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s equity. No fractional shares were issued in connection with the stock split. Stockholders who would otherwise be entitled to a fractional share of common stock were instead entitled to receive a proportional cash payment. The Restated Certificate of Incorporation authorizes the Company to issue 32,661,416 shares of capital stock on a post-stock split adjusted basis, inclusive of 19,000,000 shares of common stock, and 13,661,416 shares of series seed redeemable convertible preferred stock. All common share and per share amounts presented in the financial statements and accompanying notes have been retroactively adjusted to reflect the stock split.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Recently adopted accounting pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This standard simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The Company adopted this standard as of January 1, 2022, which did not have material impact on its financial statements.
Recently issued accounting pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. This standard is effective for fiscal years beginning after December 15, 2024, and may be adopted on a prospective or retrospective basis, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.
| 3 | Other financial statement information |
Accrued expenses and other current liabilities – related party
Accrued expenses and other current liabilities – related party consisted of the following:
| | | As of December 31, | |
| | | 2023 | | | 2022 | |
| Accrued research and development | | $ | 856,144 | | | $ | 748,438 | |
| Accrued interest on promissory notes | | | - | | | | 114,879 | |
| Other accrued liabilities | | | - | | | | 55,964 | |
| Total accrued expenses and other current liabilities | | $ | 856,144 | | | $ | 919,281 | |
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
| 4 | Commitment and contingencies |
Guarantees and Indemnification
In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. The Company has entered into indemnification agreements with certain directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of the status or service as directors or officers. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of December 31, 2023, the Company does not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities.
Contingencies
From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not currently a party to any material legal proceedings.
| 5 | Redeemable convertible preferred stock |
In March 2020, the Company issued an aggregate of 5,216,179 shares of its series seed redeemable convertible preferred stock (“preferred stock”) at a purchase price of $0.402594 per share in exchange for cash proceeds of $2.1 million.
Pursuant to the terms of the original and amended Series Seed Preferred Stock Purchase Agreement (the “Agreement”), the Company was obligated to sell additional shares of its preferred stock to the same investors at a cash purchase price of $0.402594 per share. In 2021, the Company issued an aggregate of 8,445,237 shares of its preferred stock at a purchase price of $0.402594 per share in exchange for cash proceeds $3.4 million.
Redeemable convertible preferred stock consisted of the following:
| As of December 31, 2023 and 2022 |
| Series | | Shares authorized | | | Shares issued
and outstanding | | | Aggregate
liquidation preferrence | | | Carrying value | |
| Series Seed | | | 13,661,416 | | | | 13,661,416 | | | $ | 5,500,001 | | | $ | 5,466,925 | |
| | | | 13,661,416 | | | | 13,661,416 | | | $ | 5,500,001 | | | $ | 5,466,925 | |
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
The following are the key terms of the preferred stock:
Dividends
The holders of shares of preferred stock are entitled to receive dividends, out of any assets legally available, prior and in preference to any declaration or payment of any dividend on the common stock, payable only if and when declared. Such dividends are non-cumulative.
After payment of any such dividends on the preferred stock, any additional dividends or distributions shall be distributed among all holders of common stock and preferred stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of preferred stock were converted to common stock at the then effective conversion rate. No dividends have been declared to date.
Optional Conversion
Each share of preferred stock is convertible at the option of the holder at any time after the issuance date of such share into such number of shares of common stock as is determined by dividing the applicable original issue price by the applicable conversion price for such series. The initial conversion price per share for each series of preferred stock shall be the original issue price of $0.402594 per share. Adjustments to the conversion price, if any, occur if additional shares of common stock have been issued at a price less than the respective preferred stock.
Automatic Conversion
Each share of preferred stock will automatically convert into shares of common stock at the conversion rate at the time in effect for such series of preferred stock immediately upon either of (1) the closing of the Company’s sale of its common stock in an initial public offering pursuant to a registration statement on Form S-1 that results in at least $30.0 million of gross proceeds; or (2) the date, or the occurrence of an event, specified by vote or written consent or agreement of the holders of a majority of the then outstanding shares of preferred stock (voting together as a single class and not as separate series, and on an as-converted basis).
Liquidation Preference
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of the preferred stock are entitled to receive out of the proceeds or assets of the Company available for distribution to its stockholders, prior and in preference to any distribution of the proceeds to the holders of common stock, a liquidation preference in the amount per share equal to the sum of the original issue price of $0.402594 per share, plus any declared but unpaid dividends on such share.
If the assets of the Company are insufficient to pay the holders of the preferred stock the full amount, the holders of the preferred stock will share ratably in any distribution of the assets available for distribution.
If preferential amounts are paid in full, the remaining assets of the Company are distributed among the holders of the preferred stock and common stock pro rata based on the number of shares held by each shareholder.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Voting rights
Each share of preferred stock has a number of votes equal to the number of shares of common stock into which it is convertible. Except as provided in the Company’s amended or restated articles of incorporation, the holders of preferred stock and the holders of common stock vote together as one single class.
The holders of preferred stock are entitled to elect two directors of the Company. The holders of preferred stock and common stock (voting together as a single class and on an as converted basis) are entitled to elect the two remaining directors.
Redemption
The preferred stock is not currently redeemable; however, it is redeemable at the option of the holders in the event of certain “liquidation events” (including a merger, acquisition or sale of all or substantially all of the Company’s assets) that are not solely within the control of the Company.
The voting, dividend, and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers, and preferences of the holders of the preferred stock set forth above. Each share of common stock entitles the holder to one vote, together with the holders of the preferred stock, on all matters submitted to the stockholders for a vote. The holders of common stock are entitled to receive dividends, if any, as declared by the Company’s board of directors, subject to the preferential dividend rights of redeemable convertible preferred stock. As of December 31, 2023 and 2022, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 19,000,000 shares of common stock with a par value of $0.0001 per share. There are 758,967 shares of common stock issued and outstanding. The Company currently has 13,661,416 shares of common stock reserved for issuance upon the conversion of its outstanding redeemable convertible preferred stock.
Capital Contributions
During the year ended December 31, 2023, the Company received capital contributions of $14.1 million from Eilean. Capital contributions received consisted of cash contributions of $8.7 million to support working capital requirements and the assumption by Eilean of the Company’s outstanding principal and accrued interest of related party promissory notes of $5.4 million (see Note 8).
During the year ended December 31, 2022, the Company received capital contributions of $2.0 million from Eilean to support the Company’s working capital requirements.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
There is no provision for income taxes for the years ended December 31, 2023 or 2022 because the Company has historically incurred operating losses and maintains a full valuation allowance against its deferred tax assets. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows:
| | | December 31, | |
| | | 2023 | | | 2022 | |
| Deferred tax assets: | | | | | | |
| Capitalized research and development expenditures | | $ | 3,253,225 | | | $ | 1,044,678 | |
| Net operating loss carryforwards | | | 2,183,803 | | | | 1,622,234 | |
| Research and development tax credits | | | 1,253,836 | | | | 621,422 | |
| Share-based compensation | | | 24,969 | | | | 23,456 | |
| Accruals and other | | | 13,548 | | | | 14,243 | |
| Total deferred tax assets | | | 6,729,381 | | | | 3,326,034 | |
| Less: valuation allowance | | | (6,729,381 | ) | | | (3,326,034 | ) |
| Deferred tax asset, net of valuation allowance | | $ | - | | | $ | - | |
Based upon the historical and anticipated future losses, management has determined that the deferred tax assets do not meet the more likely than not threshold for realizability. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of December 31, 2023 and December 31, 2022. The valuation allowance increased by $3.4 million and $3.3 million during the years ended December 31, 2023, and 2022, respectively. The valuation allowance balance for the year ended December 31, 2023 is $6.7 million.
A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:
| | | For the Year Ended
December 31, | |
| | | 2023 | | | 2022 | |
| Rate Reconciliation | | | | | | |
| Federal tax benefit at statutory rate | | | 21.0 | % | | | 21.0 | % |
| State tax, net of federal benefit | | | 6.9 | | | | 6.9 | |
| Research and development credits | | | 6.4 | | | | 6.2 | |
| Change in valuation allowance | | | (34.3 | ) | | | (34.1 | ) |
| Effective tax rate | | | 0.0 | % | | | 0.0 | % |
At December 31, 2023, the Company has federal and state net operating loss (“NOL”) carryforwards of approximately $9.6 million and $2.6 million, respectively, which may be available to offset future taxable income. At December 31, 2023, the Company has research and development tax credits of approximately $1.3 million. The federal and state net operating loss carryforwards have no expiration. The research and development tax credit will begin to expire in 2040.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service (the “IRS”) and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code, which could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the Company’s value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not yet conducted a study to determine if any such limitation exists.
The Tax Cuts and Jobs Act (“TCJA”) resulted in significant changes to the treatment of R&D expenditures under Section 174. For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all R&D expenditures that are paid or incurred in connection with their trade or business. Specifically, costs for U.S.-based R&D activities must be amortized over five years and costs for foreign R&D activities must be amortized over 15 years, both using a midyear convention. During the year ended December 31, 2023, the Company capitalized $9.7 million of R&D expenses.
| 8 | Related Party Transactions |
Research and development arrangements with related parties
In March 2020, the Company entered into a Master Research and Development Agreement with ChemDiv, Inc. (“ChemDiv”), pursuant to which ChemDiv provides services related to preclinical drug discovery to the Company. Dr. Nikolay Savchuk, President and Chief Executive Officer of the Company, is a stockholder of ChemDiv and a member of its board of directors. During the years ended December 31, 2023 and 2022, $5.8 million and $3.9 million, respectively, was expensed as research and development cost in the statements of operations related to ChemDiv services. As of December 31, 2023 and 2022, the Company recorded $0.9 million and $0.5 million, respectively, as accrued expense relating to ChemDiv services in the balance sheets.
In January 2023, the Company entered into an agreement with Eilean Therapeutics AU Pty Ltd (“Eilean AU”), a subsidiary of Eilean, which provided the Company rights to intellectual property under development by Eilean AU. During the year ended December 31, 2023, the Company paid Eilean AU $3.0 million for the intellectual property rights. Because the intellectual property rights from Eilean AU have no alternative future use, the payment was recorded immediately through research and development expenses in the Company’s statements of operations for the year ended December 31, 2023.
Administrative arrangements with related parties
In March 2020, the Company entered into an Administrative Services Agreement with Eil Therapeutics, Inc. (“Eil”), a subsidiary of Eilean. Pursuant to such administrative services agreement, Eil agreed to provide the Company, directly or indirectly through its contractors, administrative support services and access to staff’s management experience and knowledge. Such services included general management and operations, including financial and accounting services, insurance program marketing and administration and various tax-related services. Dr. Nikolay Savchuk, President and Chief Executive Officer of the Company, is also President and Chief Executive Officer of Eil. During the years ended December 31, 2023 and 2022, $1.0 million and $0.2 million, respectively was expensed as research and development cost. Amounts expensed as general and administrative cost during the years ended December 31, 2023 and 2022 were de minimis. As of December 31, 2022, the Company recorded $0.3 million as accrued expense relating to Eil services in the balance sheet.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Related party notes payable
In May and June 2022, the Company borrowed an aggregate principal amount of $3.9 million under two promissory note agreements with Dinas Therapeutics, Inc. (“Dinas”) for research and development invoices paid by Dinas on behalf of the Company. Dr. Nikolay Savchuk, President and Chief Executive Officer of the Company, is the Chief Executive Officer of Dinas. The notes were due on the earlier of (i) written demand by Dinas, (ii) the second anniversary of the note issuances. The notes accrued interest per annum at a rate equal to 5.00%, to be paid at maturity.
In January and December 2023, the Company borrowed an aggregate principal amount of $1.3 million under two promissory note agreements with Eil, for payment of services performed on behalf of the Company. The notes were due no later than the second anniversary of the note issuances. The notes accrued interest per annum at a rate of 2.5%, to be paid at maturity.
In December 2023, Eilean assumed the promissory notes outstanding with Dinas and Eil and related accrued interest, which was accounted for as a contribution from parent of $5.4 million, as further described in Note 6.
| 9 | Share-based compensation |
During the year ended December 31, 2020, the Company issued 539,796 option awards to non-employee consultants for services to be performed for the Company. Option awards granted generally vest based on a specific vesting schedule as agreed upon by the optionee and the Company and generally expire 10 years after the grant date.
In connection with the Eilean transaction, the existing option awards granted by the Company were cancelled and replaced with common units (the “units”) in Eilean. The units granted generally vest (i) on the date of grant, or (ii) 50% on the date of grant, with the remaining 50% vesting over 24 months in equal monthly installments as services are provided.
The replacement of the option awards with units was evaluated as a modification. The fair value of the option awards was in excess of the grant date fair value of the units. As such, there was no incremental compensation costs related to the units to be recorded. The Company recognized $25,000 at the grant date of the units related to the portion of the units that became fully vested at such time.
Total share-based compensation of $5,428 and $29,165 is included in the Company’s statements of operations as general and administrative expenses for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, there was $3,510 of total unrecognized share-based compensation costs related to the Company’s common unit interest awards which is expected to be recognized over a weighted-average period of approximately 0.58 years. There were no awards granted during the year ended December 31, 2023.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
The estimated fair value of option awards were estimated as of July 1, 2022 immediately prior to the replacement with units in Eilean using a Black-Scholes option pricing model, based on the following assumptions:
| Assumptions used to estimate fair value of option grants: | | | |
| Risk-free interest rate | | | 2.90% | |
| Expected term (in years) | | | 4.0 - 4.3 years | |
| Expected volatility | | | 99.5% - 99.7% | |
| Expected dividend yield | | | 0% | |
The estimated grant date fair value of the units in Eilean was estimated as of July 1, 2022 using a Black-Scholes option pricing model, based on the following assumptions:
| Assumptions used to estimate fair value of profits interest grants: | | | |
| Risk-free interest rate | | | 2.85% | |
| Expected term (in years) | | | 2.50 years | |
| Expected volatility | | | 79.80% | |
| Expected dividend yield | | | 0% | |
A summary of unit award activity in Eilean is presented below:
| | | Number of awards | | | Weighted average grant date fair value | |
| Outstanding at January 1, 2023 | | | 223,800 | | | $ | 0.17 | |
| Granted | | | - | | | | - | |
| Forfeited or expired | | | - | | | | - | |
| Outstanding at December 31, 2023 | | | 223,800 | | | | 0.17 | |
| Exercisable at December 31, 2023 | | | 202,042 | | | $ | 0.17 | |
The Company evaluated the potential impact of subsequent events on the financial statements through November 7, 2024, the date the financial statements were available to be issued.
Issuance of SAFE Instruments
In August and October 2024, the Company issued SAFE instruments to TPAV, LLC (“TPAV”), a party related through Nikolay Savchuk, the President and Chief Executive Officer of the Company, and entities affiliated with OrbiMed, a party related through Carl Gordon, a Director of the Company, and third-party investors resulting in net proceeds of $11.0 million. The SAFE instruments provide investors the right to certain shares of the Company’s capital stock.
If there is a qualified equity financing before the termination of the SAFE instruments, the SAFEs will automatically convert into the number of shares of capital stock equal to the purchase amount divided by the conversion price.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
If there is a non-qualified equity financing before the termination of the SAFE instruments, the majority-in-interest investors may elect to convert the purchase amounts of all then-outstanding SAFE instruments with the same post-money valuation cap into the number of shares of capital stock equal to the purchase amount divided by the conversion price.
If there is a merger, reverse merger, acquisition and/or other business combination involving the Company and a publicly traded company or other similar entity that is a “blank check” company under applicable U.S. securities laws before the termination of the SAFE instruments, the SAFE instruments will automatically convert into the number of shares of common stock of the issuer entity in the same manner as a qualified equity financing, and as though the SAFE instrument was issued to the investor by the issuer.
If there is a liquidity event before the termination of the SAFE instruments, the investor will be automatically entitled to receive a portion of the proceeds due and payable to the investor equal to the greater of (i) a cash payment equal to the purchase amount, or (ii) the amount payable on the number of shares of common stock equal to the conversion amount, or actual shares of common stock equal to the purchase amount divided by the liquidity price, subject to adjustment in certain events. A liquidity event means a change in control, direct, listing, or an initial public offering of the Company’s common stock.
In the event of a voluntary or involuntary dissolution event of the Company before the expiration or termination of the SAFE instruments, the investors will receive a cash payment equal to their purchase amount.
Agreements with Eil and Bala
In October 2024, the Company entered into license agreements with both of Eil (the “Eil License Agreement”) and Bala Therapeutics, Inc. (“Bala”, the “Bala License Agreement”). Pursuant to the Eil License Agreement and Bala License Agreement, the Company obtained exclusive, perpetual, worldwide licensing rights for the development and future ownership of (i) a BCL-2, inhibitor for the treatment of AML and CLL from Eil, and (ii) an early-stage menin inhibitor for the treatment of AML from Bala.
The Eil License Agreement and Bala License Agreement became effective in October 2024 when the Company issued promissory notes to Eil and Bala, respectively. The principal amount of the promissory notes with Eil and Bala are $1.7 million and $1.2 million, respectively. Each such promissory note bears interest at a rate of 7% per annum, compounded annually, and matures on October 17, 2026. Each such promissory note may be prepaid without penalty. In addition, the two promissory notes each provide for customary events of default.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Upon the payment in full of the applicable promissory note, Eil and Bala have each agreed to transfer to the Company all of the intellectual property rights covered by the license agreements, as the case may be.
The license rights are sublicensable at the option of the Company. Under such license agreements, Lomond, but not Eil or Bala, as the case may be, have the right to terminate the applicable license agreement for convenience upon 30 days’ written notice. If Lomond, or Eil or Bala, as the case may be, materially breaches the applicable license agreement, and such breach is not cured within 90 days after the receipt of notice of such breach, then the non-defaulting party may terminate such license agreement. In addition, upon the occurrence of an event of default under the applicable promissory note, the license agreement shall be terminated.
Eil and Bala are each wholly-owned by Eilean, Lomond’s parent company.
Adoption of 2024 Stock Plan and Grant of Options
On September 20, 2024, the Board of Directors of Lomond (the “Board”) approved the adoption of the Lomond Therapeutics, Inc. 2024 Stock Plan (the “2024 Plan”). The purpose of the 2024 Plan is to attract, incentivize and retain employees, outside directors and consultants through the grant of awards. The 2024 Plan provides for the direct award or sale of shares, the grant of options to purchase shares and the grant of restricted stock units to acquire shares. The maximum number of shares which may be issued under the 2024 Plan were 4,329,617. Options granted under the 2024 Plan may be ISOs intended to qualify under Code Section 422 or NSOs which are not intended to so qualify.
Immediately following the adoption of the 2024 Plan, the Board approved the grant of 4,329,617 options to purchase Lomond common stock to employees, outside directors and consultants, at an exercise price of $1.30 per share. The option shares will become eligible to vest based on, and subject to, the Company’s completion of a merger, consolidation or share exchange with a special purpose acquisition company or other similar entity in which the common stock (or similar securities) of the surviving parent entity is listed on a nation securities exchange on or prior to December 31, 2024 (the “Milestone”) and the optionee’s continuous service through the achievement of the Milestone. Any option shares that become eligible to vest based on achievement of the milestone (the “Eligible Shares”) shall vest and become exercisable in a series of 48 successive equal monthly installments.
Entry into a Material Definitive Agreement
On November 1, 2024, the Company, Venetian, and its wholly-owned subsidiary, Lomond Acquisition Corp. (“Acquisition Corp.”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on November 1, 2024 (the “Closing Date”), Acquisition Corp. merged with and into Lomond, with Lomond continuing as the surviving corporation and a wholly-owned subsidiary of Venetian (the “Merger”). In connection with the Merger, Venetian intends to change its corporate name from “Venetian-1 Acquisition Corp” to “Lomond Therapeutics Holdings, Inc.”
Pursuant to the terms of the Merger Agreement, at the time the certificate of merger reflecting the Merger was filed with the Secretary of State of Delaware (the “Effective Time”), each share of Legacy Lomond’s capital stock issued and outstanding immediately prior to the closing of the Merger was cancelled and converted into the right to receive one share of Venetian common stock (the “Exchange Ratio”), with the maximum number of shares of Venetian common stock issuable to the former holder of Lomond’s capital stock equal to 14,420,383. In addition, pursuant to the Merger Agreement, immediately prior to the Effective Time, an aggregate of 3,625,000 shares of the 5,000,000 then-outstanding shares of Venetian common stock owned by Venetian stockholders prior to the Merger were forfeited and cancelled (the “Stock Forfeiture”).
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
In addition, pursuant to the Merger Agreement, at the Effective Time, options to purchase an aggregate of 4,329,617 shares of Lomond common stock at an exercise price of $1.30 per share issued and outstanding immediately prior to the closing of the Merger under Lomond’s 2024 Equity Incentive Plan (the “Legacy Lomond Plan”) were assumed and converted into options to purchase 4,329,617 shares of Lomond Therapeutics Holdings, Inc. common stock at an exercise price of $1.30 per share.
The Merger Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions. The Merger will be treated as a recapitalization and reverse acquisition for Venetian for financial reporting purposes. Lomond will be considered the acquirer for accounting purposes, and Venetian’s historical financial statements before the Merger will be replaced with the historical financial statements of Lomond before the Merger in future filings with the United States Securities and Exchange Commission (the “SEC”). The Merger is intended to be treated as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended.
Immediately following the Effective Time of the Merger, Lomond Therapeutics Holdings, Inc. held a closing for a private placement offering (the “Offering”) pursuant to which 8,241,375 shares of common stock were issued and sold at a purchase price of $4.00 per share for aggregate gross proceeds of approximately $32.9 million before deducting placement agent fees and expenses of the Offering.
In connection with the Offering and subject to the closing of the Offering, Lomond Therapeutics Holdings, Inc. agreed to pay the placement agents, Raymond James & Associates, Inc. (“Raymond James”), and Wedbush & Co., LLC (“Wedbush” and with Raymond James, the “Lead Placement Agents”) and Aegis Capital Corp. (“Aegis” and together with Raymond James and Wedbush, the “Placement Agents”), each a U.S. registered broker-dealer, a cash placement fee and issue Placement Agent Warrants to the Placement Agent as follows. The Lead Placement Agents will be paid a cash placement fee equal to the sum of (x) 4% of the gross proceeds raised from OrbiMed Advisors LLC (“OrbiMed”) and Torrey Pines Investment LLC and/or their respective affiliates and/or certain other investors (collectively “Insider Investors”), (y) 6% of the gross proceeds raised from certain other investors introduced by Legacy Lomond or its affiliates (“Lomond Investors”) and (z) 8% of the gross proceeds raised from all other Purchasers resulting from the efforts of the Lead Placement Agents (other than Co-Agent Investors (as defined below), the “Lead Placement Agent Investors”). Aegis will be paid a cash placement fee equal to 8% of the gross proceeds raised from Purchasers resulting from the efforts of Aegis (the “Co-Agent Investors”). Further, Lomond Therapeutics Holdings, Inc. agreed to issue Placement Agent Warrants to the Placement Agents covering a number of shares of its common stock equal to 8% of the number of shares of Common Stock sold in the Offering to the Lead Placement Agent Investors and Co-Agent Investors, as applicable, with a term of four years and an exercise price of $4.00 per share.
As a result of the foregoing, in connection with the closing of the Offering, Lomond Therapeutics Holdings, Inc. paid the Placement Agents an aggregate cash commission of $2.5 million and issued Placement Agent Warrants to purchase an aggregate of 275,410 shares of Lomond Therapeutics Holdings, Inc. Common Stock. Lomond Therapeutics Holdings, Inc. has also reimbursed or will reimburse the Placement Agents for approximately $0.1 million of expenses incurred in connection with the Offering.
Lomond Therapeutics, Inc.
Notes to the Financial Statements
As of and for the years ended December 31, 2023 and 2022
Consulting Agreement with Dr. Dukes
In November 2024, the Company entered into a consulting agreement with Dr. Iain Dukes, to commence upon closing of the Merger. Pursuant to the terms of Dr. Dukes’ consulting agreement, Dr. Dukes will serve as Chief Executive Officer and Chairman of Lomond Therapeutics Holdings, Inc., is eligible to receive consulting fees at an annual rate of $400,000, and is eligible to receive an annual incentive payment equal to up to 50% of such annual consulting fees, subject to the achievement of applicable performance metrics as determined by the Company’s board of directors. Dr. Dukes’ consulting agreement contains customary invention assignment and confidentiality provisions.
Consulting Agreement with Dr. Savchuk
In November 2024, the Company entered into a consulting agreement with Dr. Nikolay Savchuk, to commence upon closing of the Merger. Pursuant to the terms of Dr. Savchuk’s consulting agreement, Dr. Savchuk will serve as Chief Operating Officer and President of Lomond Therapeutics Holdings, Inc., is eligible to receive consulting fees at an annual rate of $400,000, and is eligible to receive an annual incentive payment equal to up to 50% of such annual consulting fees, subject to the achievement of applicable performance metrics as determined by the Company’s board of directors. Dr. Savchuk’s consulting agreement contains customary invention assignment and confidentiality provisions.
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