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Item 7. Management’s Discussion and Analysis

2026-03-18 compared with 2024-09-27 · 241 added, 396 removed, 17 unchanged (97% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Unless the context otherwise

requires, for purposes of this section, the terms “Company,” “we,” “us,” “our,” refer

to Immunopharma, Inc.

collectively with its subsidiary Estrella Biopharma, Inc., while the term “Estrella” refers to Estrella

Biopharma, Inc.

prior to closing of the business combination (the “Business Combination”) with TradeUP Acquisition Corp.

on September 29, 2023.

The following discussion and analysis of our results of operations and financial condition should be read together

with our audited financial statements and the notes thereto, which are included elsewhere in this Report and our audited financial statements

as exhibit 99.1 on Form 8-K filed with the SEC on October 5, 2023 and the section entitled “Management’s Discussion and Analysis

of Financial Conditions and Results of Operations” included in the Company’s Registration Statement on Form S-1, filed with

the SEC on October 11, 2023 and amended on November 13, 2023 and December 18, 2023.

Certain information contained in the discussion and

analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Our financial statements have been

Management’s Discussion

and Analysis of Financial Condition and Results of Operations.

The following discussion

and analysis of our results of operations and financial condition should be read together with our audited consolidated financial statements

and the notes thereto, which are included elsewhere in this report.

Certain information contained in the discussion and analysis set

forth below includes forward-looking statements that involve risks and uncertainties.

Our consolidated financial statements have been

prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Company is a clinical-stage biopharmaceutical company developing T-cell therapies with the capacity to address treatment challenges for

patients with blood cancers and solid tumors.

We believe T-cell therapy continues to represent a revolutionary step towards providing

a potential solution for many forms of cancer, including cancers poorly addressed by current approaches.

June 28, 2022, pursuant to the Contribution Agreement, Eureka contributed certain assets related to T-cell therapies targeting CD19 and/or

CD22 to Estrella in exchange for 105,000,000 shares of Series AA Preferred Stock of Estrella (the “Separation”).

Eureka determined

that the Separation would allow for the flexibility to create a capital structure tailored to Estrella’s strategic goals, provide

increased access to capital markets, allow for greater focus on the product candidates contributed to Estrella, and result in a dedicated

management team.

part of the Separation, Estrella entered into a License Agreement with Eureka and Eureka Therapeutics (Cayman) Ltd., an affiliate of

Eureka, and a Services Agreement with Eureka, and Eureka contributed and assigned the Collaboration Agreement between Eureka and Imugene

The License Agreement grants Estrella an exclusive license to develop CD19 and CD22-targeted T-cell therapies using Eureka’s

ARTEMIS ® platform.

Under the Services Agreement, Eureka has agreed to perform certain services for us in connection

with the development of our product candidates, EB103 and EB104, and researching the use of EB103 in conjunction with CF33-CD19t.

Collaboration Agreement establishes our collaboration with Imugene related to the development of solid tumor treatments using CF33-CD19t

in conjunction with EB103.

March 2, 2023, the FDA cleared the IND application for EB103, allowing Estrella to proceed with the Phase I/II STARLIGHT-1 Clinical Trial.

On March 4, 2024, Estrella

and Eureka entered into Statement of Work No.

001 (“SOW”) relating to the clinical trial services to be performed by Eureka

in connection with STARLIGHT-1, the Phase I/II clinical trial of Estrella’s product candidate, EB103, a T-cell therapy targeting

CD19 using ARTEMIS ® T cell technology licensed by Estrella from Eureka.

Pursuant to the SOW, Estrella agrees to pay Eureka

non-refundable net fees in connection with the achievement of certain milestones set forth in the SOW, with total fees of $33,000,000

for achievement of all milestones.

As of June 30, 2024, Estrella has paid $3,500,000 to Eureka for covering the fees associated with milestones

that have been achieved.

To date, Estrella has funded

its operations primarily from the June 28, 2022 issuance of $5.0 million of our Series A Preferred Stock, and net proceeds of approximately

$20.1 million raised from completion of the Business Combination on September 29, 2023.

We have a limited operating history.

inception, our operations have focused on preparing for the Business Combination, regulatory filings (including the INDs), planning preclinical

and clinical studies, and building our management team.

We do not have any product candidates approved for sale and have not generated

any revenue from product sales.

of June 30, 2024, we had an accumulated deficit of approximately $19.5 million.

We have remitted payment of approximately $11.2 million

to Eureka, consisting of the upfront payment incurred under the License Agreement and monthly service provided by Eureka under the Services

Agreement on October 10, 2023.

In addition, in March 2024, we have paid $3,500,000 to Eureka for covering the fees associated with the

milestones achieved.

anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

to advance preclinical and clinical development of our product candidates and preclinical programs;

seek regulatory

approval for any product candidates that successfully complete clinical trials;

up our clinical and regulatory capabilities;

adapt our regulatory compliance

efforts to incorporate requirements applicable to marketed products;

maintain, expand, and protect

our intellectual property portfolio;

add operational, financial

and management information systems and personnel, including personnel to support our product development and planned future commercialization

incur additional legal,

accounting and other expenses in operating as a public company.

Business Combination and Public Company Costs

September 29, 2023, we consummated the previously announced Business Combination with UPTD pursuant to the terms of the Merger Agreement

by and among UPTD, Merger Sub and Estrella.

No closing conditions set forth in the Merger Agreement were waived by either UPTD or Estrella.

Moreover, concurrently with closing of the Merger, Estrella consummated the following transactions:

(i) sales of 9.25 million shares

of Estrella Series A Preferred Stock for $9.25 million ($730,000 of which was comprised of funds in the trust account delivered to the

Company at the closing of the Business Combination that would have otherwise been paid to US Tiger Securities, Inc as a deferred underwriting

fee in connection with UPTD’s initial public offering), which shares were converted to shares of Estrella Common Stock and subsequently

exchanged for Merger Consideration Shares of UPTD immediately prior to the effective time of the merger at an exchange ratio of 0.2407,

with such shares becoming shares of New Estrella Common Stock from and after the effective time of the Merger;

(ii) issuance of 500,000

shares of Estrella’s Series A Preferred Stock to White Lion for $500,000 and 250,000 shares of Estrella Series A Preferred Stock

to White Lion in consideration for its commitments under the Common Stock Purchase Agreement, dated April 20, 2023, between UPTD and

White Lion and in accordance with the Joinder to the Series A Preferred Stock Purchase Agreement between Estrella and White Lion, dated

April 20, 2023, which shares were subsequently converted to shares of Estrella Common Stock and exchanged for Merger Consideration Shares

of UPTD at an exchange ratio of 0.2407, with such Merger Consideration Shares becoming shares of New Estrella Common Stock from and after

the effective time of the Merger and (iii) issued an unsecured promissory note to a third party for $300,000 at 12% interest per annum,

which will be payable 30 days after the closing date of the Merger of September 29, 2023 and subsequently settled on October 26, 2023.

the legal acquirer in the Business Combination was UPTD, for financial accounting and reporting purposes under U.S.

GAAP, Estrella was

the accounting acquirer, and the Business Combination was accounted for as a “reverse recapitalization.” A reverse recapitalization

(i.e., a capital transaction involving the issuance of stock by UPTD for the stock of Estrella) does not result in a new basis of accounting,

and the consolidated financial statements of the combined company represent the continuation of the consolidated financial statements

of Estrella in many respects.

Accordingly, the consolidated assets, liabilities and results of operations of Estrella became the historical

consolidated financial statements of the combined company, and UPTD’s assets, liabilities, and results of operations were consolidated

with Estrella beginning on the Closing Date.

Operations prior to the Business Combination are presented as those of Estrella.

assets of UPTD are recognized at historical cost (which is expected to be consistent with carrying value), with no goodwill or other

intangible assets recorded upon execution of the Business Combination.

a consequence of the Merger, Estrella became the successor to an SEC-registered and Nasdaq-listed company which will require Estrella

to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

Estrella expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’

liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including

increased audit and legal fees.

future results of consolidated operations and financial position may not be comparable to historical results as a result of the Business

June 26 2024, the Company filed a Certificate of Ownership and Merger with the Delaware Secretary of State to effect a merger (the “Merger

1”) with its wholly-owned subsidiary, Estrella, pursuant to Section 253 of the Delaware General Corporation Law.

The Merger 1 was

approved by resolutions duly adopted by the unanimous written consent of the Company’s board of directors.

The Merger 1 became

effective at 11:59 PM Eastern Time on June 30, 2024, at which time the separate existence of Estrella ceased, and the Company became

the surviving corporation.

of Operations

was formed on March 30, 2022, and has not commenced revenue-producing operations.

To date, our operations have consisted of the development

and early-stage testing of our initial product candidates, EB103 and EB104, preparation and submission of the IND Application for and

researching the use of EB103 in conjunction with CF33-CD19t.

results of operations for the year ended June 30, 2024 represented our results of operations to be comparable with the same period in

There are two major expenses

incurred for the operation:

and Development Expenses

and development expenses consist primarily of costs related to conducting work related to IND-enabling, IND-filing and clinical trial

preparation, which were mainly performed by Eureka.

For the years ended June 30, 2024 and 2023, we incurred approximately $4.1 million

and $10.5 million of research and development expenses, respectively.

All research and development expense incurred for the periods presented

above were dedicated to the development of ARTEMIS ® T-cell therapies targeting CD19 and CD22.

The decrease in research

and development expenses was mainly due to Estrella incurring lower service fees with Eureka due to a lower volume of service rendered

under the Services Agreement for the year ended June 30, 2024 compared to the same period in 2023.

In addition, for the year ended June

30, 2024, we have incurred $3.5 million R&D expense from Eureka for achieving the milestones related to SOW.

breakdown of research and development expenses by categories for the years ended June 30, 2024 and 2023 are summarized below:

For year Ended

Consulting and laboratory related

We are a clinical-stage biopharmaceutical company developing T-cell

therapies with the capacity to address treatment challenges for patients with blood cancers and solid tumors.

Our mission is to harness

the evolutionary power of the human immune system to provide patients fighting cancer with safe, effective therapies.

Our lead product

candidate, EB103, is a T-cell therapy called “CD19-Redirected ARTEMIS ® T-Cell Therapy,” which utilizes Eureka

Therapeutics, Inc.’s (“Eureka”) ARTEMIS ® technology to target CD19.

On March 2, 2023, the FDA cleared

the Investigational New Drug (“IND”) application for EB103, allowing us to proceed with the Phase I/II STARLIGHT-1 Clinical

We hold an exclusive license

from Eureka to develop CD19 and CD22-targeted T-cell therapies using their ARTEMIS ® platform.

Under a Services Agreement

and a related Statement of Work (“SOW”), Eureka performs clinical trial services for our STARLIGHT-1 trial.

As of December

31, 2025, nine patients had been dosed in the trial, and we had accrued approximately $12.4 million in related-party

liabilities for the corresponding milestones.

To date, we have funded our

operations primarily through the issuance of preferred and common stock, including net proceeds from our business combination in September 2023

and a private placement during May through September 2025.

We have a limited operating history and have not generated any revenue

from product sales.

As of December 31, 2025, we had an accumulated deficit of approximately $37.0 million.

We expect our expenses

and operating losses to increase significantly as we continue to advance our product candidates through clinical development.

Change in Fiscal Year

On November 25, 2024, our Board of Directors approved a change

in our fiscal year end from June 30 to December 31.

Results of Operations for the year ended December

31, 2025 Compared with the unaudited twelve-month period ended December 31, 2024

Due to the change in our fiscal

year end from June 30 to December 31, the audited consolidated financial statements included in this Annual Report present our financial

results for the year ended December 31, 2025, and the six-month transition period ended December 31, 2024.

However, to provide a meaningful

year-over-year comparison, the following discussion compares our results of operations for the year ended December 31, 2025, against the

unaudited twelve months ended December 31, 2024.

There are two major expense

categories in our operations:

(i) research and development expenses and (ii) general and administrative expenses.

Research and Development Expenses

Research and development expenses consist primarily of costs related

to conducting work related to the conduct of the STARLIGHT-1 clinical trial, which was mainly performed by Eureka.

For the year ended

December 31, 2025 and for the twelve months ended December 31, 2024, we incurred approximately $10.2 million and $6.4 million of research

and development expenses, respectively.

All research and development expenses incurred for the periods presented above were dedicated

to the development of ARTEMIS ® T-cell therapies targeting CD19 and CD22.

The increase in research and development expenses

was mainly due to Estrella incurring higher service fees during the clinical phase and the dosing of seven patients, and a second site

activation under the SOW for the year ended December 31, 2025 compared to two patients dosed during the same period in 2024.

for the twelve months ended December 31, 2024, we have incurred $3.5 million R&D expense from Eureka for achieving the milestones

associated with the initiation of the study, the preparation and activation of the first study site, and the First Patient First Visit

(FPFV) under the SOW.

Our breakdown of research and

development expenses by categories for the year ended December 31, 2025 and for the twelve months ended December 31, 2024 are summarized

Consulting and laboratory related fee

Stock based compensation

Total research and development

and administrative expense

the years ended June 30, 2024 and 2023, we incurred approximately $3.2 million and $0.7 million of general and administrative expenses,

respectively.

The increase in general and administrative expenses for the year ended June 30, 2024, was mainly due to an increase in

professional fee, and recognition of the acceleration of the stock-based compensation upon consummation of the Business Combination.

The increase was also attributable to approximately $0.5 million of bonus granted to our executive officers in recognition of their service.

incurred a net loss of approximately $7.3 million and $11.1 million for the years ended June 30, 2024 and 2023, respectively.

our research and development expenses to continue to increase as we continue to work with Eureka to advance the IND filings, preclinical

General and Administrative Expenses

For the year ended December 31, 2025 and for the twelve months ended

December 31, 2024, we incurred approximately $2.8 million and $2.4 million in general and administrative expenses, respectively.

was primarily driven by higher professional fees and stock-based compensation expense related to stock options granted in October 2024

under our 2023 Omnibus Incentive Plan, partially offset by lower other corporate expenses.

We incurred a net loss of approximately

$13.1 million and $8.8 million for the year ended December 31, 2025 and for the twelve months ended December 31, 2024, respectively.

expect our research and development expenses to continue to increase as we continue to work with Eureka to advance the IND filings, preclinical

and clinical development of our product candidates and preclinical programs, seek regulatory approval for any product candidates that

successfully complete clinical trials, scale up our clinical and regulatory capabilities, adapt our regulatory compliance efforts to

incorporate requirements applicable to marketed products, maintain, expand, and protect our intellectual property portfolio, add operational,

financial, and management information systems and personnel, including personnel to support our product development and planned future

commercialization efforts, and incur additional legal, accounting, and other expenses in operating as a public company.

and Capital Resources

of June 30, 2024, we had cash of approximately $4.2 million.

Our ability to fund our operations is dependent on the amount of cash on

hand, our ability to raise debt or additional equity financing, and ultimately our ability to generate sufficient revenue.

We have expended

substantial funds on research and development, have experienced losses and negative cash flows from operations since our inception, and

expect losses and negative cash flows from operations to continue until such time that our product candidates receive regulatory approval

and we generate sufficient revenue and positive cash flow from operations, if ever.

date, we have not generated any revenue from any source, and we do not expect to generate revenue for at least the next few years.

If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, our

ability to generate future revenue will be adversely affected.

We do not know when, or if, we will generate any revenue from our product

candidates, and we do not expect to generate revenue unless and until we obtain regulatory approval of, and commercialize, our product

expect our expenses to increase significantly in connection with our ongoing activities, particularly as we continue research and development,

and seek marketing approval for, our product candidates.

In addition, if we obtain approval for any of our product candidates, we expect

to incur significant commercialization expenses related to sales, marketing, manufacturing, and distribution.

Furthermore, following

the completion of the Business Combination, we expect to incur additional costs associated with operating as a public company.

September 29, 2023, the Business Combination and several concurrent financing transactions were consummated, with Estrella receiving

net proceeds of approximately $20.1 million, after deducting $5.07 million payable to redeem 467,122 shares of UPTD Common Stock at $10.86

per share in connection with the special meeting of UPTD stockholders related to the Business Combination held on July 31, 2023, $1.6

million for transaction expenses and $0.7 million for repayment of working capital loans, consisting of:

(i) $9.75 million from the issuance

of shares of Estrella Series A Preferred Stock immediately prior to the closing of the Business Combination ($0.7 million of which was

comprised of funds in the trust account delivered to Estrella at the closing of the Business Combination that would have otherwise been

paid to US Tiger Securities, Inc.

as a deferred underwriting fee in connection with UPTD’s IPO);

(ii) $0.3 million from the issuance

of an unsecured promissory note by us to a third party investor;

(iii) $0.7 million from the funds held in UPTD’s trust account;

and (iv) $10 million from the PIPE investors pursuant to the Subscription Agreements.

October 10, 2023, we remitted approximately $9.3 million to Eureka upon consummation of the Business Combination.

We expect to devote

the remaining net proceeds from the Business Combination to the preclinical and clinical development of our product candidates and our

public company compliance costs.

Based on our current operating plan, we expect that the net proceeds from the Business Combination and

our ability to raise funds in the future through the issuance and sale of Equity Line Shares to White Lion will allow us to fund our

operating expenses and capital requirements through one year from the issuance of these consolidated financial statements.

However, this

estimate is subject to various uncertainties and risks, some of which are beyond our control.

We may use our available capital resources

sooner than we currently anticipate, and we may need to seek additional funds sooner than planned.

Our estimate as to how long we expect

such proceeds to be able to fund our operating expenses and capital requirements is based on assumptions that may prove to be wrong,

and we could use our available capital resources sooner than we currently expect.

Changing circumstances, some of which may be beyond

our control, could result in fewer cash and cash equivalents available to us or cause us to consume capital significantly faster than

we currently anticipate, and we may need to seek additional funds sooner than planned.

On March 4, 2024, the Company

and Eureka entered into Statement of Work No.

001 (“SOW”) relating to the clinical trial services to be performed by Eureka

in connection with STARLIGHT-1, the Phase I/II clinical trial of Estrella’s product candidate, EB103, a T-cell therapy targeting

CD19 using ARTEMIS ® T cell technology licensed by Estrella from Eureka.

Pursuant to the SOW, Estrella agreed to pay Eureka

non-refundable net fees in connection with the achievement of certain milestones set forth in the SOW, with total fees of $33,000,000

for achievement of all milestones.

As of June 30, 2024, the Company had expensed $3,500,000 to Eureka for covering the fees associated

with the milestones achieved.

On May 13, 2024, the Company and Eureka entered

into Amendment No.

1 to the SOW, effective as of March 4, 2024, to clarify that in the event that Estrella exercises its right to terminate

or suspend the engagement with Eureka by providing written notice to Eureka in accordance with the SOW, Estrella will only be obligated

to compensate Eureka for (i) services provided by Eureka pursuant to the SOW (“Services”) in connection with milestones that

were achieved prior to the date and time of such written notice, (ii) reasonable and documented pass-through costs incurred by Eureka

on behalf of Estrella prior to the date and time of such written notice in connection with providing the Services and (iii) amounts payable

to third parties pursuant to commitments reasonably entered into by Eureka on behalf of Estrella prior to the date and time of such written

notice in connection with providing the Services, provided that Eureka shall make commercially reasonable efforts to cancel or reduce

any such amounts.

future operations are highly dependent on a combination of factors, including but not necessarily limited to (1) the success of our research

and development programs;

(2) the timely and successful completion of any additional financing;

(3) the development of competitive therapies

by other biotechnology and pharmaceutical companies;

(4) our ability to manage growth of the organization;

(5) our ability to protect

our technology and products;

and, ultimately (6) regulatory approval and successful commercialization and market acceptance of our product

In addition, there is no assurance that the Warrant

holders will exercise their Warrants because they are currently out of the money.

As of June 30, 2024, the closing price of our Common

Stock was $1.05 per share, which is significantly lower than the exercise price of the Warrants of $11.50 per share.

Therefore, it is

unlikely that the warrant holders will exercise their warrants unless the market price of our Common Stock increases substantially above

the exercise price.

The cash proceeds associated with the exercise of the Warrants are dependent on the stock price and the number of

Warrants being exercised.

We cannot predict when or if any Warrants will be exercised, and it is possible that none or only a small number

of Warrants will ever be exercised.

Therefore, we may not be able to rely on the warrant exercise as a source of liquidity or capital

although the Common Stock Purchase Agreement with White Lion provides that the Company may, in its discretion, from time to time, direct

White Lion to purchase shares of up to $50,000,000 of Common Stock (“Equity Line Shares”) from the Company in one or more

purchases in accordance with the Common Stock Purchase Agreement, the Company is not permitted to issue any Equity Line Shares under

the Common Stock Purchase Agreement without obtaining majority stockholder approval if such issuance would equal 20% or more of the Company’s

outstanding common stock, which had not been obtained as of the date hereof and may not be obtained in the future.

On December 28, 2023,

the Company’s registration statement on Form S-1 related to the Equity Line Shares was declared effective.

As of the date hereof,

no Equity Line Shares have been issued to White Lion under the Common Stock Purchase Agreement.

plan to raise additional capital in the future in order to continue our research and development programs and fund operations.

our ability to raise additional capital in the equity or debt markets is dependent on various factors, and there is no assurance that

such financing will be available on acceptable terms, or at all.

The market demand of our equity is subject to a number of risks and

uncertainties, including but not limited to, negative economic conditions, adverse market conditions, and adverse financial results.

successfully complete clinical trials, scale up our clinical and regulatory capabilities, adapt our regulatory compliance efforts to incorporate

requirements applicable to marketed products, maintain, expand, and protect our intellectual property portfolio, add operational, financial,

and management information systems and personnel, including personnel to support our product development and planned future commercialization

efforts, and incur additional legal, accounting, and other expenses in operating as a public company.

Liquidity and Capital Resources

As of December 31, 2025, we

had cash and cash equivalents of approximately $1.4 million and a working capital deficit of approximately $11.9 million.

Since our inception,

we have expended substantial funds on research and development and have experienced significant losses and negative cash flows from operations.

For the year ended December 31, 2025, we reported a net loss of approximately $13.1 million and net cash used in operating activities

of approximately $1.8 million.

As of December 31, 2025, we had an accumulated deficit of approximately $37.0 million.

Going Concern and Management’s Assessment

We expect our expenses and

operating losses to increase significantly as we continue to advance our product candidates through clinical development, particularly

in connection with the Phase I/II STARLIGHT-1 clinical trial of EB103.

Our recurring losses from operations, accumulated deficit, and

need for additional financing to fund future operations, raise substantial doubt about our ability to continue as a going concern.

our independent registered public accounting firm has included an explanatory paragraph in its report on our consolidated financial statements

for the year ended December 31, 2025, expressing substantial doubt about our ability to continue as a going concern.

To fund our operations, we

recently completed a private placement between May and September 2025, receiving gross proceeds of approximately $2.4 million.

to the end of the fiscal year, on January 6, 2026, we consummated a registered direct offering and concurrent private placement resulting

in gross proceeds of approximately $8.0 million.

Despite these recent financing activities, management is of the opinion that we will

not have sufficient funds to meet our working capital requirements and debt obligations as they become due starting from one year from

the date of this report.

If we are unable to obtain adequate financing or generate significant revenue, we may be required to curtail

or cease our operations.

Material Cash Requirements and Capital Sources

Our primary use of cash is

to fund operating expenses, primarily consisting of clinical trial activities and related research and development costs.

the SOW) with Eureka for the STARLIGHT-1 clinical trial, we agreed to pay total non-refundable net fees of $33.0 million for the achievement

of all projected milestones.

As of December 31, 2025, we have cumulatively incurred approximately $16.4 million to Eureka for milestones

achieved, and we hold an accrued liability to related parties of approximately $12.4 million for corresponding milestones.

Our ability to fund our operations

is dependent on our cash on hand, our ability to raise debt or additional equity financing, and ultimately our ability to generate sufficient

We plan to raise additional capital in the future;

however, there is no assurance that such financing will be available on acceptable

terms, or at all.

Furthermore, while we have tradeable warrants outstanding, it is unlikely that holders will exercise these warrants

to provide additional liquidity in the near term, as the current market price of our Common Stock ($1.25 per share as of March 12, 2026)

is significantly lower than the $11.50 per share exercise price.

Additionally, our Common Stock Purchase Agreement with White Lion Capital

LLC expired on December 30, 2025, and is no longer available as a source of liquidity.

Operating Activities

cash used in operating activities was approximately $16.1 million for the year ended June 30, 2024, and was primarily attributable to

(a) a net loss of approximately $7.3 million, approximately $9.3 million decrease in accounts payable, related party, as we remitted

approximately $9.4 million payment to Eureka, consisting of the upfront payment incurred under the License Agreement and monthly service

provided by Eureka under the Services Agreement on October 10, 2023, (b) approximately $0.1 million increase in prepaid expense as we

prepaid various service providers and insurance which we expect to be amortized within the next 12 months, and (c) approximately $0.4

million decrease in other payables and accrued liabilities as we paid off accrued professional fee over the previous period, offset by

approximately $1.2 million increase in non-cash items such as stock-based compensation as we incurred amortization for the year ended

June 30, 2024 related to the stock options granted to our employees, board of directors, and other consultants under the Incentive Plan.

cash used in operating activities was approximately $1.3 million for the year ended June 30, 2023, and was primarily attributable to a

net loss of approximately $11.1 million, offset by (a) approximately $8.4 million increase in account payable related party which related

to service fee incurred from the Services Agreement, (b) approximately $0.4 million increase in non-cash item such as stock-based compensation

as we incurred amortization for year ended June 30, 2023 related to the stock options granted to our employees, board of directors, and

other consultants under the Incentive Plan, (c) approximately $0.8 million decrease in prepaid expenses – related party as we utilized

prior prepaid service fees from the Services Agreement in the current period, and (d) an approximately $0.1 million increase in other

payables and accrued liabilities as we accrued various legal, consulting, and research and development expenses related to the Business

Investing activities

cash provided by investing activities was approximately $5.0 million for the year ended June 30, 2024, and was primarily attributable

to approximately $5.1 million cash released from trust account as a result of the consummation of the Business Combination, offset by

approximately $0.1 million loan to UPTD as Monthly Extension Payment before merger.

cash used in investing activities was approximately $0.3 million for the year ended June 30, 2023, and was primarily attributable to loan

to UPTD as Monthly Extension Payment.

Net cash used in operating

activities was approximately $1.8 million for the year ended December 31, 2025, and was primarily attributable to (a) a net loss of approximately

$13.1 million, offset by (i) approximately $9.6 million increase in accrued liability - related party as additional service charges were

incurred from Eureka following the completion of seven patient dosings, (ii) approximately $0.6 million non-cash item of

stock-based compensation under the 2023 Plan, and approximately $38,000 loss from change in fair value of derivative liabilities, (iii)

approximately $0.4 million decrease in prepaid expenses and other receivable primarily due to the utilization of previously recorded prepaid

expenses during the year ended December 31, 2025, (iv) approximately $0.6 million increase in accounts payable - related party primarily

due to the receipt of billing from Eureka of $0.5 million related to the second site activation., and (v) approximately $37,000 increase

in other payables and accrued liabilities primarily due to additional accrued expense.

Net cash used in operating

activities was approximately $3.1 million for the six-month transition period ended December 31, 2024, and was primarily attributable

to (a) a net loss of approximately $4.4 million, (b) approximately $1.5 million prepaid expense to Eureka for patient treatment expenses,

which will be applied to the final invoice, with any unused portion refunded once all fees are settled, and (c) approximately $0.4 million

increase in prepaid expense as we prepaid various service providers which we expect to be amortized within the next 12 months, offset

by (a) an approximately $0.1 million increase in other payables and accrued liabilities, due to additional professional fees accrued during

the period, (b) approximately $2.8 million increase in accrued liability - related party as additional service charges were incurred from

Eureka following the completion of two patient dosings, and (c) approximately $0.4 million non-cash item of stock-based compensation related

to the stock options granted our employees, board of directors, and other consultants under the 2023 Plan in October 2024.

Financing Activities

cash provided by financing activities was approximately $12.8 million for the year ended June 30, 2024, and was primarily attributable

to approximately $20.0 million net proceed received from the consummation of the Business Combination, which included approximately $9.0

million in gross proceeds raised through sales of Estrella Series A Preferred Stock immediately prior to the effective time of the Merger,

approximately $0.3 million raised through issuance of an unsecured promissory note by Estrella to a third party investor, approximately

$0.7 million proceeds raise from the reverse recapitalization, and $10.0 million net proceeds from the PIPE Investment that closed concurrently

with the consummation of the Business Combination, offset by approximately $1.5 million payments of transaction cost related to the Merger,

approximately $5.1 million payment to UPTD’s stockholder for stock redemption before the Business Combination, approximately $0.3

million repayment of promissory note, and approximately $0.3 million payment in stock repurchase.

Sheet Arrangements

of June 30, 2024 and 2023, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and

regulations of the SEC.

Commitments &

Contingencies

the normal course of business, we are subject to loss contingencies, such as legal proceedings and claims arising out of our business,

that cover a wide range of matters, including, among others, government investigations and tax matters.

Net cash provided by financing activities was approximately $2.3 million

for the year ended December 31, 2025, primarily from the proceeds of the private placement of $2.4 million, offset by approximately $117,000

of transaction cost and approximately $29,000 of cash used for stock repurchases under our stock repurchase program.

Net cash used in financing activities was approximately $0.1 million

for the six-month transition period ended December 31, 2024, and was primarily attributable to approximately $0.2 million payment in stock

repurchase, offset by approximately $79,000 net proceeds received from issuance of common stock through stock purchase under the Common

Stock Purchase Agreement.

Commitments and Contractual Obligations

In the normal course of business,

we are subject to loss contingencies, such as legal proceedings and claims arising out of our business, that cover a wide range of matters,

including, among others, government investigations and tax matters.

In accordance with ASC No.

“Loss Contingencies”, we will record accruals for such loss contingencies when it is probable that a liability has been incurred

and the amount of loss can be reasonably estimated.

to the License Agreement, we were obligated to make (i) a one-time, non-refundable, non-creditable payment of $1,000,000, payable in

twelve equal monthly installments, (ii) certain one-time, non–refundable, non-creditable development “milestone” payments

upon the occurrence of certain events related to development and sales, with potential aggregate multi-million dollar payments upon FDA

approval, and (iii) royalty payments of a single digit percentage on net sales during any consecutive 12-month period.

of June 30, 2024, we have fully paid the license fee to Eureka.

January 30, 2023, one development milestone payment in the amount of $50,000 related to the submission of EB103 to the FDA was earned

by Eureka under the Agreement, which was paid on October 10, 2023.

No other development milestone, sales milestone, or royalty payment

has been earned as we do not have any product candidates approved for sale and have not generated any revenue from product sales.

Collaboration

to the Collaboration Agreement, we and Imugene will be separately responsible for all qualified full-time person (“FTE”)

and other internal costs incurred in the performance of its research, as well as the full cost of procurement of leukopaks and purification

of T-cells from two donors, and of manufacturing and quality control of EB103 T-cells under the research plan.

Any joint cost will be

shared equally.

If either we or Imugene incurs out-of-pocket costs in excess of the amount budgeted for such costs in the applicable

research budget plus allowable overruns, then the other party will not be responsible for its 50% share of the excess of such budgeted

amount plus allowable overruns, unless the joint steering committee approves such excess costs (either before or after such costs have

been incurred).

The research plan under the Collaboration Agreement was completed as of August 30, 2023.

450-20, “Loss Contingencies”,

we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can

be reasonably estimated.

License Agreement

Pursuant to the License Agreement,

we were obligated to make and may be required to make, as applicable, (i) a one-time, non-refundable, non-creditable payment of $1.0 million,

payable in twelve equal monthly installments, (ii) certain one-time, non-refundable, non-creditable development “milestone”

payments upon the occurrence of certain events related to development and sales, with potential aggregate multi-million dollar payments

upon FDA approval, and (iii) royalty payments of a single digit percentage on net sales during any consecutive 12-month period.

As of December 31, 2025, we

have fully paid the $1.0 million license fee to Eureka.

As of December 31, 2025, two

development milestones related to the IND submission of EB103 to the FDA (“Milestone 1”) and first patient dosed in the first

clinical trial of a licensed product (“Milestone 2”) have been earned by Eureka under the Agreement.

The $50,000 milestone

payment related to Milestone 1 was paid on October 10, 2023.

The $50,000 milestone payment related to Milestone 2 was paid on September

No other development milestones,

except those mentioned above, sales milestone, or royalty payment has been earned as we do not have any product candidates approved for

sale and have not generated any revenue from product sales.

Services Agreement

Pursuant to the Services Agreement,

we agreed to (i) pay Eureka $10,000,000 in connection with the services thereunder payable in 12 equal monthly installments and (ii) reimburse

Eureka on a monthly basis for reasonable pass-through costs incurred or paid to providers by Eureka in providing the services.

we will be charged for other services performed by Eureka outside the scope of the services set forth in the Services Agreement, at a

flat rate, by time or materials or as mutually agreed upon the parties in writing.

As of June 30, 2024, we had remitted to Eureka a total

of $10,000,000 and $117,920 of pass-through costs for services provided pursuant to the Services Agreement.

to the SOW, Estrella agreed to pay Eureka total fees of $33,000,000 in connection with the Phase I/II clinical trial of

Estrella’s product candidate, EB103, a T-cell therapy targeting CD19 using ARTEMIS ® T cell technology licensed

by Estrella from Eureka.

As of June 30, 2024, we have paid $3,500,000 to Eureka for covering the fees associated with the milestones

Financing Commitment

April 20, 2023, UPTD entered into a Common Stock purchase agreement (as amended on April 26, 2023 and from time to time, the “Common

Stock Purchase Agreement”) and a related registration rights agreement (the “White Lion RRA”) with White Lion.

to the Common Stock Purchase Agreement, following the Closing, the Company has the right, but not the obligation to require White Lion

to purchase, from time to time up to $50,000,000 in aggregate gross purchase price of newly issued shares of Common Stock of the Company,

subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement, including, among others, the initial

and any subsequent registration statement for the Equity Line Shares being declared effective by the SEC and remaining effective during

the term of the Common Stock Purchase Agreement.

In addition, under Nasdaq listing rules, the Company is not permitted to issue any Equity

Line Shares under the Common Stock Purchase Agreement if such issuance would equal 20% or more of the Company’s outstanding common

stock without obtaining majority approval by our stockholders, which had not been obtained as of the date hereof.

On December 28, 2023,

the Company’s registration statement on Form S-1 related to the Equity Line Shares was declared effective by the SEC.

date hereof, no Equity Line Shares have been issued to White Lion pursuant to the Common Stock Purchase Agreement.

holders of 312,200 shares of common stock that were issued to the initial stockholders of UPTD (the “Founder Shares”) and

of 1,107,500 shares of Common Stock issued to certain investors in a private placement in connection with UPTD’s initial public

offering (the “Private Shares”) are entitled to registration rights pursuant to a registration rights agreement, dated July

14, 2021, among UPTD, TradeUP Acquisition Sponsor LLC and certain security holders named therein.

The Company assumed the obligations

of UPTD under such agreement upon consummation of the Business Combination.

The holders of the majority of these securities are entitled

to make up to three demands, excluding short form demands, that the Company registers such securities.

In addition, the holders have

certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the

initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the

Securities Act.

We are also obligated to file a registration statement for the (i) Equity Line Shares that we may issue to White Lion

pursuant to the Common Stock Purchase Agreement and White Lion RRA, (ii) up to 2,225,000 shares of Common Stock issuable upon exercise

of the Warrants and (iii) the shares issued or that will be issued pursuant to the Subscription Agreements.

The Company will bear the

expenses incurred in connection with the filing of any such registration statements.

The Company filed a registration statement on Form

S-1 with the SEC on October 10, 2023 and subsequently filed Amendment No.

1 and Amendment No.

2 thereto on November 13, 2023 and December

18, 2023, respectively, with respect to the Founder Shares, Private Shares, Equity Line Shares, the shares of Common Stock issuable upon

exercise of the Warrants and certain shares issuable under the Subscription Agreements.

The registration statement was declared effective

by the SEC on December 28, 2023.

Accounting Policies

financial statements accompanying notes have been prepared in accordance with U.S.

The preparation of these financial statements

and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues

and expenses, and related disclosure of contingent assets and liabilities.

We base our estimates on historical experience and on various

other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments

about the carrying values of assets and liabilities that are not readily apparent from other sources.

We have identified certain accounting

estimates that are significant to the preparation of our financial statements.

These estimates are important for an understanding of

our financial condition and results of operation.

Certain accounting estimates are particularly sensitive because of their significance

to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s

current judgments.

We believe no critical accounting estimate was identified other than below listed significant estimate and accounting

We recognize compensation

costs resulting from the issuance of stock-based awards to employees, non-employees, and directors as an expense in the consolidated statements

we agreed to (i) pay Eureka $10.0 million in connection with the services thereunder payable in 12 equal monthly installments and (ii)

reimburse Eureka on a monthly basis for reasonable pass-through costs incurred or paid to providers by Eureka in providing the services.

In addition, we will be charged for other services performed by Eureka outside the scope of the services set forth in the Services Agreement,

at a flat rate, by time or materials or as mutually agreed upon the parties in writing.

As of December 31, 2025, we had remitted to Eureka

a total of $10.0 million pursuant to the Services Agreement.

Statement of Work

Pursuant to the SOW,

Estrella agreed to pay Eureka total fees of $33.0 million in connection with the Phase I/II clinical trial of Estrella’s

product candidate, EB103, a T-cell therapy targeting CD19 using ARTEMIS ® T cell technology licensed by Estrella from

As of December 31, 2025, we had paid $3.5 million to Eureka for covering the fees associated with milestones achieved, and

deposited $1.5 million for patient treatment expenses, which will be applied to the final invoice, with any unused portion refunded

once all fees are settled.

Nine patient dosings and a second site activation milestones have been

completed as of December 31, 2025, and the Company has accrued approximately $12.4 million in accrued liability - related party and recorded

$0.5 million in accounts payable – related party, for the corresponding milestones as of December 31, 2025.

Off-Balance Sheet Arrangements

As of December 31, 2025 and

2024, we did not have any off-balance sheet arrangements (as defined in Item 303 of Regulation S-K) that have or are reasonably

likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results

of operations, liquidity, cash requirements or capital resources.

Critical Accounting Policies and Estimates

Our consolidated financial statements accompanying notes have been

prepared in accordance with U.S.

The preparation of these consolidated financial statements and accompanying notes requires us to

make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of

contingent assets and liabilities.

We base our estimates on historical experience and on various other assumptions that are believed to

be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and

liabilities that are not readily apparent from other sources.

We have identified certain accounting estimates that are significant to

the preparation of our consolidated financial statements.

These estimates are important for an understanding of our financial condition

and results of operations.

Certain accounting estimates are particularly sensitive because of their significance to consolidated financial

statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current

We believe no critical accounting estimate was identified other than the below-listed significant estimate and accounting policies.

Derivative Liabilities

We evaluate all of our financial

instruments, including the True-Up Shares in connection with the Securities Purchase Agreement, to determine if such instruments

are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC 815, Derivatives and Hedging

The classification of derivative instruments, including whether such instruments should be recorded as liabilities

or as equity, is reassessed at the end of each reporting period.

As of December 31, 2025,

the fair value of the derivative liability related to the True-Up Shares was valued at $356,505 using a Monte Carlo Simulation

Key inputs included a volatility of 107% to 115%, a risk-free rate of 3.5% to 3.6%, and a spot price of

$1.56 per share.

The model captured the path-dependent payoff structure of the True-Up obligation and incorporated the terms of

the contingent settlement feature, including the $0.99 to $1.08 True-Up Price and the Contractual Floor Price of $0.20 per

Stock-Based Compensation

We recognize compensation costs

resulting from the issuance of stock-based awards to employees, non-employees, and directors as an expense in the consolidated statements

of operations over the requisite service period based on a measurement of fair value for each stock-based award.

7 unchanged sentences

reflect our best estimates, but they involve inherent uncertainties based on market conditions generally outside of our control.

a result, if other assumptions had been used, stock-based compensation expense, as determined in accordance with authoritative guidance,

could have been materially impacted.

Furthermore, if we use different assumptions on future grants, stock-based compensation expense

could be materially affected in future periods.

account for the fair value of equity instruments issued to non-employees using either the fair value of the services received or the

fair value of the equity instrument, whichever is considered more reliable .

We utilize the Black-Scholes-Merton option-pricing

model to measure the fair value of options issued to non-employees.

record compensation expense for the awards with graded vesting using the straight-line method.

We recognize compensation expense over

the requisite service period applicable to each individual award, which generally equals the vesting term.

Forfeitures are recognized

when realized.

Quantitative and Qualitative Disclosures About Market Risk.

required for smaller reporting companies.

As a result, if other assumptions

had been used, stock-based compensation expense, as determined in accordance with authoritative guidance, could have been materially impacted.

Furthermore, if we use different assumptions on future grants, stock-based compensation expense could be materially affected in future

We account for the fair value

of equity instruments issued to non-employees using either the fair value of the services received or the fair value of the equity instrument,

whichever is considered more reliable.

We utilize the Black-Scholes-Merton option-pricing model to measure the fair value of options issued

to non-employees.

We record compensation expense

for the awards with graded vesting using the straight-line method.

We recognize compensation expense over the requisite service period

applicable to each individual award, which generally equals the vesting term.

Forfeitures are recognized when realized.

Emerging Growth Company and Smaller Reporting

Company Status

As an emerging growth company, we have elected to use the extended transition period for complying with new or

revised accounting standards as permitted by the JOBS Act, which allows us to delay the adoption of these standards until they apply to

private companies.

For further details on our emerging growth company status and related exemptions, see Note 2 to our consolidated financial

Quantitative and Qualitative Disclosures

About Market Risk.

Not required for smaller reporting

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis