What changed in this filing

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Item 9A. Controls and Procedures

2026-03-18 compared with 2024-09-27 · 1193 added, 1389 removed, 382 unchanged (87% of the section changed)

Controls and Procedures.

on Effectiveness of Controls and Procedures

designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how

well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design

of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply

judgment in evaluating the benefits of possible controls and procedures relative to their costs.

of Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our

1 unchanged sentence

the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to

ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated

to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure

that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to

our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure

Controls and Procedures

required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation

of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024.

of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025.

Based upon their evaluation,

1 unchanged sentence

(e) and 15d-15 (e) under the Exchange Act) were not effective.

Annual Report on Internal Control over Financial Reporting

required by SEC rules and regulations implementing Section 404 of the Sarbanes Oxley Act, our management is responsible for establishing

and maintaining adequate internal control over financial reporting.

disclosure controls and procedures are designed to ensure that the information we are required to disclose in reports that we file or

submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and

forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Our management, with the participation

and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls

and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure

controls and procedures were, in design and operation, not effective as of June 30, 2024 at a reasonable assurance level.

believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives

of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of

fraud or error, if any, within a company have been detected.

Report of the Registered Public Accounting Firm

Annual Report does not include an attestation report of our independent registered public accounting firm due to an exemption established

by the JOBS Act for “emerging growth companies.”

in Internal Control over Financial Reporting

Company has implemented certain changes in its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)

under the Exchange Act) to remediate the material weaknesses identified in fiscal year 2023.

The implementation of the material aspects

of this plan took place during the second and third quarters of fiscal year 2024.

Additional qualified personnel with appropriate levels

of accounting knowledge and experience to address U.S.

GAAP accounting issues have been added to prepare and review financial statements

and related disclosures under U.S.

Non-routine transactions are analyzed by in-house staff and third-party consultants to ensure

proper accounting treatment.

Narratives and policies for business processes that relate to financial statements have been put in place

to establish proper segregation of duties and internal controls.

Management’s Annual Report on Internal

Control over Financial Reporting

Our management, including

our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control

over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Internal control over financial reporting

is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with U.S.

Under the supervision and with the participation of our management, including

our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control

over financial reporting as of December 31, 2025, based on the Internal Control-Integrated Framework (2013) issued by the Committee of

Sponsoring Organizations of the Treadway Commission (COSO) (2013 Framework).

Based on this evaluation

under the 2013 Framework, our principal executive officer and principal financial officer have concluded that our internal control over

financial reporting was not effective as of December 31, 2025, due to the lack of qualified full-time personnel with appropriate levels

of accounting knowledge and experience to address complex U.S.

GAAP accounting issues

In light of this material

weakness, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with

Accordingly, management believes that the financial statements included in this Annual Report on Form 10-K present fairly in

all material respects our financial position, results of operations and cash flows for the period presented.

Limitations on Effectiveness of Controls and

In designing and evaluating

our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated,

can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and

procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the

benefits of possible controls and procedures relative to their costs.

Attestation Report of the Registered Public

Accounting Firm

This Annual Report does not

include an attestation report of our independent registered public accounting firm due to an exemption established by the JOBS Act for

“emerging growth companies.”

Changes in Internal Control over Financial

The Company has implemented

certain changes in its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)

to remediate the material weaknesses identified in fiscal year 2023.

The implementation of the material aspects of this plan took place

during 2025 and 2024.

Additional qualified personnel with appropriate levels of accounting knowledge and experience to address U.S.

accounting issues have been added to prepare and review financial statements and related disclosures under U.S.

Non-routine transactions

are analyzed by in-house staff and third-party consultants to ensure proper accounting treatment.

Narratives and policies for business

processes that relate to financial statements have been put in place to establish proper segregation of duties and internal controls.

While the Company has remediated certain previously identified material weaknesses, our chief executive officer and chief financial officer

concluded that as of June 30, 2024, our disclosure controls and procedures were not effective at the reasonable assurance level.

concluded that as of December 31, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Officers and Corporate Governance.

The information required by this Item is incorporated

herein by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders, which is expected to be filed with the SEC within

120 days after the close of our fiscal year.

Disclosure Regarding Foreign Jurisdictions

that Prevent Inspections.

Not applicable.

Directors, Executive Officers and

Corporate Governance.

The information required by

this Item is incorporated herein by reference to our Proxy Statement for the 2026 Annual Meeting of Stockholders, which is expected to

be filed with the SEC within 120 days after the close of our fiscal year.

Executive Compensation.

16 unchanged sentences

be filed with the SEC within 120 days after the close of our fiscal year.

Exhibits, Financial

Statement Schedules.

Exhibits and Financial Statement Schedules.

(a)(1) Financial Statements.

1 unchanged sentence

included on pages F-1 through F-28 attached hereto and are filed as part of this Annual Report on Form 10-K.

Index to Financial Statement

Report of Independent Registered Public Accounting

Firm (Macias Gini and O’Connell LLP, PCAOB ID 324)

Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID 688)

Index to Financial Statements

Report of Independent Registered Public Accounting Firm (Macias Gini and O’Connell LLP, PCAOB ID 324)

Consolidated Financial Statements

1 unchanged sentence

Consolidated Statements of Operations

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

Consolidated Statements of Changes in Stockholders’ (Deficit)

Consolidated Statements of Cash Flows

7 unchanged sentences

exhibits filed, furnished, or incorporated by reference as part of this Annual Report on Form 10-K.

Exhibit Index

Description of Exhibit

15 unchanged sentences

Description of Registrant’s Securities

Form of Pre-Funded Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2026).

Form of PIPE Common Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2026).

Promissory Note, dated July 25, 2022, issued by TradeUP Acquisition Corp.

12 unchanged sentences

incorporated by reference to Exhibit 10.5 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No.

Collaboration Agreement, dated October 29, 2021, by and between Estrella Immunopharma, Inc.

(as successor to Eureka Therapeutics, Inc.) and Imugene Limited incorporated by reference to Exhibit 10.6 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No.

Amendment to Executive Offer Letter, by and between Estrella Immunopharma, Inc.

97 unchanged sentences

(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on April 24, 2023, File No.

Description of Exhibit

Amendment to the Common Stock Purchase Agreement, dated as of April 26, 2023, by and between TradeUP Acquisition Corp.

2 unchanged sentences

(incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the SEC on July 19, 2021)

Description of Exhibit

Securities Subscription Agreement, between the TradeUP Acquisition Corp.

15 unchanged sentences

(incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed with the SEC on May 13, 2024, File No.

Securities Purchase Agreement, dated January 5, 2026, by and between the Company and the Investor (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2026).

Placement Agency Agreement, dated January 5, 2026, by and between the Company and Aegis Capital Corp.

(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2026).

Registration Rights Agreement, dated January 5, 2026, by and between the Company and the Investor (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2026).

Letter from Marcum LLP, dated February 1, 2024 (incorporated by reference to Exhibit 16.1 to the Current Report on Form 8-K filed with the SEC on February 2, 2024, File No.

Consent of Independent Registered Public Accounting Firm (Macias Gini & O’Connell LLP)

Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

4 unchanged sentences

Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Clawback Policy.

Clawback Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed with the SEC on September 27, 2024, File No.

Inline XBRL Instance Document.

5 unchanged sentences

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Annexes, schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

The registrant

agrees to furnish supplementally a copy of any omitted attachment to the Securities and Exchange Commission on a confidential basis upon

† Portions of this exhibit (indicated by asterisks) have been omitted because the registrant has determined

that the information is both not material and is the type that the registrant treats as private or confidential.

** These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated

by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

The registrant agrees to furnish supplementally

a copy of any omitted attachment to the Securities and Exchange Commission on a confidential basis upon request.

of this exhibit (indicated by asterisks) have been omitted because the registrant has determined that the information is both not material

and is the type that the registrant treats as private or confidential.

certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes

of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under

the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Form 10-K Summary

Index to Financial

Report of Independent Registered Public Accounting Firm (Macias Gini and O’Connell LLP, PCAOB ID 324)

Report of Independent Registered Public Accounting Firm (Marcum LLP, PCAOB ID 688)

to Financial Statements

Report of Independent Registered Public Accounting Firm (Macias Gini and O’Connell LLP, PCAOB ID 324 ) F-2

Consolidated financial statements

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent

Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Estrella Immunopharma

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Estrella

Consolidated Balance Sheets as of December 31, 2025 and 2024 F-3

Consolidated Statements of Operations for the year ended December 31, 2025 and for the six months ended December 31, 2024 (Short year) F-4

Consolidated Statements of Changes in Stockholders’ (Deficit)

Equity for the year ended December 31, 2025 and for the six months ended December 31, 2024 (Short year) F-5

Consolidated Statements of Cash Flows for the year ended December 31, 2025 and for the six months ended December 31, 2024 (Short year) F-6

Notes to Consolidated Financial Statements F-7

of Independent Registered Public Accounting Firm

of Directors and Stockholders

Immunopharma, Inc.

(the “Company”) as of June 30, 2024, the related consolidated statement of operations, stockholders’ equity

and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

as of June 30, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles

generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming that

the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses

from operations and has negative cash flows from operating activities.

These matters raise substantial doubt about the Company’s ability

to continue as a going concern.

Management’s plans in regard to these matters also are described in Note 1.

The financial statements do

not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s

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 U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are

free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an

audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control

over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control

over financial reporting.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Estrella Immunopharma, Inc.

(the “Company”) as of December 31,

2025 and 2024, and the related consolidated statements of operations, changes in stockholders’ (deficit) equity and cash flows

for the year ended December 31, 2025 and for the six months ended December 31, 2024, 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, 2025 and 2024, and the results of its operations and its cash flows for the year ended December

31, 2025 and the six months ended December 31, 2024, in conformity with accounting principles generally accepted in the United States

Concern Uncertainty

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

1 to the financial statements, the Company has suffered recurring losses from operations and has negative cash flows from operating activities.

These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard

to these matters also are described in Note 1.

The financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

of Matter – Related Parties

discussed in Note 5 to the consolidated financial statements, the entity had significant transactions with, and significant supplier

concentration in, two related parties during the year ended December 31, 2025 and the six months ended December 31, 2024.

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 U.S.

federal securities laws

and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit 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.

We have served as the Company’s auditor since 2024.

/s/ Macias Gini & O’Connell LLP

Walnut Creek, CA

September 26, 2024

Report of Independent

Registered Public Accounting Firm

To the Shareholders and Board of Directors of

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.

have served as the Company’s auditor since 2024.

Macias Gini & O’Connell LLP

ESTRELLA IMMUNOPHARMA, INC.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Estrella Biopharma,

(the “Company”, now known as Estrella Immunopharma, Inc.) as of June 30, 2023, the related statements of operations,

stockholders’ deficit and cash flows for the year ended June 30, 2023, 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 June 30, 2023, and the results of its operations and its cash flows for the year ended June 30, 2023, in conformity with accounting

principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that

the Company will continue as a going concern.

As more fully described in Note 1, the Company has a significant working capital deficiency,

has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations.

These conditions

raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are

also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

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 audit in accordance with the standards of the PCAOB.

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.

The Company is not required to have, nor were we engaged to perform, an audit

of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control

over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over

financial reporting.

Accordingly, we express no such opinion.

Our audit 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 audit 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 audit provides a reasonable basis for our opinion.

/s/ Marcum LLP

We served as the Company’s auditor from 2022 through 2024.

Costa Mesa, CA

October 5, 2023, except for the sixth paragraph of Note 3, as to which

the date is September 26, 2024

IMMUNOPHARMA, INC

BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

Current Assets

Cash and cash equivalent

Current assets:

Cash and cash equivalents

Prepaid expenses and other receivable

Extension note receivable

Total current assets

Deferred transaction costs

Liabilities, Preferred Stock and Stockholders’

Equity (Deficit)

Prepaid expenses, related party, non-current

Liabilities and Stockholders’ (Deficit) Equity

Current liabilities:

2 unchanged sentences

Accrued liability - related party

Franchise tax payables

Income tax payables

Derivative liabilities

Franchise tax payable

Income tax payable

Total current liabilities

Non-current liabilities:

Other liability

Total non-current liabilities

Total Liabilities

1 unchanged sentence

Preferred Stock

Series A Preferred Stock, $ 0.0001 par value, 15,000,000 shares authorized;

0 and 1,203,695 shares issued and outstanding as of June 30, 2024 and 2023, respectively

Series AA Preferred Stock, $ 0.0001 par value, 105,000,000 shares authorized;

0 and 25,277,591 shares issued and outstanding as of June 30, 2024 and 2023, respectively

Stockholders’ Equity (Deficit):

Preferred Stock, $ 0.0001 par value, 10,000,000 shares authorized;

0 shares issued and outstanding as of December 31, 2025 and 2024

Stockholders’ (Deficit) Equity:

Common stock, $ 0.0001 par value;

250,000,000 shares authorized;

36,610,870 and 978,243 shares issued as of June 30, 2024 and 2023, respectively*

38,486,219 and 36,680,870 shares issued as of December 31, 2025 and 2024, respectively

Additional paid-in capital

2 unchanged sentences

( 23,927,303 )

Treasury stock, at cost 321,794 and 0 shares as of June 30, 2024 and 2023, respectively

Total Stockholders’ Equity (Deficit)

Treasury stock, at cost 515,281 and 486,979 shares as of December 31, 2025 and 2024, respectively

Total Stockholders’ (Deficit) Equity

( 10,366,058 )

Total Liabilities, Preferred Stock and Stockholders’

Equity (Deficit)

* Giving retroactive effect to reverse recapitalization effected on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described in Note 3

accompanying notes are an integral part of these consolidated financial statements.

ESTRELLA IMMUNOPHARMA,

CONSOLIDATED STATEMENTS

OF OPERATIONS

Total Liabilities and Stockholders’ (Deficit) Equity

The accompanying notes are an integral part of these consolidated financial statements.

ESTRELLA IMMUNOPHARMA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Operating expenses

Research and development

General and administrative

Research and development (including $ 10,125,000 for the year ended

December 31, 2025 and $ 2,801,435 for the six months ended December 31, 2024, from a related party)

General and administrative (including $ 265,448 for the year ended December

31, 2025 and $ 103,667 for the six months ended December 31, 2024, from related parties)

Total operating expenses

5 unchanged sentences

( 4,426,964 )

Income taxes provision

Income tax provision

$ ( 13,063,512 )

2 unchanged sentences

Weighted average common stock outstanding, basic and diluted

* Giving retroactive effect to reverse recapitalization effected on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described in Note 3

accompanying notes are an integral part of these consolidated financial statements.

ESTRELLA IMMUNOPHARMA,

CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

A Preferred Stock

Series AA Preferred Stock

The accompanying notes are an integral part of these consolidated financial statements.

ESTRELLA IMMUNOPHARMA, INC.

CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ (DEFICIT) EQUITY

Stockholders’

Balance, June 30, 2024

$ ( 354,440 )

$ ( 19,500,276 )

Recapitalization

Issuance of common stock through common stock purchase agreement

Stock-based compensation

Purchase of treasury stock

( 4,427,027 )

Balance, December 31, 2024

( 23,927,303 )

Purchase of treasury stock

Stock-based compensation

Issuance of common stock for PIPE investment

Issuance of additional common stock for settlement of subscription

( 13,063,512 )

of early exercised stock options

( 13,063,512 )

Balance, December 31, 2025

$ ( 598,379 )

June 30, 2023

$ ( 36,990,815 )

$ ( 10,366,058 )

of series A preferred stock

of series A and series AA preferred stock into common stock

The accompanying notes are an integral part of these consolidated financial statements.

ESTRELLA IMMUNOPHARMA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash Flows from Operating

$ ( 13,063,512 )

$ ( 4,427,027 )

to reconcile net loss to net cash used in operating activities:

in fair value of derivative liabilities

in operating assets and liabilities:

expenses and other receivable

expenses - related party

( 1,500,000 )

of early exercised stock options

of common stock for PIPE investment

of common stock upon completion of business combination

payable - related party

payables and accrued liabilities

liability - related party

cash used in operating activities

( 1,785,679 )

( 3,113,526 )

of common stock for PIPE investment

Flows from Financing Activities:

of transactions cost

Proceeds from issuance of common stock through stock purchase agreement

from issuance of common stock for PIPE investment

of treasury stock

( 7,311,723 )

June 30, 2024

$ ( 354,440 )

cash provided by (used in) financing activities

Change in Cash

( 3,248,512 )

* Giving retroactive effect to reverse recapitalization effected on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described in Note 3

at beginning of the year

at end of the year

Cash Flow Information

paid for income tax

paid for interest

Disclosure of Non-cash Financing Activities

of derivative liabilities upon closing of the PIPE investment

accompanying notes are an integral part of these consolidated financial statements.

ESTRELLA IMMUNOPHARMA,

CONSOLIDATED STATEMENTS

OF CASH FLOWS

Cash Flows from Operating Activities:

$ ( 7,311,723 )

$ ( 11,114,402 )

Adjustments to reconcile net loss to net cash used in

operating activities:

Stock-based compensation

Changes in operating assets and liabilities:

Prepaid expenses and other receivable

Prepaid expenses - related party

Accounts payable - related party

( 9,333,146 )

Other payables and accrued liabilities

Accrued liability - related party

Franchise tax payable

Net cash used in operating activities

( 16,068,306 )

( 1,336,121 )

Cash Flows from Investing Activities:

Loan to UPTD as extension note receivable prior to business

Cash released from trust account

Net cash provided by investing activities

Cash Flows from Financing Activities:

Payments of transactions cost

( 1,525,013 )

Net proceeds from PIPE investment

Net proceeds from issuance of Series A Preferred Stock

Net proceeds from promissory note

Repayment of promissory note

Payment of redemption payable

( 5,072,945 )

Proceeds from business combination

Purchase of treasury stock

Net cash provided by financing activities

Net Change in Cash

( 1,609,187 )

Cash at beginning of the year

Cash at end of the year

Supplemental Cash Flow Information

Cash paid for income tax

Cash paid for interest

Supplemental Disclosure of Non-cash Financing Activities

Deferred transaction costs included in other payables

and accrued liabilities

Recognition of related party operating right-of-use

asset and lease liability

Conversion of Series A prefer stock into common stock

Conversion of deferred underwriting commission payable

into Series A preferred stock

The accompanying notes are

an integral part of these consolidated financial statements.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial

Note 1 — Organization and Business Operation

Note 1 — Organization and Business

Description of business

Estrella Immunopharma, Inc., a Delaware corporation,

is a clinical-stage biopharmaceutical company developing T-cell therapies with the capacity to cure patients with blood cancers and solid

As further discussed below and in Note 3, on

September 29, 2023 (the “ Closing Date ”), Estrella Biopharma, Inc.

(“Estrella”) and TradeUP Acquisition

(“UPTD”) consummated the business combination (the “Business Combination”) pursuant to the terms of the

Agreement and Plan of Merger, dated as of September 30, 2022 (the “Merger Agreement”), by and among UPTD, Tradeup Merger

Sub Inc., a Delaware corporation and wholly-owned subsidiary of UPTD (“Merger Sub”), and the Company.

Pursuant to the terms

of the Merger Agreement, Merger Sub merged with and into Estrella, with Estrella surviving as a wholly-owned subsidiary of UPTD.

closing of the Business Combination (the “Closing”), UPTD changed its corporate name to Estrella Immunopharma, Inc.

Estrella” or the “Company”).

Estrella was incorporated in the State of Delaware

on March 30, 2022 by Eureka Therapeutics, Inc.

(“Eureka”), which was incorporated in California in February 2006 and reincorporated

in Delaware in March 2018 and is the predecessor of Estrella.

Estrella’s fiscal year end is June 30, and the Company’s fiscal

year end changed from December 31 to June 30 effective as of the Closing Date.

On June 28, 2022, pursuant to a Contribution

Agreement between Estrella and Eureka (the “Contribution Agreement”), Eureka contributed certain assets (the “Assets”)

related to T-cell therapies targeting CD19 and CD22, proteins expressed on the surface of almost all B-cell leukemias and lymphomas,

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

As part of the Separation, Estrella entered into

a License Agreement (the “License Agreement”) with Eureka and Eureka Therapeutics (Cayman) Ltd.

(“Eureka Cayman”),

an affiliate of Eureka, and a Services Agreement (the “Services Agreement”) with Eureka, and Eureka contributed and assigned

the Collaboration Agreement between Eureka and Imugene Limited (“Imugene”) (the “Collaboration Agreement”) to

Estrella Immunopharma, Inc.

(“Estrella”), a Delaware corporation, is a clinical-stage biopharmaceutical company developing T-cell therapies with the capacity

to potentially cure patients with blood cancers and solid tumors.

Estrella was incorporated in

the State of Delaware on March 30, 2022 by Eureka Therapeutics, Inc.

(“Eureka”), which was incorporated in

California in February 2006 and reincorporated in Delaware in March 2018 and is the predecessor of Estrella.

On June 28, 2022, pursuant

to a Contribution Agreement between Estrella and Eureka (the “Contribution Agreement”), Eureka contributed certain assets

(the “Assets”) related to T-cell therapies targeting CD19 and CD22, proteins expressed on the surface of almost all B-cell

leukemias and lymphomas, in exchange for 105,000,000 shares of Estrella’s Series AA Preferred Stock (the “Separation”).

As part of the Separation,

Estrella entered into a License Agreement (the “License Agreement”) with Eureka and Eureka Therapeutics (Cayman) Ltd.

Cayman”), an affiliate of Eureka, and a Services Agreement (the “Services Agreement”) with Eureka, and Eureka contributed

and assigned the Collaboration Agreement between Eureka and Imugene Limited (“Imugene”) (the “Collaboration Agreement”)

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

9 unchanged sentences

using Imugene’s product candidate (“CF33-CD19t”) in conjunction with EB103.

On March 2, 2023, the FDA cleared Estrella’s

IND application for EB103, allowing Estrella to proceed with the Phase I/II STARLIGHT-1 Clinical Trial “STARLIGHT-1”.

March 4, 2024, the Company, Estrella and Eureka executed Statement of Work #001 relating to clinical trial services to be performed by

Eureka in connection with the STARLIGHT-1 clinical trial (see Note 9).

On May 13, 2024, the Company and Eureka entered into Amendment

On March 2, 2023, the

FDA cleared Estrella’s IND application for EB103, allowing Estrella to proceed with the Phase I/II STARLIGHT-1 Clinical Trial

“STARLIGHT-1”.

On March 4, 2024, the Company, Estrella and Eureka executed Statement of Work #001 relating to clinical

trial services to be performed by Eureka in connection with the STARLIGHT-1 clinical trial (see Note 5).

On May 13, 2024, the

Company and Eureka entered into Amendment No.

1 to the Statement of Work, effective as of March 4, 2024 (see Note 5).

As of June 30, 2024, the Company has begun enrolling patients

into the STARLIGHT-1 clinical trial in the U.S.

Merger and reverse recapitalization

As described above and further discussed in Note

3, the Business Combination was consummated on September 29, 2023.

The Business Combination was accounted for as

a “reverse recapitalization.” Under this method of accounting, UPTD was treated as the “acquired” company for

financial reporting purposes.

Accordingly, the Business Combination was treated as the equivalent of Estrella issuing shares for the

net assets of UPTD, accompanied by a recapitalization.

The net assets of UPTD are stated at historical costs.

No goodwill or other intangible

assets are recorded.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial

On 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 BioPharma Inc, 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.

Liquidity and Going Concern

The accompanying financial statements have been

prepared on a basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As of June 30, 2024, the Company had cash of approximately $ 4.2 million, and accumulated deficit of approximately $ 19.5 million.

the year ended June 30, 2024, loss from operations was approximately $7.3 million.

The Company’s ability to fund its operations

is dependent on the amount of cash on hand and its ability to raise debt or additional equity financing.

The Company has expended substantial

funds on its research and development business, has experienced losses and negative cash flows from operations since its inception and

expects losses and negative cash flows from operations to continue until its technology receives regulatory approval and the Company

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

On September 29, 2023, the Business Combination

and several concurrent financing transactions were consummated, with the Company receiving net proceeds of approximately $ 20.1 million,

after deducting $ 5.1 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 UPTD’s transaction expenses

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

(i) $ 9.75 million from the issuance of shares of the Company’s

Operating 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 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 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.

On April 20, 2023, UPTD entered into the Common

Stock Purchase Agreement and the White Lion RRA with White Lion.

Subsequently, on April 26, 2023, UPTD and White Lion entered into an

amendment to the Common Stock Purchase Agreement.

Pursuant to the Common Stock Purchase Agreement, following the Closing, New Estrella

will have 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 (the “Equity Line Shares”), subject to certain limitations and conditions

set forth in the Common Stock Purchase Agreement as further described in Note 8.

On October 10, 2023, the Company used a portion

of the net proceeds from the Business Combination to pay $ 8.3 million due to Eureka under the Services Agreement and approximately $ 0.9

million aggregate amount due to Eureka under the License Agreement, comprised of the outstanding portion of the upfront fee as well as

a milestone payment in connection with the submission of the IND application for EB103.

The Company intends to devote the remaining net

proceeds from the Business Combination to the preclinical and clinical development of the Company’s product candidates and the

public company compliance costs.

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

the milestones that have been achieved.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial

On May 13, 2024, the Company and Eureka entered

into Amendment No.

1 to the Statement of Work, 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.

The Company’s future operations are highly

dependent on a combination of factors, including but not necessarily limited to (1) the success of our research and development

December 31, 2025, the Company is continuing to enroll patients into the STARLIGHT-1 clinical trial in the U.S.

On September 29,

2023 (the “ Closing Date ”), Estrella and TradeUP Acquisition Corp.

(“UPTD”) consummated the business

combination (the “Business Combination”) pursuant to the terms of the Agreement and Plan of Merger, dated as of

September 30, 2022 (the “Merger Agreement”), by and among UPTD, Tradeup Merger Sub Inc., a Delaware corporation and

wholly-owned subsidiary of UPTD (“Merger Sub”), and the Company.

Pursuant to the terms of the Merger Agreement, Merger

Sub merged with and into Estrella, with Estrella surviving as a wholly-owned subsidiary of UPTD.

Upon closing of the Business

Combination (the “Closing”), UPTD changed its corporate name to Estrella Immunopharma, Inc.

(“New Estrella”

or the “Company”).

Estrella’s fiscal year end was June 30, and the Company’s fiscal year end changed

from December 31 to June 30 effective as of the Closing Date.

On 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 BioPharma Inc, pursuant to Section 253 of the Delaware General Corporation

The Merger 1 was approved by resolutions duly adopted by the unanimous written consent of the Company’s board of

The Merger 1 became effective at 11:59 PM Eastern Time on June 30, 2024, at which time the separate existence

of Estrella BioPharma Inc ceased, and the Company became the surviving corporation.

In November 2024, the

Company established Estrella Immunopharma (Hong Kong) Co.

Ltd (“Estrella HK”) as a wholly-owned subsidiary in Hong Kong.

This subsidiary was created to facilitate strategic collaborations and provide a local presence to support the Company’s operations

and initiatives in Asia.

As of December 31, 2025, Estrella HK had not commenced any operations.

Going Concern

In assessing the Company’s

liquidity and the significant doubt about its ability to continue as a going concern, the Company monitors and analyzes cash on hand and

operating expenditure commitments.

The Company’s liquidity needs are to meet working capital requirements and operating expense

The Company’s management

has considered whether there is substantial doubt about its ability to continue as a going concern based on:

(1) recurring loss from operations

of approximately $ 13.1 million for the year ended December 31, 2025;

(2) accumulated deficit of approximately $ 37.0 million as of

December 31, 2025;

and (3) net operating cash outflow of approximately $ 1.8 million for the year ended December 31, 2025.

has expended substantial funds on its research and development business, has experienced losses and negative cash flows from operations

since its inception and expects losses and negative cash flows from operations to continue until its technology receives regulatory approval

and the Company generates sufficient revenue and positive cash flow from operations, which may never occur.

The Company’s ability

to fund its operations is dependent on the amount of cash on hand and its ability to raise debt or additional equity financing, which

may not be successful, available on acceptable terms, or available at all.

The Company’s 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;

(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 candidates.

However, management believes that the Company

has sufficient funds on hand and ability to raise funds in the future through the issuance and sale of Equity Line Shares to White Lion

in order to meet its working capital requirements and debt obligations, for at least the next 12 months from the filing date of these

financial statements.

ability to protect our technology and products;

and, ultimately (6) regulatory approval and successful commercialization and market

acceptance of our product candidates.

From May 2025 to September 2025,

the Company entered into securities purchase agreements with certain investors.

As of December 31, 2025, the Company had issued 1,600,000 shares

of its common stock to these investors and received gross proceeds of approximately $ 2.4 million.

Additionally, as disclosed in

Note 13, the Company consummated a Registered Direct Offering and a concurrent Private Placement on January 6, 2026, resulting in gross

proceeds of approximately $ 8.0 million.

Despite these financing activities, the Company’s management is of the opinion that

it will not have sufficient funds to meet the Company’s working capital requirements and debt obligations as they become due starting

from one year from the date of this report due to the recurring loss.

As a result, management has determined that there is a significant

doubt about its ability to continue as a going concern.

If the Company is unable to obtain adequate financing or generate significant

revenue, it may be required to curtail or cease its operations.

Note 2 — Significant accounting

Change in Fiscal Year End

On November 25, 2024, the Board of Directors of the Company (the “Board”)

approved a change in the fiscal year end of the Company from June 30th to December 31st.

As a result of this change, the Company filed

the Transition Report on Form 10-KT for the six-month transition period ended December 31, 2024.

The change in fiscal year end is applied

on a prospective basis and does not adjust operating results for prior periods.

Basis of Presentation

The accompanying financial statements are presented

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

GAAP”) and pursuant to

the rules and regulations of the U.S.

The accompanying consolidated

financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”).

Emerging Growth Company Status

The Company is an “emerging growth company,”

as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified

by the Jumpstart The Company’s Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage

of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth

companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of

the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,

and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any

golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS

Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private

companies are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect

to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such

an election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when

a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth

company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison

of the Company’s financial statements with another public company difficult because of the potential differences in accounting

standards used.

IMMUNOPHARMA, INC

Notes to Consolidated Financial

The Company is an “emerging

growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities

Act”), as modified by the Jumpstart The Company’s Business Startups Act of 2012, (the “JOBS Act”), and

it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are

not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of

Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and

proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder

approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of

the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until

private companies are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company

can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but

any such an election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means

that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging

growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparisons

of the Company’s consolidated financial statements with another public company difficult because of the potential differences in

accounting standards used.

The Company became an emerging

growth company upon the consummation of its initial public offering on July 19, 2021.

Accordingly, the Company will remain an emerging

growth company until the last day of the fiscal year in which the fifth anniversary of its initial public offering occurs, December 31,

2026, unless other criteria are met sooner.

Use of Estimates

The preparation of financial statements in conformity

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 revenues and expenses during

the reporting periods.

Making estimates requires management to exercise

significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances

that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near

term due to one or more future confirming events.

Accordingly, the actual results could differ significantly from those estimates.

items subject to such estimates and assumptions include stock-based compensation, and deferred income tax asset valuation and allowances.

Cash and cash equivalent

The Company maintains its operating accounts

in a single financial institution.

The preparation of the consolidated

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 consolidated financial statements

and the reported amounts of revenues and expenses during the reporting periods.

Making estimates requires

management to exercise significant judgment.

It is at least reasonably possible that the estimate of the effect of a condition, situation

or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating

its estimate, could change in the near term due to one or more future confirming events.

Accordingly, the actual results could differ

significantly from those estimates.

Significant items subject to such estimates and assumptions include stock-based compensation, derivative

liability, and deferred income tax asset valuation and allowances.

Cash and cash equivalents

The Company maintains its operating

accounts in a single financial institution.

The balance is insured by the United States Federal Deposit Insurance Corporation (“FDIC”)

but only up to specified limits.

The Company’s cash is maintained in a checking and a saving account and Certificates of Deposits.

Cash equivalents consist of funds held at the third-party broker’s account for stock repurchase purpose, and the fund are unrestricted

and immediately available for withdrawal and use.

The balance held at the third-party broker’s account is insured by the United

States Securities Investor Protection Corporation (“SIPC”) but only up to specified limits.

The Company’s cash is maintained in a checking account.

Cash equivalents consist of funds held

at the third-party broker’s account for stock repurchase purpose, and the funds are unrestricted and immediately available for withdrawal

The balance held at the third-party broker’s account is insured by the United States Securities Investor Protection

Corporation (“SIPC”) but only up to specified limits.

Prepaid expenses and other receivable

Prepaid expenses and other

receivable primarily include prepayments for third party services, such as professional fees, insurance premium, and others.

Basic and Diluted Loss per Common Stock

Basic net loss per Common Stock is calculated

by dividing the net loss by the weighted–average number of Common Stock outstanding for the period.

Diluted net loss per share

is computed by dividing the net loss by the weighted–average number of Common Stock and dilutive share equivalents outstanding

for the period, determined using the treasury stock and if–converted methods.

Since the Company has had net losses for all periods

presented, all potentially dilutive securities are anti–dilutive.

As of June 30, 2024 and 2023, the Company had

the following potential Common Stock outstanding which were not included in the calculation of diluted net loss per Common Stock because

inclusion thereof would be anti-dilutive:

Series A Preferred Stock*

Series AA Preferred Stock*

Unvested early-exercised stock option*

Basic net loss per Common

Stock is calculated by dividing the net loss by the weighted average number of Common Stock outstanding for the period.

loss per share is computed by dividing the net loss by the weighted average number of Common Stock and dilutive share equivalents

outstanding for the period, determined using the treasury stock and if-converted methods.

Since the Company has had net losses for all

periods presented, all potentially dilutive securities are anti- dilutive.

As of December 31, 2025 and

2024, the Company had the following potential Common Stock outstanding which were not included in the calculation of diluted net loss

per Common Stock because inclusion thereof would be anti-dilutive:

Public warrant

* Giving retroactive effect to reverse recapitalization effected on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described in Note 3

Stock options granted

Stock-Based Compensation

The Company recognizes 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.

The fair value of each option granted

is estimated as of the date of grant using the Black-Scholes-Merton option-pricing model, net of actual forfeitures.

The fair value is

amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting

The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of the Common Stock

of the Company, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others.

assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally outside

the control of the Company.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

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.

if the Company uses different assumptions on future grants, stock-based compensation expense could be materially affected in future periods.

Mezzanine Equity

Mezzanine equity represents the Series A Preferred

Stock and Series AA Preferred Stock (collectively known as “Preferred Stock”) issued by the Company.

The shares of Preferred

Stock were mandatorily redeemable upon the occurrence of Deemed Liquidation Events outside of the Company’s control.

the Company classifies the Preferred Stock as mezzanine equity.

Refer to Note 11.

The Company accounts for warrants as either equity-classified

or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance

in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”)

and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial

instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements

for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether

the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,

among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the

time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all

of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance.

The Company determined that upon further review of the warrant agreements, the Company concluded that its warrants qualify for equity

accounting treatment.

Upon completion of the business combination,

all of UPTD’s public warrants that remained outstanding were replaced by the Company’s public warrants.

The Company treated

such warrants replacement as a warrant modification and no incremental fair value was recognized.

The Company recognizes 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.

The fair value of each

option granted is estimated as of the date of grant using the Black-Scholes-Merton option-pricing model, net of actual forfeitures.

fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally

the vesting period.

The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of the

Common Stock of the Company, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others.

These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally

outside the control of the Company.

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 the Company uses different assumptions on future grants, stock-based compensation expense could be materially affected

in future periods.

The Company accounts for warrants

as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable

authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity

(“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether

the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,

and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are

indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement”

in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires

the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while

the warrants are outstanding.

For issued or modified warrants

that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time

The Company determined that upon further review of the warrant agreements, the Company concluded that its warrants qualify

for equity accounting treatment.

Upon completion of the business

combination, all of UPTD’s public warrants that remained outstanding were replaced by the Company’s public warrants.

treated such warrants replacement as a warrant modification and no incremental fair value was recognized.

Concentration of Credit Risk

Financial instruments that potentially subject

the Company to concentration of credit risk consist of two cash accounts in a financial institution located in the United States.

Company has not experienced losses on these accounts, and management believes the Company is not exposed to significant risks.

Deposit Insurance Corporation (FDIC) provides standard insurance coverage of $ 250,000 per insured bank for each account ownership category.

As of June 30, 2024, and 2023, the Company had not experienced losses on these accounts.

As of June 30, 2024, and 2023, the Company had

deposited $ 4,019,813 and $ 2,479,146 , respectively, with financial institutions in the United States.

Of these balances, $ 3,758,670 and

$ 2,229,146 , respectively, were not covered by deposit insurance.

While management believes that these financial institutions are of high

credit quality, it also continually monitors their creditworthiness.

The Securities Investor Protection Corporation

(SIPC) provides standard insurance coverage of $ 500,000 per brokerage account, which includes $ 250,000 for cash balances.

30, 2024, and 2023, the Company maintained $ 145,615 and $ 0 , respectively, in its brokerage account, with the entire balance covered by

SIPC insurance.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Financial instruments that

potentially subject the Company to concentration of credit risk consist of one cash account in a financial institution located in the

United States.

The Company has not experienced losses on these accounts, and management believes the Company is not exposed to significant

The Federal Deposit Insurance Corporation (FDIC) provides standard insurance coverage of $ 250,000 per insured bank for each

account ownership category.

As of December 31, 2025 the Company had not experienced losses on these accounts.

As of December 31, 2025,

and 2024, the Company had deposited approximately $ 1.4 million and $ 0.9 million, respectively, with a financial institution

in the United States.

Of these balances, approximately $ 1.1 million and $ 0.6 million, respectively, were not covered by

deposit insurance.

While management believes that the financial institution is of high credit quality, it also continually monitors their

credit-worthiness.

The Securities Investor Protection

Corporation (SIPC) provides standard insurance coverage of $ 500,000 per brokerage account, which includes $ 250,000 for cash

As of December 31, 2025 and 2024, the Company maintained approximately $ 500 and $ 30,000 , respectively, in its brokerage

account, with the entire balance covered by SIPC insurance.

Risks and Uncertainties

Management continues to evaluate the impact of

inflation rates, the continuing military action in Ukraine, and Israel’s war against Hamas on the industry and has concluded that

these factors could have a negative effect on the Company’s financial position and/or results of its operations.

The specific impact

of these factors is not readily determinable as of the date of these financial statements.

The financial statements do not include any

adjustments that might result from the outcome of these uncertainties.

The Company’s future success depends on

the Company and Eureka’s ability to retain key employees, directors, and advisors and to attract, retain and motivate qualified

The Company relies on Eureka to provide certain technical assistance to facilitate the Company’s exploitation of the

intellectual property licensed by Eureka, and Eureka will be solely responsible for the manufacture and supply of clinical quantities

of the licensed products and final filled and finished (including packaged) drug product form of the licensed products.

Pursuant to the

Services Agreement, Eureka currently performs or supports the Company’s important research and development activities.

The Statement

of Work (see Note 9) may be terminated by mutual agreement at any time.

Following the termination of, or the expiration of the term of,

the Statement of Work, the Company may not be able to replace the research and development-related services that Eureka provides or enter

into appropriate third-party arrangements on terms and conditions, including cost, comparable to those that the Company will receive

Additionally, after the Statement of Work terminates, the Company may be unable to sustain the research and development-related

services at the same levels or obtain the same benefits as when the Company was receiving such services and benefits from Eureka.

the Company is required to operate these research and development functions separately in the future, or are unable to obtain them from

other providers, the Company may not be able to operate the Company’s business effectively and could result in a material adverse

Management continues to evaluate the impact of inflation rates, the

continuing military actions in Ukraine, Israel’s war against Hamas and the armed conflict between the U.S./Israel and Iran on the

industry and has concluded that these factors could have a negative effect on the Company’s financial position and/or results of

its operations.

The specific impact of these factors is not readily determinable as of the date of these consolidated financial statements.

The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The Company’s future success depends on the Company and Eureka’s

ability to retain key employees, directors, and advisors and to attract, retain and motivate qualified personnel.

The Company relies on

Eureka to provide certain technical assistance to facilitate the Company’s exploitation of the intellectual property licensed by

Eureka, and Eureka will be solely responsible for the manufacture and supply of clinical quantities of the licensed products and final

filled and finished (including packaged) drug product form of the licensed products.

Pursuant to the Services Agreement, Eureka currently

performs or supports the Company’s important research and development activities.

The Statement of Work (see Note 5) may be

terminated by mutual agreement at any time.

Following the termination of, or the expiration of the term of, the Statement of Work, the

Company may not be able to replace the research and development-related services that Eureka provides or enter into appropriate third-party

arrangements on terms and conditions, including cost, comparable to those that the Company will receive from Eureka.

Additionally, after

the Statement of Work terminates, the Company may be unable to sustain the research and development-related services at the same levels

or obtain the same benefits as when the Company was receiving such services and benefits from Eureka.

If the Company is required to operate

these research and development functions separately in the future, or is unable to obtain them from other providers, the Company may not

be able to operate the Company’s business effectively, which could result in a material adverse effect.

Fair Value of Financial Instruments

The fair value of the Company’s assets

and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,”

The fair value of the Company’s

assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,”

approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

2 unchanged sentences

the quality and reliability of the information used to determine fair values.

Financial assets and liabilities carried at fair value

which is not equivalent to cost will be classified and disclosed in one of the following three categories:

Level 1 — Quoted prices (unadjusted) in

active markets for identical assets and liabilities.

Level 2 — Inputs other than Level 1 that

are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted

prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially

the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are

supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company recognizes deferred tax assets and

liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for

the expected future tax benefit to be derived from tax loss and tax credit carry forwards and establishes a valuation allowance when

it is more likely than not that all or a portion of deferred tax assets will not be realized.

Accounting for uncertainty in income taxes is

recognized based on a recognition threshold and measurement process for the financial statement recognition and measurement of a tax

position taken or expected to be taken in a tax return.

Financial assets and liabilities carried at fair value which

is not equivalent to cost will be classified and disclosed in one of the following three categories:

Quoted prices (unadjusted)

in active markets for identical assets and liabilities.

Inputs other than Level

1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted

quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market

data for substantially the full term of the assets or liabilities.

Unobservable inputs that

are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table sets forth

by level within the fair value hierarchy our financial asset and liability that were accounted for at fair value on a recurring basis

as of December 31, 2025:

Fair Value Measurement at December 31, 2025

Derivative liabilities (True-Up Shares)

The following is a reconciliation

of the beginning and ending balance of the financial liability measured at fair value on a recurring basis for the year ended December

Initial fair value of derivative liabilities attributable to True-Up shares feature embedded in the Private Placement

Change in fair value of derivative liabilities

Ending balance as of December 31, 2025

Derivative Liabilities

The Company does not use derivative

instruments to hedge exposures to cash flow, market, or foreign currency risks.

The Company evaluates all of its financial instruments,

including the True-Up Shares in connection with the Securities Purchase Agreements entered during May 2025 to September 2025

(refer to Note 7), 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 (“ASC 815”).

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

The True-Up Shares embedded within Securities Purchase Agreement do

not qualify as equity under ASC 815;

therefore, the True-Up Shares are required to be bifurcated and classified as a liability and

measured at fair value with subsequent changes in fair value recorded in the consolidated statements of operations.

The Company recognizes deferred

tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities

and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards and establishes a valuation allowance

when it is more likely than not that all or a portion of deferred tax assets will not be realized.

Accounting for uncertainty

in income taxes is recognized based on a recognition threshold and measurement process for the financial statement recognition and measurement

of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not

to be sustained upon examination by taxing authorities.

There were no unrecognized tax benefits and no amounts accrued for interest and

penalties as of June 30, 2024 and 2023.

The Company is currently not aware of any issues under review that could result in significant

payments, accruals or material deviation from its position.

The Company may be subject to potential examination by federal and state

taxing authorities in the areas of income taxes.

These potential examinations may include questioning the timing and amount of deductions,

the nexus of income among various tax jurisdictions and compliance with federal and state tax laws.

The Company’s management does

not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

The Company is incorporated in the State of Delaware

and is required to pay franchise taxes to the State of Delaware on an annual basis.

There were no unrecognized tax benefits and no amounts accrued for interest

and penalties associated with unrecognized tax benefits as of December 31, 2025 and 2024.

The Company is currently not aware of any

issues under review that could result in significant payments, accruals or material deviation from its position.

The Company may be subject

to potential examination by federal and state taxing authorities in the areas of income taxes.

These potential examinations may include

questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state

The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over

the next twelve months.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed

into law in the U.S.

The OBBBA includes changes to U.S.

federal tax law, including extending and modifying certain key Tax Cuts

and Jobs Act of 2017 provision, and provisions allowing accelerated tax deductions for qualified property and research expenditures.

The Company has completed its assessment and determined that the provisions did not have a material impact on its consolidated financial

Refer to Note 9 for further information.

The Company is incorporated

in the State of Delaware and is required to pay franchise taxes to the State of Delaware on an annual basis.

Research and Development Expenses

The Company charges research and development

costs to operations as incurred.

The Company accrues for costs incurred by external service providers, including contract research organizations

and clinical investigators, based on its estimates of service performed and costs incurred.

These estimates include the level of services

performed by third parties, patient enrollment in clinical trials when applicable, administrative costs incurred by third parties, and

other indicators of the services completed.

Based on the timing of amounts invoiced by service providers, the Company may also record

payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are

Research and development expenses for the years ended June 30, 2024 and 2023 primarily consisted of personnel costs for the

design and development of clinical trials, legal and professional fees and, facilities related fees.

Refer to Note 9 for the terms of

the License Agreement, the Service Agreement, and the Statement of Work.

Deferred transaction costs

Deferred transaction costs consist primarily

of expenses paid to attorneys, consultants, underwriters, and others related to the Merger, which were charged to shareholders’

equity upon the completion of the Merger.

The Company completed the Merger on September 29, 2023.

Effective July 1, 2022, the Company adopted ASU

2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require us to reassess:

(1) whether any

expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct

costs for any expired or existing leases.

For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy

election not to recognize lease assets and liabilities.

If any of the following criteria are met, the

Company classifies the lease as a finance lease:

The lease transfers ownership

of the underlying asset to the lessee by the end of the lease term;

The lease grants the lessee

an option to purchase the underlying asset that the Company is reasonably certain to exercise;

The lease term is for a

major part of the remaining economic life of the underlying asset;

The present value of the

sum of the lease payments and any residual value guaranteed by the lessee, that is not otherwise included in the lease payments substantially

exceeds all of the fair value of the underlying asset;

The underlying asset is

of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

Leases that do not meet any of the above criteria

are accounted for as operating leases.

The Company combines lease and non-lease components

in its contracts under Topic 842, when permissible.

Operating lease right-of-use (“ROU”)

asset and lease liability were recognized at the adoption date of July 1, 2022, based on the present value of lease payments over the

Since the implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing

rate based on the information available at the commencement date in determining the present value of lease payments.

The incremental

borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the

lease payments, in a similar economic environment and over a similar term.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

In the event of lease modification, the Company

followed ASC 842-10-25 through 25-12, “lessee accounting for a modification that is not accounted for as a separate contract,”

to remeasure and reallocate the remaining consideration in the lease agreement and reassess the classification of the lease at the effective

date of the modification.

The Company reviews the impairment of its ROU

asset consistent with the approach applied for its other long-lived assets.

The Company reviews the recoverability of its long-lived

assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable.

The assessment

of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax

cash flows of the related operations.

The Company has elected to include the carrying amount of operating lease liability in any tested

asset group and includes the associated operating lease payments in the undiscounted future pre-tax cash flows.

The Company charges research

and development costs to operations as incurred.

The Company accrues costs incurred by external service providers, including contract

research organizations and clinical investigators, based on its estimates of service performed and costs incurred.

These estimates include

the level of services performed by third parties, patient enrollment in clinical trials when applicable, administrative costs incurred

by third parties, and other indicators of the services completed.

Based on the timing of amounts invoiced by service providers, the Company

may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related

services are rendered.

Research and development expenses for the years ended December 31, 2025 and 2024 primarily consisted of personnel

costs for the design and development of clinical trials, legal and professional fees, and facilities related fees.

Refer to Note 5

for the terms of the License Agreement, the Service Agreement, and the Statement of Work.

Related Parties

Parties, which can be a corporation

or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise

significant influence over the other party in making financial and operating decisions.

Companies are also considered to be related if

they are subject to common control or common significant influence.

Effective July 1, 2022,

the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that do not require

the Company to reassess:

(1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for

any expired or existing leases and (3) initial direct costs for any expired or existing leases.

For lease terms of twelve months

or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities.

If any of the following criteria

are met, the Company classifies the lease as a finance lease:

● The lease transfers ownership of the underlying asset to

the lessee by the end of the lease term;

● The lease grants the lessee an option to purchase the underlying

asset that the Company is reasonably certain to exercise;

● The lease term is for a major part of the remaining economic

life of the underlying asset;

● The present value of the sum of the lease payments and any

residual value guaranteed by the lessee, that is not otherwise included in the lease payments substantially exceeds all of the fair value

of the underlying asset;

● The underlying asset is of such a specialized nature that

it is expected to have no alternative use to the lessor at the end of the lease term.

Leases that do not meet any

of the above criteria are accounted for as operating leases.

The Company combines lease

and non-lease components in its contracts under Topic 842, when permissible.

Operating lease right-of-use

(“ROU”) asset and lease liability are recognized based on the present value of lease payments over the lease term.

implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing rate based on the

information available at the commencement date in determining the present value of lease payments.

The incremental borrowing rate is the

rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a

similar economic environment and over a similar term.

The Company reviews the impairment

of its ROU asset consistent with the approach applied for its other long-lived assets when such assets are recognized.

The Company reviews

the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the

asset may not be recoverable.

The assessment of possible impairment is based on its ability to recover the carrying value of the asset

from the expected undiscounted future pre-tax cash flows of the related operations.

When operating ROU assets and lease liabilities are

recognized, the Company includes the carrying amount of operating lease liability in any tested asset group and the associated operating

lease payments in the undiscounted future pre-tax cash flows.

In the event of lease modification,

the Company follows ASC 842-10-25 through 25-12, “lessee accounting for a modification that is not accounted for as a

separate contract,” to remeasure and reallocate the remaining consideration in the lease agreement and reassess the classification

of the lease at the effective date of the modification.

If, as a result of a lease modification or renewal, the remaining lease

term is twelve months or less, the Company elects the short-term lease practical expedient and derecognizes any related operating lease

ROU assets and lease liabilities.

Following such derecognition, lease payments are recognized in profit or loss on a straight-line basis

over the remaining lease term.

Segment reporting

The Company accounted for segment reporting in

accordance with ASC 280, “Segment Reporting”.

Based on qualitative and quantitative criteria established by ASC 280,

the Company considers itself to be operating within one reportable segment.

The chief executive officer

is identified as the Company’s chief operating decision-maker (“CODM”).

The CODM reviews financial information presented

on a consolidated basis, including net income (loss), for purposes of allocating resources and evaluating financial performance.

The Company has not generated revenue

to date, and the CODM does not receive or review discrete financial information by business line, product, service or geographic area.

Based on the management approach and the qualitative and quantitative criteria established by Accounting Standards Codification (“ASC”)

280, “Segment Reporting”, the Company considers itself to be operating within one operating and reportable segment.

Recent Accounting Pronouncements

The Company considers the applicability and impact

of all accounting standards updates (“ASUs”).

Management periodically reviews new accounting standards that are issued.

the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging

growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the

adoption of these accounting standards until they would apply to private companies.

In October 2023, the FASB issued ASU 2023-06,

Disclosure Improvements — codification amendments in response to SEC’s disclosure Update and Simplification initiative which

amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows—Overall, 250-10 Accounting

Changes and Error Corrections— Overall, 260-10 Earnings Per Share— Overall, 270-10 Interim Reporting— Overall, 440-10

Commitments—Overall, 470-10 Debt—Overall, 505-10 Equity—Overall, 815-10 Derivatives and Hedging—Overall, 860-30

Transfers and Servicing—Secured Borrowing and Collateral, 932-235 Extractive Activities— Oil and Gas—Notes to Consolidated

Financial Statements, 946-20 Financial Services— Investment Companies— Investment Company Activities, and 974-10 Real Estate—Real

Estate Investment Trusts—Overall.

The amendments represent changes to clarify or improve disclosure and presentation requirements

of above subtopics.

Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures

with those entities that were not previously subject to the SEC’s requirements.

Also, the amendments align the requirements in the

Codification with the SEC’s regulations.

For entities subject to existing SEC disclosure requirements or those that must provide

financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the

date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K.

The Company considers the

applicability and impact of all accounting standards updates (“ASUs”).

Management periodically reviews new accounting

standards that are issued.

Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”),

the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new

or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements

— codification amendments in response to SEC’s disclosure Update and Simplification initiative which amend the disclosure

or presentation requirements of codification subtopic 230-10 Statement of Cash Flows — Overall, 250-10 Accounting Changes and Error

Corrections — Overall, 260-10 Earnings Per Share — Overall, 270-10 Interim Reporting — Overall, 440-10 Commitments —

Overall, 470-10 Debt — Overall, 505-10 Equity — Overall, 815-10 Derivatives and Hedging — Overall, 860-30 Transfers

and Servicing — Secured Borrowing and Collateral, 932-235 Extractive Activities — Oil and Gas — Notes to Financial Statements,

946-20 Financial Services — Investment Companies — Investment Company Activities, and 974-10 Real Estate — Real Estate

Investment Trusts — Overall.

The amendments represent changes to clarify or improve disclosure and presentation requirements of

above subtopics.

Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with

those entities that were not previously subject to the SEC’s requirements.

Also, the amendments align the requirements in the Codification

with the SEC’s regulations.

For entities subject to existing SEC disclosure requirements or those that must provide financial statements

to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes

the related disclosure from Regulation S-X or Regulation S-K.

Early adoption is not allowed.

For all other entities,

the amendments will be effective two years later from the date of the SEC’s removal.

The Company is currently evaluating the impact

of the update on the Company’s consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09,

which is an update to Topic 740, Income Taxes.

The amendment in this update enhances the transparency and decision usefulness of

income tax disclosures.

ASU 2023-09 will be effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted

for annual financial statements that have not yet been issued or made available for issuance.

The amendments in this Update should be

applied on a prospective basis.

Retrospective application is permitted.

The Company is currently evaluating the impact the adoption of

ASU 2023-07 will have on its annual and interim disclosures.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

The Company does not believe recently issued but

not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial

Note 3 — Reverse recapitalization

Upon the consummation of the Business Combination,

the following transactions (collectively, the “Transactions”) were completed, based on the Company’s capitalization

as of September 29, 2023:

● each share of common stock, par value $ 0.0001 per share, of Merger Sub issued and outstanding immediately prior to the effective time of the Business Combination (“Effective Time”) was no longer outstanding and thereupon were converted into and become one validly issued fully paid and non-assessable share of Common Stock, par value $ 0.001 per share, of the Company and all such shares constituted the only outstanding shares of capital stock of the Company as of immediately following the Effective Time;

The UPTD Units were automatically

separated into underlying Common Stock and UPTD Warrants and are no longer be traded on the open market following the Closing;

● Estrella issued 500,000 shares of Series A Preferred Stock to White Lion for $ 500,000 and 250,000 shares of Series A Preferred Stock to White Lion as commitment fee pursuant to the Common Stock Purchase Agreement immediately prior to the Effective Time;

● Estrella issued (i) 1,520,000 shares of Series A Preferred Stock were issued to Lianhe World for $1,520,000, (ii) 1,000,000 shares of Series A Preferred Stock were issued to CoFame for $1,000,000, (iii) 730,000 shares of Series A Preferred Stock were issued to Tiger for $730,000 for deferred commission, (iv) 2,000,000 shares of Series A Preferred Stock were issued to Smart Crest for $2,000,000;

(v) 2,000,000 shares of Series A Preferred Stock were issued to Xiao for $2,000,000 and (vi) 2,000,000 shares of Series A Preferred Stock were issued to Wang for $2,000,000, immediately prior to the Effective Time ;

● Estrella issued an unsecured 30-day promissory note to Hongbing Zhang in the principal amount of $ 0.3 million with an interest rate of 12 % per annum;

Each share of Series A

Preferred Stock and Series AA Preferred Stock that was issued and outstanding immediately prior to the Effective Time was automatically

converted into a number of shares of Estrella Common Stock (See Note 12);

● Each share of Estrella Common Stock was converted into 0.2407 shares of Company Common Stock;

● The Company issued 500,000 shares of Common Stock to each of Plentiful Limited and Lianhe World, respectively.

The following table presents the number of the

Company’s Common Stock issued and outstanding immediately following the Reverse Recapitalization:

UPTD’s Common Stock outstanding prior to Reverse Recapitalization

redemption of UPTD’s Common Stock

Common Stock issued to PIPE investment

Conversion of Estrella’s Common Stock into UPTD’s Common Stock

Total Common Stock outstanding

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Estrella was determined to be the accounting

acquirer given that Estrella effectively controlled the Company upon consummation of the Business Combination.

The transaction is accounted

for as a reverse recapitalization, which is equivalent to the issuance of Common Stock by Estrella for the net monetary assets of UPTD,

accompanied by a recapitalization.

Estrella was determined as the accounting acquirer and the historical financial statements of Estrella

became the Company’s historical financial statements, with retrospective adjustments to give effect of the reverse recapitalization.

The net assets of UPTD were recognized as of the Closing Date at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Closing Date are those of Estrella and Estrella’s operations are the only ongoing operations of the Company.

In connection with the Reverse Recapitalization,

the Company raised approximately $ 726,339 of proceeds, presented as cash flows from financing activities, which included the contribution

of $ 8,138,230 of funds held in UPTD’s trust account, $ 9,782 of cash held in UPTD’s operating cash account, net of $ 5,072,945

payable to UPTD’s public stockholders to redeem 467,122 public shares of UPTD’s Common Stock, $ 1,640,128 in transaction

costs incurred by UPTD, and $ 708,600 prepayment of working capital loans issued to UPTD’s related parties.

The following table reconcile the elements of

the Reverse Recapitalization to the statements of cash flows and the changes in shareholders’ equity (deficit):

September 29,

Funds held in UPTD’s trust account

Funds held in UPTD’s operating cash account

amount payable to redeem public shares of UPTD’s Common Stock

( 5,072,945 )

payments of transaction costs incurred by UPTD

( 1,640,128 )

repayments of working capital loan – related parties of UPTD

Proceeds from the Reverse Recapitalization

non-cash net deficit assumed from UPTD

( 1,200,316 )

Net distributions from issuance of Common Stock upon the Reverse Recapitalization

$ ( 473,977 )

The shares and corresponding capital amounts

and all per share data related to the Company’s outstanding Common Stock prior to the Reverse Recapitalization have been retroactively

adjusted using the Exchange Ratio of 0.2407 .

Note 4 — Cash Held in Trust Account

The Company had cash held in a trust account,

carried over from UPTD upon the consummation of the Business Combination.

Such balance held in trust account was designated to pay UPTD’s

shareholders who redeemed public shares of UPTD’s Common Stock before the consummation of the business combination.

3, 2023, the remaining balance of cash held in trust account was disbursed to the UPTD’s shareholder as mentioned above.

Note 5 — Extension Note Receivable

Pursuant to Merger Agreement, Estrella agreed

to, upon request by UPTD, deposit the agreed reasonable amount to UPTD’s trust account in order to effectuate extension of UPTD’s

deadline to consummate a business combination.

Pursuant to the Merger Agreement, as of June 30, 2023, a total of $ 273,066 of six-monthly

extension payments, each in the principal amount of $ 45,511 , would be deposited into the Trust Account of UPTD, all of which were sourced

by loans from Estrella (the “Extension Notes”).

The Extension Notes bore no interest and were settled between Estrella

and UPTD upon the consummation of the Business Combination on September 29, 2023.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Note 6 — Other payables and accrued

For all other entities, the amendments will

be effective two years later from the date of the SEC’s removal.

The Company is currently evaluating the impact of the update on

the Company’s consolidated financial statements and related disclosures.

On November 4, 2024, the FASB

issued ASU No.

2024-03, Expense Disaggregation Disclosures (“ASU 2024-03”).

ASU 2024-03 amends ASC 220, Comprehensive Income

to expand income statement expense disclosures and require disclosure in the notes to the financial statements of specified information

about certain costs and expenses.

ASU 2024-03 is required to be adopted for fiscal years commencing after December 15, 2026, with early

adoption permitted.

The Company is currently evaluating the impact of adopting the standard on its financial position and results of operations.

The Company does not believe recently issued but not yet effective

accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

Note 3 — Other payables and

accrued liabilities

Accrued professional fees (i)

1 unchanged sentence

Total other payables and accrued liabilities

(i) The balance of accrued professional fees represented amount due to third party service providers which include, legal and consulting fee related to research and development, and others.

Note 7 — Stock redemption payable

Stock redemption payable represents the balance

payable to UPTD’s shareholders related to the redemption of public shares of UPTD’s Common Stock before the consummation

of the business combination.

On October 3, 2023, such balance was paid in full through the Company’s investment held in trust account.

(see Note 4).

Note 8 — Commitments and contingencies

(i) The balance of accrued professional fees represented amount

due to third party service providers which include, legal and consulting fee related to research and development, and others.

Note 4 — Commitments and

contingencies

Manufacturing Commitment

On June 28, 2022, Eureka and the Company entered

into the License Agreement under which Eureka granted to the Company a license under certain intellectual property controlled by Eureka

for exploitation by the Company in the Company’s territory under the License Agreement (the “Licensed Territory”).

Eureka will be solely responsible for the manufacture and supply of clinical quantities of the licensed products and final filled and

finished (including packaged) drug product form of the licensed products for development and commercialization purposes in the field

both in the Licensed Territory and elsewhere.

On June 28, 2022, Eureka

and the Company entered into the License Agreement under which Eureka granted to the Company a license under certain intellectual property

controlled by Eureka for exploitation by the Company in the Company’s territory under the License Agreement (the “Licensed

Estrella’s supply of clinical quantities of the licensed products and final filled and finished (including

packaged) drug product form of the licensed products for development and commercialization purposes, both in the Licensed Territory and

elsewhere, are to be manufactured either by Eureka, its affiliate or a third party contract manufacturer.

Refer to Note 5.

Equity Financing Commitment

On 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.

Pursuant 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.

As of the date hereof, no Equity Line Shares have been

issued to White Lion pursuant to the Common Stock Purchase Agreement.

Registration Rights

The 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.

The Company is 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.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

In connection with the Securities Purchase Agreements entered into with the Selling Stockholders on or about

May 30, 2025 and June 1, 2025, the Company agreed to file a registration statement to register the resale of the Shares of Common

Stock purchased by the Selling Stockholders (refer to Note 7).

The Company also agreed to register the resale of any additional shares

of Common Stock, or “True-Up Securities,” that may be issuable pursuant to the true-up mechanism in such agreements.

agreed to cause such registration statement to be declared effective, which occurred on January 23, 2026.

Contingencies

From time to time, the Company is or may be party

to certain legal proceedings, as well as certain asserted and un-asserted claims.

Amounts accrued, as well as the total amount of reasonably

possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the financial statements.

In some instances, the Company may be required

to indemnify its licensors for the costs associated with any such adversarial proceedings or litigation.

Third parties may assert infringement

claims against the Company, its licensors or its strategic collaborators based on existing patents or patents that may be granted in

the future, regardless of their merit.

There is a risk that third parties may choose to engage in litigation or other adversarial proceedings

with the Company, its licensors or its strategic collaborators to enforce or otherwise assert their patent rights.

Collaboration Agreement

On October 29, 2021, Eureka, entered into a Collaboration

Agreement with Imugene Ltd, a clinical stage immune-oncology company to evaluate Imugene’s CF33-CD19t, its oncolytic virus onCARlytics

technology in combination with Eureka’s CD19 ARTEMIS ® T-cell therapy for the treatment of solid tumors.

On June 28, 2022, as part of the Separation,

Eureka contributed and assigned the Collaboration Agreement to Estrella.

Pursuant to the Collaboration Agreement, Estrella and Imugene

have each granted to the other a royalty free, non-exclusive, worldwide license, with the right to grant and authorize sublicenses, to

their respective technologies to conduct the research activities each is responsible for performing under the research plan set forth

in the Collaboration Agreement.

The research plan is required to be reviewed no less frequently than every six to eight months by a joint

steering committee comprised of participants from each of Estrella and Imugene.

Allocation of Costs, unless otherwise agreed

by the Parties in connection with a given Research Plan and associated Research Budget:

Eureka Costs:

be responsible for all FTE and other internal costs incurred in the performance of all Eureka Research Activities, as defined in

the Collaboration Agreement;

Imugene Costs:

will be responsible for all FTE and other internal costs incurred in the performance of all Imugene Research Activities, as defined

in the Collaboration Agreement;

Eureka and Imugene will share equally (50:50) the out-of-pocket costs set forth in the applicable Research Budget plus Allowable Overruns, as defined in the Collaboration Agreement.

If either Party incurs out-of-pocket costs in excess of the amount budgeted therefor in the applicable Research Budget plus Allowable Overruns, then the other Party will not be responsible for its 50 % share to the extent in excess of such budgeted amount plus Allowable Overruns, unless the joint steering committee (“JSC”) 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.

The Company and Eureka recorded the costs associated with the Collaboration Agreement as research

and development expenses in the amount of $ 0 and $ 24,186 , For the years ended June 30, 2024 and 2023, respectively.

On May 15, 2023, Estrella assigned a cost reimbursement

receivable of $ 27,169 from Imugene under the Collaboration Agreement to Eureka.

There was no impact on Estrella’s statements of

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

From time to time, the Company

is or may be party to certain legal proceedings, as well as certain asserted and un-asserted claims.

Amounts accrued, as well as the total

amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to

the Company’s consolidated financial statements.

In some instances, the Company

may be required to indemnify its licensors for the costs associated with any such adversarial proceedings or litigation.

Third parties

may assert infringement claims against the Company, its licensors or its strategic collaborators based on existing patents or patents

that may be granted in the future, regardless of their merit.

There is a risk that third parties may choose to engage in litigation or

other adversarial proceedings with the Company, its licensors or its strategic collaborators to enforce or otherwise assert their patent

Note 5 — Related Party Transactions

License Agreement

On June 28, 2022, in connection with the Contribution

Agreement, Eureka, Eureka Cayman and Estrella entered a License Agreement under which Eureka and Eureka Cayman granted to Estrella a

license under certain intellectual property controlled by Eureka for exploitation by Estrella in the Licensed Territory, which primarily

includes the United States and the rest of the world, excluding China and the Association of Southeast Asian Nations.

Pursuant to the License Agreement, (1) Eureka

will be solely responsible for the manufacture and supply of clinical quantities of the licensed products and final filled and finished

(including packaged) drug product form of the licensed products (“Drug Product”) for development and commercialization purposes

in the field both in the Licensed Territory and elsewhere, and (2) during the term of the License Agreement, Eureka will manufacture

and supply, either itself or through an affiliate or a third party contract manufacturer, all of Estrella’s and its related parties’

clinical quantities requirements of Drug Product for Estrella’s and its related parties’ development activities with respect

to the licensed products in the field in the Territory conducted in accordance with this agreement.

Eureka and Estrella will use good

faith efforts to negotiate and enter into a clinical supply agreement on reasonable and customary terms for the supply of Drug Product

by Eureka to Estrella at a price equal to the fully burdened cost (the “Clinical Supply Agreement”), and a related quality

agreement, which agreements will govern the terms and conditions of the manufacturing and clinical supply of Drug Product to Estrella.

Furthermore, Eureka and Estrella’s collaboration will be overseen by a JSC.

Eureka and Estrella will initially appoint one representative

to the JSC, with each representative having knowledge and expertise in the development and commercialization of products similar to the

licensed products and having sufficient seniority within the applicable party to provide meaningful input and make decisions arising

within the scope of the JSC’s responsibility.

The License Agreement requires Estrella to make

certain payments, including (a) an “upfront” payment of $ 1,000,000 , payable in 12 equal monthly installments, (b) “milestone”

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

upon FDA approval, and (c) royalty payments of a single digit percentage on net sales.

As of June 30, 2024 and 2023, Estrella had remaining

balance of account payable - related party amounted to $ 0 and $ 833,333 , respectively, related to License Agreement’s upfront payment.

As of June 30, 2024, 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.

Such amount was accrued by Estrella and outstanding as of June 30, 2023 and payment was made on October

10, 2023 with $ 0 outstanding as of June 30, 2024.

On June 28, 2022, in connection with the Contribution Agreement,

Eureka, Eureka Cayman and Estrella entered a License Agreement under which Eureka and Eureka Cayman granted to Estrella a license under

certain intellectual property controlled by Eureka for exploitation by Estrella in the Licensed Territory, which primarily includes the

United States and the rest of the world, excluding China and the Association of Southeast Asian Nations (ASEAN) countries.

Pursuant to the License Agreement,

during the term, (1) Eureka will manufacture and supply, either itself or through an affiliate or a third party contract manufacturer,

all of Estrella’s and its related parties’ clinical quantities requirements of the Licensed Products and final filled and

finished (including packaged) drug product form of the Licensed Products (“Drug Product”) for Estrella’s and its related

parties’ development activities with respect to the Licensed Products conducted in accordance with this agreement, and (2) Eureka

will manufacture and supply, either itself or through an affiliate or a third party contract manufacturer, all of Estrella’s and

its related parties’ commercial quantities requirements of Drug Product for Estrella’s and its related parties’ development

activities with respect to the Licensed Products conducted in accordance with this agreement.

Furthermore, Eureka and Estrella will form

a Joint Steering Committee (JSC) to oversee the development and commercialization of the Licensed Products by Estrella and its related

Eureka and Estrella will initially appoint one representative to the JSC, with each representative having knowledge and

expertise in the development and commercialization of products similar to the Licensed Products and having sufficient seniority within

the applicable party to provide meaningful input and make decisions arising within the scope of the JSC’s responsibility.

The License Agreement

requires Estrella to make certain payments, including (a) an “upfront” payment of $ 1.0 million, payable in 12

equal monthly installments, (b) “milestone” payments upon the occurrence of certain events related to development and

sales, with potential aggregate multi-million dollar payments upon FDA approval, and (c) royalty payments of a single digit

percentage on net sales.

As of December 31, 2025 and

2024, Estrella had no remaining balance of accounts payable - related party, related to the upfront payment under the License

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”) was earned by Eureka under the

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

Milestone payment of $ 50,000 related to Milestone

2 was paid on September 3, 2024, and was recorded as research and development expense in the Company’s consolidated statements

of operations.

Services Agreement

On June 28, 2022, Estrella entered a Services

Agreement with Eureka.

Pursuant to the Services Agreement, Eureka will perform certain services for Estrella related the transfer of

certain technology and the provision of certain technical assistance to facilitate Estrella’s exploitation of the intellectual

property licensed by Eureka to Estrella under the License Agreement, and Eureka will perform such services for Estrella (the “Services”).

Under the Services Agreement, Estrella shall pay Eureka (1) $ 10,000,000 in connection with the Services payable in 12 equal monthly installments

with the first payment to be made no later than five days after the Effective date and (2) reimburse Eureka on a monthly basis for reasonable

pass-through costs incurred or paid to providers by Eureka in providing the Services.

In addition, Estrella will be charged for other

services performed by Eureka outside the scope of the Services per the Service Agreement, at a flat rate, by time or materials or as

mutually agreed upon the parties in writing.

Eureka’s service covered a period of 12

months and the service commenced on June 28, 2022.

As of June 30, 2024 and June 30, 2023, Estrella had account payable balance - related

party of $ 0 and $ 8,333,331 related to Service Agreement with Eureka, respectively.

As of June 30, 2024 and 2023, Estrella accrued

$ 0 and $ 116,482 for pass-through costs related to clinical trials incurred by Eureka in account payable-related party, respectively.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

For the years ended June 30, 2024 and 2023, Estrella

incurred $ 54,957 and $ 116,482 pass-through costs related to clinical trials, respectively.

After the closing of the business combination

on September 29, 2023, on October 10, 2023 Estrella remitted $ 9,334,475 to Eureka.

On June 28, 2022, Estrella

entered a Services Agreement with Eureka, as subsequently amended by Amendment No.

1, effective as of

October 1, 2022, and Amendment No.

2, effective as of March 1, 2023.

Pursuant to the Services Agreement, Eureka will perform certain services

for Estrella related to the transfer of certain technology and the provision of certain technical assistance to facilitate Estrella’s

exploitation of the intellectual property licensed by Eureka to Estrella under the License Agreement, and Eureka will perform such services

for Estrella (the “Services”).

Under the Services Agreement, Estrella shall pay Eureka (1) $ 10.0 million in connection

with the Services payable in 12 equal monthly installments with the first payment to be made no later than five days after the Effective

date and (2) reimburse Eureka on a monthly basis for reasonable pass-through costs incurred or paid to providers by Eureka in providing

the Services.

In addition, Estrella will be charged for other services performed by Eureka outside the scope of the Services per the Service

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

Services provided by

Eureka under the Services Agreement commenced in June 2022 and the IND allowance milestone was achieved in March 2023.

the consummation of the Business Combination on September 29, 2023, the Company remitted a payment of approximately

$ 9.3 million to Eureka on October 10, 2023.

As of December 31, 2025 and 2024, the Company has settled all amounts owed under

the Services Agreement, and there are no outstanding accounts payable or additional related-party liabilities associated with this

Statement of Work

On March 4, 2024, the Company, 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.

The trial is designed to assess the safety,

tolerability, recommended Phase II dose, and preliminary anti-cancer activity of EB103 for the treatment of relapsed or refractory (R/R)

B-cell non-Hodgkin lymphoma (NHL) patients.

The SOW is governed by the terms of the Services

Agreement, dated June 28, 2022, between Estrella and Eureka (as amended by Amendment No.

1, effective as of October 1, 2022, and Amendment

2, effective as of March 1, 2023), and incorporates all the terms of the Services Agreement by reference.

Notwithstanding the foregoing,

the terms and conditions of the SOW govern in the event of any conflict with the terms and conditions of the Services Agreement.

The scope of work set forth in the SOW includes

study start-up, patient dosing and related activities, study close-out, and reporting.

Additionally, the SOW sets forth the various services

Eureka will provide in connection with the clinical trial, including regulatory document development, site activation, patient enrollment

and consent management, data collection, and pharmacovigilance.

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, excluding additional pass-through costs and expenses incurred by Eureka and payable by Estrella as further described below.

On March 4, 2024, the

Company, 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.

The trial is designed

to assess the safety, tolerability, recommended Phase II dose, and preliminary anti-cancer activity of EB103 for the treatment of

relapsed or refractory (R/R) B-cell non-Hodgkin lymphoma (NHL) patients.

The SOW is governed by the

terms of the Services Agreement, dated June 28, 2022, between Estrella and Eureka (as amended by Amendment No.

1, effective as of

October 1, 2022, and Amendment No.

2, effective as of March 1, 2023), and incorporates all the terms of the Services Agreement

by reference.

Notwithstanding the foregoing, the terms and conditions of the SOW govern in the event of any conflict with the terms and

conditions of the Services Agreement.

The scope of work set forth

in the SOW includes study start-up, patient dosings and related activities, study close-out, and reporting.

Additionally, the SOW sets

forth the various services Eureka will provide in connection with the clinical trial, including regulatory document development, site

activation, patient enrollment and consent management, data collection, and pharmacovigilance.

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 $ 33.0 million for achievement

of all milestones, excluding additional pass-through costs and expenses incurred by Eureka and payable by Estrella as further described

Such amount assumes 20 patients to be dosed and one clinical site is activated.

An additional $ 500,000 will

become payable to Eureka if a second site is activated following mutual agreement of Estrella and Eureka.

An additional $ 0.5 million will become payable

to Eureka if a second site is activated following mutual agreement of Estrella and Eureka.

In addition to the

milestone payments, Eureka will invoice Estrella quarterly for additional pass-through costs and expenses incurred in connection

with its services under the SOW.

Estrella is required to settle invoices within 30 days, with Eureka reserving the right to

impose monthly interest charges of 1.5 % for undisputed amounts unpaid after 30 days.

Estrella will also be responsible for

payment of any taxes, fees, duties or charges imposed by any governmental authority in connection with the services provided by Eureka

under the SOW, other than any taxes on Eureka’s income.

The first invoice payable to Eureka issuable

upon execution of the SOW is for $ 3.5 million, covering the fees associated with the initiation of the study, the preparation and activation

of the first study site, and the First Patient First Visit (FPFV) milestones.

Prior to the commencement of the patient dosing phase,

a deposit of $ 1.5 million is required to be delivered to Eureka to ensure the readiness for patient treatment expenses and will be applied

against the final invoice, and any unused portion will be returned to Estrella following collection of all outstanding fees and costs

payable to Eureka under the SOW.

Additional invoices will be issued in connection with the patient dosing milestone, amounting to $ 1,375,000

per patient and a total cost $ 27,500,000 for 20 patients, excluding any pass-through costs and additional expenses.

The SOW provides

an estimated dosing timeline of 6 patients by the end of 2024 and an additional 14 patients by the end of 2025.

Lastly, a $ 2,000,000

milestone fee will become due in connection with the study close-out phase, estimated to be completed by the end of 2025.

Services provided

in connection with this milestone include finalizing patient data, trial data cleaning, statistical analysis, and preparing and submitting

the final study report.

As of June 30, 2024, Estrella has paid $ 3,500,000

to Eureka for covering the fees associated with milestones achieved.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

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.

milestone payments, Eureka will invoice Estrella quarterly for additional pass-through costs and expenses incurred in connection with

its services under the SOW.

Pass-through cost details are summarized in the invoice, and supporting documents are provided upon Estrella’s

Estrella is required to settle invoices within 30 days, with Eureka reserving the right to impose monthly interest

charges of 1.5 % for undisputed amounts unpaid after 30 days.

Estrella will also be responsible for payment of any taxes, fees,

duties or charges imposed by any governmental authority in connection with the services provided by Eureka under the SOW, other than any

taxes on Eureka’s income.

The first invoice payable to

Eureka issuable upon execution of the SOW is for $ 3.5 million, covering the fees associated with the initiation of the study, the

preparation and activation of the first study site, and the First Patient First Visit (FPFV) milestones.

Prior to the commencement of

the patient dosing phase, a deposit of $ 1.5 million is required to be delivered to Eureka to ensure the readiness for patient treatment

expenses and will be applied against the final invoice, and any unused portion will be returned to Estrella following collection of all

outstanding fees and costs payable to Eureka under the SOW.

Additional invoices will be issued in connection with the patient dosing

milestone, amounting to approximately $ 1.4 million per patient and a total cost of $ 27.5 million for 20 patients, excluding

any pass-through costs and additional expenses.

Lastly, a $ 2.0 million milestone fee will become due in connection with the study

close-out phase.

Services provided in connection with this milestone include finalizing patient data, trial data cleaning, statistical

analysis, and preparing and submitting the final study report.

As of December 31, 2025,

the Company has 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.

The deposit of $ 1.5 million was recorded as prepaid expenses,

related party, non-current on the consolidated balance sheets.

As of December 31, 2025 and 2024, nine and two patients had been dosed,

respectively.

The second clinical trial site was activated as of December 31, 2025.

As of December 31, 2025, the Company accrued approximately

$ 12.4 million under accrued liability – related party, and recorded $ 0.5 million as accounts payable – related party,

which included amounts related to dosing milestone payments and second site activation costs.

As of December 31, 2024, approximately $ 2.8

million was accrued under accrued liability - related party and $ 0 was recorded as accounts payable - related party.

All such amounts

were recorded as research and development expenses in the consolidated statements of operations.

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.

Consulting Agreement

On November 1, 2024, the

Company entered into a consulting agreement (the “Consulting Agreement”) with CoFame Investment Holding LLC (“CoFame”),

a related party, as CoFame’s manager, Hong Zhang, is a director of the Company.

Pursuant to the Consulting Agreement, CoFame provides

advisory and consulting services to the Company regarding activities in Asia, including investor relations and potential business collaborations,

as mutually agreed upon from time to time.

As of December 31, 2025, the Company has accrued $ 18,333 under

accrued liability - related party, and recorded $ 36,666 as accounts payable – related party, representing unpaid consulting

fees due to CoFame.

As of December 31, 2024, $ 36,667 was accrued under accrued liability - related party, and $ 0 was recorded as accounts

payable - related party.

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

Company recorded a consulting expense of $ 219,995 and $ 91,667 related to CoFame, respectively.

The following table summarizes research and development

expenses and general and administrative expenses incurred by the Company in connection with related party transactions for the year ended

December 31, 2025 and for the six-month transition period ended December 31, 2024, as discussed above.

Name of related party Relationship Nature For the Year Ended December 31, 2025 For the

Eureka Shareholders of the Company Research and development expenses $ 10,125,000 $ 2,801,435

Eureka Shareholders of the Company General and administrative expenses 45,453 12,000

CoFame Hong Zhang, director of the Company, is the manager of CoFame General and administrative expenses 219,995 91,667

Total $ 10,390,448 $ 2,905,102

Series AA Preferred Stock

On June 28, 2022, Estrella and Eureka entered

into the Contribution Agreement pursuant to which Eureka agreed to contribute and assign to Estrella all rights, title and interest in

and to the Assets in exchange for 105,000,000 shares of Estrella’s Series AA Preferred Stock (refer to Note 11).

As of June 30,

2024 and 2023, Eureka collectively owned 69.7 % and 92.1 % of Estrella on a fully diluted basis, respectively.

On July 6, 2022, Estrella entered into an office

lease contract with Eureka, to lease a 428 square feet office with a $ 2,000 payment.

Under the original lease contract, the sublease

agreement commenced on August 1, 2022 and expired on September 30, 2023.

In November 2022, the sublease’s expiration date was amended

to July 31, 2023.

Therefore, such lease contained a lease term for 12 months and less after amendment.

On June 28, 2022, Estrella and Eureka entered into the Contribution

Agreement pursuant to which Eureka agreed to contribute and assign to Estrella all rights, title and interest in and to the Assets in

exchange for 105,000,000 shares of Estrella’s Series AA Preferred Stock.

The issued shares of Series AA preferred

stock were converted to common stock immediately prior to the closing of the business combination on September 29, 2023 (see Note 6).

As of December 31, 2025 and 2024, Eureka collectively owned 66.6 % and 69.8 % of the Company on a fully diluted basis, respectively.

On October 1, 2023, Estrella entered into an office sublease agreement

with Eureka, to lease 180 square feet of office space with $ 2,000 monthly lease payments for nine months until June 30,

2024, without any renewal option (“Lease 1”).

On July 1, 2024, the Company entered into a new office sublease

agreement with Eureka.

Pursuant to the Sublease Agreement, the sublease commenced on July 1, 2024 and expired on December 31,

2024 with $ 2,000 sublease fee per month (“Lease 2”).

On January 1, 2025, the Company entered into another sublease

agreement with Eureka for the same location.

Under the new sublease agreement, the sublease commenced on January 1, 2025, and expired

on June 30, 2025 , with a monthly sublease fee of $ 2,000 , without any renewal option (“Lease 3”).

On July 1, 2025, the Company entered into a new office sublease

agreement with Eureka.

Pursuant to the Sublease Agreement, the sublease commenced on July 1, 2025 and expires on December 31,

2025 with $ 2,000 sublease fee per month (“Lease 4”).

Estrella elected not to apply

the ROU and lease liability recognition requirements to above mentioned short-term lease as the modified lease term was less than twelve

the ROU and lease liability recognition requirements to above mentioned short-term lease as the modified lease term was less than twelve months.

As a result of the lease amendment, Estrella then reduced the corresponding ROU and lease liability to $ 0 and continued to recognize

the lease monthly payments in profit or loss on a straight-line basis over the remaining lease term period.

On October 1, 2023 Estrella entered into an office

lease contract with Eureka, to lease 180 square feet of office space with $ 2,000 monthly lease payments for nine months without any renewal

For the years ended June 30, 2024 and 2023, the

Company incurred $ 20,000 and $ 22,000 rent expense from Eureka.

For the years ended December

31, 2025 and for the six-month transition period ended December 31, 2024, the Company incurred $ 24,000 and $ 12,000 rent expense,

respectively from Eureka.

Refer to Note 10.

As of June 30, 2024 and 2023, the outstanding

balance of lease payments of $ 4,000 and $ 22,000 was recorded as accrued liability - related party on the Company’s consolidated

balance sheets, respectively.

Note 10 — Promissory note

On September 29, 2023, Estrella issued an unsecured

promissory note to Hongbing Zhang, in the aggregate principal amount of $ 300,000 (the “Unsecured Note”).

Interest shall begin

accruing on September 29, 2023 at a rate of 12 % per annum until the outstanding amount has been paid in full.

The Unsecured Note matures

on October 30, 2023 and was paid in full on October 27, 2023.

As of December 31, 2025 and 2024, the outstanding balance of lease

payments of $ 6,000 and $ 4,000 was recorded as accounts payable - related party, respectively, on the Company’s consolidated

balance sheets.

Note 6 — Preferred Stock

Series AA Preferred Stock

On June 28, 2022, Estrella and Eureka entered

into the Contribution Agreement pursuant to which Eureka contributed and assigned to Estrella all right, title and interest in and to

the Assets in exchange for 105,000,000 shares of Estrella’s Series AA Preferred Stock.

In accordance with ASC 805 “Common

control transactions.” The transfer of the Assets was accounted for by Estrella at historical carrying values.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Series A Preferred Stock

On June 28, 2022, Estrella entered into a Series

A Preferred Stock Purchase Agreement with an accredited third-party investor to raise gross proceeds of $ 5,000,000 by issuing 5,000,000

shares of its Series A Preferred Stock.

The shares of Series A Preferred Stock were sold for $ 1.00 per share.

On each of July 31, 2023 and September 18, 2023,

an aggregate of six third party investors executed joinders to Estrella’s Series A Preferred Stock Purchase Agreement.

to the joinders, such investors agreed to purchase an aggregate of 9,250,000 shares of Estrella’s Series A Preferred Stock for

$ 9,250,000 immediately prior to the effective time of Estrella’s merger with UPTD.

Subsequently and immediately prior to the effective

time of the merger with UPTD, such shares of Estrella’s Series A Preferred Stock converted into Estrella Common Stock and then

into Merger Consideration Shares based on an exchange ratio of 0.2407 determined by the total number of shares of Estrella Common Stock

outstanding immediately prior to the Effective Time in accordance with the Merger Agreement.

In addition, immediately prior to the Effective

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

Series A Preferred Stock were issued to White Lion in consideration for its commitments under the Common Stock Purchase Agreement pursuant

to the Joinder to the Series A Preferred Stock Purchase Agreement between Estrella and White Lion, dated April 20, 2023, as further described

in Note 8 above.

The significant terms of the Series A, Series

AA Preferred Stocks issued by Estrella are as follows:

Dividend Rights

Each holder of Preferred Stock shall be entitled

to receive only when, as and if declared by the board of directors, out of any funds and assets legally available therefor, dividends

on a pari passu basis at the rate of 8 % of the original issue price of $ 1.00 per share.

The dividend shall be non-cumulative and non-compounding.

Liquidation Rights

Series A Preferred Stock –

In the event of any voluntary or involuntary liquidation, dissolution or winding up of Estrella, the holders of shares of Series A Preferred

Stock then outstanding shall be entitled to be paid out of the assets of Estrella available for distribution to its stockholders or,

in the case of a Deemed Liquidation Event (as defined below), out of the consideration payable to stockholders in such Deemed Liquidation

Event or the Available Proceeds, before any payment shall be made to the holders of Series AA Preferred Stock or Common Stock by reason

of their ownership thereof, and amount per share equal to the applicable Original Issue Price, plus any dividends declared but unpaid

Series AA Preferred Stock – After

payment of the full liquidation preference of the Series A Preferred Stock, then in the event of any voluntary or involuntary liquidation,

dissolution or winding up of Estrella, the holders of shares of Series AA Preferred Stock then outstanding shall be entitled to be paid

out of the assets of Estrella available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, out of the

consideration payable to stockholders in such Deemed Liquidation Event or the Available Proceeds.

Before any payment shall be made to

the holders of Common Stock by reason of their ownership, an amount per share equal to the applicable Original Issue Price, plus any

dividends declare but unpaid thereon.

Distribution of Remaining Assets – If

there are any remaining assets of the Estrella, such assets shall be distributed among the holders of the shares of Series A Preferred

Stock and Common Stock, prorated based on the number of shares held by each such holder, treating for this purpose all such securities

as if they had been converted to Common Stock.

Voting Rights

Each holder of outstanding shares of Series A

Preferred Stock shall be entitled to cast two (2) votes for each share of Series A Preferred Stock held by such holder and each holder

of outstanding shares of Series AA Preferred Stock shall be entitled to cast one (1) vote for each share of Series AA Preferred Stock

held by such holder.

Except as provided by law or by the other provisions of the amended and restated certificate of incorporation, holders

of Preferred Stock shall vote together with holders of Common Stock as a single class.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Conversion Rights

Each share of Preferred Stock shall be convertible,

at the option of the holder at any time and from time to time, and without the payment of additional consideration by the holder into

such number of fully paid and non – assessable shares of Common Stock as is determined by dividing the Original Issue Price by

the Conversion Price in effect at the time of conversion.

The Series A Conversion Price applicable to the Series A Preferred Stock shall

initially be equal to $ 1.00 .

The Series AA Conversion Price applicable to the Series AA Preferred Stock shall initially be equal to $ 1.00 .

The Series A Conversion Price and the Series AA Conversion Price are referred to as “Conversion Price.” The initial Conversion

Prices and the rate at which shares of applicable Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment

in connection with certain dilutive issuances, share split, combinations, dividends, distributions, recapitalizations, mergers, consolidations,

reclassifications, exchanges, and substitutions.

Pursuant to the Estrella’s amended and

restated certificate of incorporation, holders of the Estrella’s Preferred Stock have the following methods of conversion:

conversion upon either (a) the closing of the sale of shares of Common Stock to the public at a price of at least $ 1.00 per share (subject

to appropriate adjustment in the event of any stock dividend, stock splits, combination or other similar recapitalization with respect

to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities

Act of 1933, as amended, resulting in at least $ 50,000,000 of gross proceeds to Estrella and in connection with such offering the Common

Stock is listed for trading on the Nasdaq Stock Market’s National Market, the New York Stock Exchange or another exchange or marketplace

approved by the board of directors or (b) the date and time, or the occurrence of an event, specified by vote or written consent of (i)

the holders of at least a majority of the outstanding shares of Series A Preferred Stock and (ii) the holders of at least a majority

of the outstanding shares of Series AA Preferred Stock, voting separately, then (x) all outstanding shares of Preferred Stock shall automatically

be converted into shares of Common Stock, at the then effective conversion rate (y) such shares may not be reissued by Estrella.

Redemption Rights

Both Series A Preferred Stock and Series AA Preferred

Stock were mandatorily redeemable upon the occurrence of a “Deemed Liquidation Event” which includes the following:

merger or consolidation in which (a) Estrella is a constituent party or (b) a subsidiary of Estrella is a constituent party and Estrella

issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Corporation

or a subsidiary in which the shares of capital stock of Estrella outstanding immediately prior to such merger or consolidation continue

to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation,

at least a majority, by voting power, of the capital stock of (i) the surviving or resulting corporation;

or (ii) if the surviving or

resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent

corporation of such surviving or resulting corporation;

or (2) (a) the sale, lease, transfer, exclusive license or other disposition,

in a single transaction or series of related transactions, by Estrella or any subsidiary of Estrella of all or substantially all the

assets of Estrella and its subsidiaries taken as a whole, or (b) the sale or disposition (whether by merger, consolidation or otherwise,

and whether in a single transaction or a series of related transactions) of one or more subsidiaries of Estrella if substantially all

of the assets of Estrella and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale,

lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of Estrella.

Estrella shall use the consideration received

by Estrella for such Deemed Liquidation Events mentioned above (net of any retained liabilities associated with the assets sold or technology

licensed, as determined in good faith by the board of directors of Estrella) , together with any other assets of Estrella

available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the

“Available Proceeds”), to redeem all outstanding shares of Preferred Stock at a price per share equal to the applicable liquidation

amount, which is equal to the original issue price of the Preferred Stock plus any declared but unpaid dividends.

The Series A Preferred

Stock must receive its liquidation amount prior to the Series AA Preferred Stock receives any payment.

The Series A Preferred Stock and the Series AA

Preferred Stock were accounted for under Section 480-10-S99 — Distinguishing Liabilities from Equity (FASB Accounting Standards

Codification 480) as amended by ASU 2009-04 — for Redeemable Equity Instruments (“ASU 2009-04”).

Under ASU 2009-04,

a redeemable equity security is to be classified as temporary equity if it is conditionally redeemable upon the occurrence of an event

that is not solely within the control of the issuer.

Therefore, the Company classified the Series A Preferred Stock and Series AA Preferred

Stock as temporary equity in the consolidated balance sheet as of June 30, 2023.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Immediately prior to the consummation of the

business combination on September 29, 2023, all shares of Estrella Series A and Series AA Preferred Stock were converted into Estrella

Common Stock and each share of Estrella Common Stock was exchanged for shares of Common Stock at an exchange ratio of 0.2407 .

Note 12 — Stockholders’

Equity (Deficit)

Before reverse recapitalization

Given the consideration of retroactive adjustments,

upon incorporation on March 20, 2022, the Company’s authorized shares were 145,000,000 shares of Common Stock with a par value

of $ 0.0001 per share.

After reverse recapitalization

Upon consummation of the business combination

on September 29, 2023, each share of Estrella’s Common Stock was converted into 0.2407 shares of the Company’s Common Stock.

The Company’s authorized shares of Common

Stock is 250,000,000 with a par value of $ 0.0001 per share (the “Common Stock”).

Given the retroactive effect of the reverse

recapitalization, as of June 30, 2023, there were 978,243 shares of Common Stock issued and outstanding.

Issuance of Common Stock upon the reverse

recapitalization (see Note 3)

On September 29, 2023, upon the consummation

of the Business Combination, the Company issued an aggregate total of 1,701,232 Common Stock to UPTD’s shareholders.

The following table presents the number of the

Company’s ordinary shares issued upon the Reverse Recapitalization:

UPTD’s Common Stock outstanding prior to Reverse Recapitalization

redemption of UPTD’s Common Stock

Total shares issued upon the Reverse Recapitalization

Conversion of Series A Preferred Stock

and the Series AA Preferred Stock

Immediately prior to the consummation of the

business combination on September 29, 2023, all shares of Estrella Series A and Series AA Preferred Stock were converted into Estrella

Common Stock and then into Merger Consideration Shares which is amounted to 28,888,675 shares of Common Stock based on an exchange ratio

of 0.2407 determined by the total number of shares of Estrella Common Stock outstanding at the Effective Time in accordance with the

Merger Agreement.

All previously issued shares

of Series AA and Series A preferred stock were converted to common stock immediately prior to the closing of the business combination

on September 29, 2023.

Upon the closing of the business combination, the specific authorizations for Series AA and Series A preferred

stock under the pre-merger certificate of incorporation were cancelled, and the Company’s Amended and Restated Certificate of Incorporation

now authorizes 10,000,000 shares of undesignated preferred stock, par value $ 0.0001 per share.

As of December 31, 2025 and 2024, no shares

of preferred stock were issued or outstanding.

Note 7 — Stockholders’ (Deficit) Equity

The Company’s authorized shares of Common Stock is 250,000,000

with a par value of $ 0.0001 per share (the “Common Stock”).

As of December 31, 2025 and 2024, there were 38,486,219 and 36,680,870

shares of Common Stock issued, respectively.

PIPE investment shares

In connection with the Merger, on September 14,

2023, UPTD entered into subscription agreements (the “Subscription Agreements”) with each of Plentiful Limited, a Samoan

limited company (“Plentiful Limited”) and Lianhe World Limited (“Lianhe World,” together with Plentiful Limited,

collectively, the “PIPE Investors”).

Concurrently with the closing of the Business Combination, the Company issued 500,000

shares of Common Stock to each of Plentiful Limited and Lianhe World, respectively, for aggregate proceeds of $ 10,000,000 .

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Within thirty days following the date of the

Closing, each PIPE Investor will also be entitled to receive 704,819 shares of Common Stock.

Within five days following the date that

is 24 months following the Closing (the “24-Month Date”), if the VWAP of Common Stock for the fifteen trading days prior

In connection with the Merger,

on September 14, 2023, UPTD entered into subscription agreements (the “Subscription Agreements”) with each of Plentiful

Limited, a Samoan limited company (“Plentiful Limited”) and Lianhe World Limited (“Lianhe World,” together with

Plentiful Limited, collectively, the “PIPE Investors”).

Concurrently with the closing of the Business Combination, the Company

issued 500,000 shares of Common Stock to each of Plentiful Limited and Lianhe World, respectively, for aggregate proceeds of

$ 10,000,000 .

Within thirty days following

the date of the Closing, each PIPE Investor will also be entitled to receive 704,819 shares of Common Stock.

Within five days

following the date that is 24 months following the Closing (the “24-Month Date”), if the VWAP of Common Stock for the fifteen trading days prior

to the 24-Month Date (the “24-Month Date VWAP”) is less than $ 8.30 , then each of them will be entitled to a number of shares

of Common Stock equal to (i) (A) 8.30 minus (B) the 24-Month Date VWAP multiplied by (ii) (A) the number of Shares held by the Investor

on the 24-Month Date minus (B) the number of Shares acquired by the Investor following the Closing divided by 10.00.

On January 22, 2024, the Company completed the

issuance of an additional 704,819 shares of Common Stock to each of the two PIPE Investors.

of Common Stock equal to (i) (A) 8.30 minus (B) the 24-Month Date VWAP multiplied by (ii) (A) the number of Shares

held by the Investor on the 24-Month Date minus (B) the number of Shares acquired by the Investor following the Closing divided by 10.00 .

In accordance with the terms of the Subscription Agreements, the maximum number of shares to be issued at the 24-Month Date totals to 709,770 .

On January 22, 2024, the Company completed the issuance of an

additional 704,819 shares of Common Stock to each of the two PIPE Investors.

The shares were issued as part of the consideration

that each PIPE Investor was entitled to receive thirty days following the date of the closing of the Business Combination.

In connection with the reverse recapitalization,

the Company has assumed 2,214,993 Public Warrants outstanding.

in December 2025, the Company had issued 205,349 additional shares to the PIPE Investors in accordance with the terms of the Subscription

Agreements as the Company’s common stock for the fifteen ( 15 ) trading days prior to September 29, 2025 was less than $ 8.30 , and

based on the VWAP from September 8 to September 26, 2025.

Stock purchase agreement shares

On April 20, 2023, the Company entered into a Common Stock Purchase

Agreement with White Lion Capital LLC, which was subsequently amended.

Over the life of the agreement, White Lion purchased a total of

70,000 shares of the Company’s Common Stock for aggregate consideration of $ 79,491 .

The agreement expired on December 30, 2025,

and was not renewed.

From May 2025 to September 2025,

the Company entered into Securities Purchase Agreements with three accredited investors.

Each Securities Purchase Agreement includes

a contingent value protection feature pursuant to which the Company may be required to issue additional shares of Common Stock (the “True-Up

Shares”) if the market price of the Company’s stock on the 12-month anniversary of the agreement is below $ 1.50 per

As of December 31, 2025, the Company received gross proceeds of $ 2.4 million in connection with the executed Securities Purchase

Agreements and issued 1,600,000 shares of its Common Stock to the investors, and incurred issuance costs of $ 117,473 related to the transaction.

The True-Up feature was determined to require bifurcation from the

host equity contract and is accounted for separately as a derivative liability under ASC 815.

The derivative liability is initially

measured at fair value on the issuance date and is remeasured at fair value at each subsequent reporting date, with changes in fair value

recognized as general and administrative expense in the consolidated statements of operations.

In accordance with the Securities Purchase

Agreements executed between May 2025 to September 2025, the maximum number of True-Up Shares totals to 735,857 .

Change in fair value recognized for the year ended December 31, 2025,

was $ 38,189 .

The Company did not recognize any changes in fair value for the six months ended December 31, 2024 as no derivative liabilities

As of December 31, 2025, the

fair values of the derivative liabilities related to the True-Up Shares were valued at $ 356,505 using a Monte Carlo Simulation model.

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

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 share.

In connection with the reverse

recapitalization, the Company has assumed 2,214,993 Public Warrants outstanding.

Public Warrants met the criteria for equity classification.

Each whole Warrant entitles the registered holder

to purchase one whole share of the Company’s Common Stock at a price of $ 11.50 per share.

Pursuant to the warrant agreement,

a warrant holder may exercise its Warrants only for a whole number of shares of Common Stock.

This means that only a whole Warrant may

be exercised at any given time by a warrant holder.

No fractional Warrants will be issued upon separation of the Units and only whole

Warrants will trade.

The Warrants will expire five years after the completion of the Company’s initial Business Combination,

at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Company has agreed that as soon as practicable,

but in no event later than 30 business days, after the closing of the initial Business Combination, it will use its reasonable commercially

reasonable efforts to file, and within 60 business days following its initial Business Combination to have declared effective, a

registration statement for the registration, under the Securities Act, of the shares of Common Stock issuable upon exercise of the Warrants.

The Company will use its commercially reasonable efforts to maintain the effectiveness of such registration statement, and a current

prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of the warrant agreement.

will be exercisable for cash unless the Company has an effective and current registration statement covering the Common Stock issuable

upon exercise of the Warrants and a current prospectus relating to such shares of Common Stock.

Notwithstanding the above, if the Company’s

Common Stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition

of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of

Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities

Act and, in the event it so elect, it will not be required to file or maintain in effect a registration statement, but it will be required

to use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption

is not available.

Once the Warrants become exercisable, the Company

may call the Warrants for redemption:

Each whole Warrant entitles

the registered holder to purchase one whole share of the Company’s Common Stock at a price of $ 11.50 per share.

Pursuant to the warrant agreement, a warrant holder may exercise its Warrants only for a whole number of shares of Common Stock.

means that only a whole Warrant may be exercised at any given time by a warrant holder.

No fractional Warrants will be issued upon separation

of the Units and only whole Warrants will trade.

The Warrants will expire at 5:00 p.m., New York City time, on September 29, 2028,

which is five years after the completion of the Company’s initial Business Combination, or earlier upon redemption or liquidation.

The Company has agreed that

as soon as practicable, but in no event later than 30 business days, after the closing of the initial Business Combination,

it will use its reasonable commercially reasonable efforts to file, and within 60 business days following its initial Business

Combination to have declared effective, a registration statement for the registration, under the Securities Act, of the shares of Common

Stock issuable upon exercise of the Warrants.

The Company will use its commercially reasonable

efforts to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration

of the Warrants in accordance with the provisions of the warrant agreement.

No Warrants will be exercisable for cash unless the Company

has an effective and current registration statement covering the Common Stock issuable upon exercise of the Warrants and a current prospectus

relating to such shares of Common Stock.

Notwithstanding the above, if the Company’s Common Stock is at the time of any exercise

of a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under

Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Warrants who exercise their Warrants

to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event it so

elect, it will not be required to file or maintain in effect a registration statement, but it will be required to use its commercially

reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Once the Warrants become exercisable,

the Company may call the Warrants for redemption:

● in whole and not in part;

● at a price of $ 0.01 per Warrant;

● upon not less than 30 days’ prior written notice of redemption (the “ 30 -day redemption period”) to each warrant holder;

● if, and only if, the reported last sale price of the Common Stock equals or exceeds $ 16.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending on third business day before the Company send the notice of redemption to the warrant holders.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

The Company accounted for the 2,214,993 public

Warrants assumed from the merger as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity”

and ASC 815-40, “Derivatives and Hedging:

● upon not less than 30 days’ prior written notice

of redemption (the “ 30 -day redemption period”) to each warrant holder;

● if, and only if, the reported last sale price of the Common

Stock equals or exceeds $ 16.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and

the like) for any 20 trading days within a 30 -trading day period ending on third business day before the

Company send the notice of redemption to the warrant holders.

The Company accounted for the 2,214,993 Public Warrants assumed

from the merger as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity” and ASC 815-40,

“Derivatives and Hedging:

Contracts in Entity’s Own Equity”.

As of December 31, 2025 and 2024, none of the Public Warrants

had been exercised.

Stock Repurchase Program

On January 30, 2024, the Company issued a press

release announcing that its board of directors has authorized share repurchases of up to $ 1 million of its common stock.

The authorization

does not constitute a formal or binding commitment to make any share repurchases and the timing, amount and method of any share repurchases

made pursuant to the authorization will be determined at a future date depending on market conditions and other factors.

As of June 30,

2024, $ 645,560 remained available for repurchases.

For the year ended June 30, 2024, the Company

repurchased 321,794 shares of its Common stock in open market transactions for $ 354,440 at a weighted average price per share of $ 1.10 .

The Company did not repurchase any shares of its Common stock during the same period in 2023.

On January 30, 2024, the Company issued a press release announcing

that its board of directors has authorized share repurchases of up to $ 1.0 million of its common stock.

The authorization does not

constitute a formal or binding commitment to make any share repurchases and the timing, amount and method of any share repurchases made

pursuant to the authorization will be determined at a future date depending on market conditions and other factors.

As of December 31,

2025 and 2024, approximately $ 0.4 million remained available for repurchases of its common stock.

As of December 31, 2025 and

2024, the Company has repurchased 515,281 and 486,979 shares of its common stock.

For the years ended December 31, 2025 and for the six-month

transition period ended December 31, 2024, the Company repurchased 28,302 and 165,185 shares of its common stock in open market transactions

for $ 29,462 and $ 214,477 at a weighted average price per share of $ 1.04 , and $ 1.30 , respectively.

Note 8 — Stock Based Compensation

At the special meeting of UPTD stockholders related

to the Business Combination held on July 31, 2023, UPTD’s shareholders approved the adoption of the Company’s 2023 Omnibus

Incentive Plan (the “2023 Plan”), which became effective on the Closing Date.

Upon the closing of the Business Combination,

3,520,123 shares of Common Stock became authorized for issuance under the 2023 Plan.

As of the date hereof, no shares of Common Stock

have been issued under the Incentive Plan.

On May 27, 2022, Estrella’s board of directors

approved its 2022 Equity Incentive Plan (the “2022 Plan”).

The 2022 Plan provides for the grant of (i) options, (ii) share

appreciation rights, (iii) restricted share awards, (iv) restricted share unit awards, and (v) other share awards.

The aggregate number

of shares of Common Stock that may be issued pursuant to the 2022 Plan will not exceed 15,000,000 shares of Common Stock.

On May 27, 2022,

the Company granted options under the 2022 Plan to purchase 15,000,000 shares of its Common Stock to its employees, board of directors,

and other consultants.

The total fair value of these stock options was approximately $ 1,638,381 .

The stock-based compensation expense recorded

in the Company’s results of operations.

For the years ended June 30, 2024 and 2023 were $ 1,194,653 and $ 409,595 , respectively.

The breakdown of stock-based compensation by

categories for the years ended June 30, 2024 and 2023 are summarized below:

At the special meeting of UPTD stockholders related to the Business

Combination held on July 31, 2023, UPTD’s shareholders approved the adoption of the Company’s 2023 Omnibus Incentive

Plan (the “2023 Plan”), which became effective on the Closing Date.

Upon the closing of the Business Combination, 3,520,123 shares

of Common Stock became authorized for issuance under the 2023 Plan.

On January 1, 2024, under the plan’s evergreen provision, the

share reserve automatically increased by 1,941,293 shares, and on January 1, 2025, it increased by an additional 1,920,444 shares.

of December 31, 2025, 7,381,860 shares were authorized for issuance under the plan.

On October 30, 2024, the Company granted options

under the 2023 Plan to purchase 3,600,000 shares of its Common Stock to its employees, board of directors, and other consultants.

For the year ended December 31, 2025, no additional stock options were granted or exercised.

The stock-based compensation

expense was recorded in the Company’s results of operations.

For the years ended December 31, 2025, and for the six-month transition

period ended December 31, 2024, the stock-based compensation expense was $ 618,974 and $ 432,256 , respectively.

The breakdown of stock-based

compensation by categories for the year ended December 31, 2025 and for the six-month transition period ended December 31, 2024 are summarized

Research and development

1 unchanged sentence

Total stock-based compensation

The intrinsic value of the granted options was

approximately $ 1.6 million.

Upon completion of the business combination on September 29, 2023, the unvested options were vested upon

consummation of the merger, under which the Company recognized the remaining unrecognized fair value as expense.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

The Company estimated the fair value of the stock

options using the Black-Scholes option pricing model.

The fair value of employee stock options issued was estimated using the following

Grant date May 27,

The fair value of the granted options under 2023 plan was $ 2,350,018 .

As of December 31, 2025 and 2024, there were $ 1,298,788 and $ 1,917,762 unvested compensation costs, which is expected to be

recognized over the weighted average remaining 2.29 and 3.27 years of employment service period, respectively.

The Company estimated the

fair value of the stock options using the Black-Scholes option pricing model.

The fair value of stock options issued was estimated using

the following assumptions:

Exercise price

Estimated stock price $ 0.11

Expected volatility

101.5 - 101.6

Expected term (in years)

Risk-free interest rate

The risk-free interest rate was obtained from

Expected dividend

The risk-free interest rate

was obtained from U.S.

Treasury rates for the applicable periods.

The Company’s expected volatility was based upon the implied volatility of a portfolio

of comparable companies.

The expected life of the Company’s options was determined using the actual remaining life of the stock

The fair value of the Common Stock input was determined by the board of directors based on a variety of factors, including valuation

prepared by a third party, the Company’s financial position, the status of development efforts within the Company, the current

climate in the marketplace and the prospects of a liquidity event, among others.

For the year ended June 30, 2024, no additional

stock options were granted.

On May 27, 2022, all employees, the board of

directors, and other consultants elected to exercise the stock options granted by the Company early.

The total proceeds received by the

Company amounted to $ 15,000 and was recorded as other liability due to the terms of the early exercised shares, which are subject to

repurchase until such shares are vested and are required to be returned to the Company if the vesting conditions are not satisfied.

other liability account should be cleared at the time the exercised shares are vested or repurchased.

As of June 30, 2024 and June 30,

2023, the unamortized balance of the above mentioned other liability amounted to $ 0 and $ 12,725 , respectively, based on the vesting period.

A summary of early-exercised stock option’s

vesting activity for the years ended June 30, 2024 and 2023, are as follows:

Weighted-Average

Balance of unvested early-exercised stock option at June 30, 2022

Vested early-exercised stock option

Balance of unvested early-exercised stock option at June 30, 2023

Vested early-exercised stock option

( 2,633,082 )

Balance of unvested early-exercised stock option at June 30, 2024

* Giving retroactive effect to reverse recapitalization effected

on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described in Note 3

IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Note 14 — Income Taxes

The Company has no income tax expense except

state minimum taxes, due to operating losses incurred for the years ended June 30, 2024 and 2023.

Loss before income taxes were $ 7,310,098 ,

and $ 11,114,402 for the year ended June 30, 2024 and 2023, respectively.

The provision for income taxes for the years

ended June 30, 2024 and 2023 consisted of the following:

The Company’s expected volatility was calculated from a blended

volatility estimate from the implied volatility of a portfolio of comparable companies and the Company’s trading history since October

Due to a limited history of relevant stock option exercise activity, the expected life of the Company’s options was determined

using the simplified method, which is based on the average of the time-to-vesting and the contractual life of the options.

A summary of information related

to stock option activities during the year ended December 31, 2025 is as follows:

Options Number of

Shares Weighted

Share Weighted

Term Aggregate

Outstanding at December 31, 2024 3,600,000 $ 0.815 9.84 $ 1,278,000

Outstanding at December 31, 2025 3,600,000 $ 0.815 8.84 $ 2,682,000

Options vested and expected to vest at December 31, 2025 3,600,000 $ 0.815 8.84 $ 2,682,000

Options exercisable at December 31, 2025 1,612,467 $ 0.815 8.84 $ 1,201,288

9 — Income Taxes

The Company has no income tax expense except state minimum taxes, due

to operating losses incurred for the year ended December 31, 2025 and for the six-month transition period ended December 31, 2024.

before income taxes were $ 13,062,674 , and $ 4,426,964 for the year ended December 31, 2025 and for the six-month transition period ended

December 31, 2024, respectively.

The provision for income taxes

for the year ended December 31, 2025 and for the six-month transition period ended December 31, 2024 consisted of the following:

Income tax expense

Current income tax expense

The effective tax rate of the Company’s

provision (benefit) for income taxes differs from the federal statutory rate as follows as of June 30, 2024 and 2023

Statutory rate

State income tax rate

Stock-based compensation

Acquired Intangible

Research and development tax credit rate difference

Prior year true-ups

Changes in valuation allowance

The Company’s net deferred tax assets were

as follows as of June 30, 2024 and 2023

Beginning in 2025, the Company adopted ASU 2023-09 on a prospective

Accordingly, the reconciliation of the U.S.

federal statutory income tax rate to the effective tax rate for the year ended December

31, 2025, is presented using the updated disaggregated categories and reporting currency amounts.

Comparative information for the six-month

transition period ended December 31, 2024 is presented under the legacy disclosure requirements.

For the six months ended

December 31, 2024

U.S federal statutory tax rate

( 2,743,161 )

State and local income taxes, net of federal income tax effect

Change in valuation allowance

Nondeductible items

The Company’s

net deferred tax assets were as follows as of December 31, 2025 and 2024 :

Deferred tax assets:

8 unchanged sentences

Deferred tax asset, net of allowance

As of June 30, 2024 and 2023, the Company had

gross federal income tax net operating loss (“NOL”) carry forwards of approximately $ 6.6 million and $ 1.7 million, respectively.

As of June 30, 2024 and 2023, the Company had gross state income tax net operating loss (“NOL”) carry forwards of approximately

$ 6.5 million and $ 6.5 million, respectively.

The federal net operating losses are carried forward indefinitely.

The state net operating

losses will begin to expire in 2042.

Under the Code, the NOL can be carried forward

indefinitely and can be used to offset up to 80 % of taxable income for losses arising in tax years beginning after June 30, 2022.

the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred

tax asset will be realized.

The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income

during periods in which those temporary differences become deductible.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

Due to the uncertainty surrounding the realization

of the benefits of its deferred assets, including NOL carry forwards, stock-based compensation, research and development expense capitalization

and federal research tax credit, the Company has provided a 100 % valuation allowance on its deferred tax assets at June 30, 2024 and

The valuation allowance increased from $ 2.6 million to $ 4.5 million in 2023.

The cash paid for income taxes,

net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is

State and local

As of December 31, 2025 and

2024, the Company had gross federal income tax net operating loss (“NOL”) carry forwards of appro ximately

$ 28.3 million and $ 9.4 mil lion, respectively.

As of December 31, 2025 and 2024, the Company had gross state income tax

net operating loss (“NOL”) carry forwards of approximately $ 6.5 million and $ 6.5 million, respectively.

net operating losses are carried forward indefinitely.

The state net operating losses will begin to expire in 2042.

Under the Code, the NOL can

be carried forward indefinitely and can be used to offset up to 80 % of taxable income for losses arising in tax years beginning after

June 30, 2022.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some

portion or all of the deferred tax asset will be realized.

The ultimate realization of deferred tax assets is dependent upon the Company

attaining future taxable income during periods in which those temporary differences become deductible.

Due to the uncertainty

surrounding the realization of the benefits of its deferred assets, including NOL carry forwards, stock-based compensation, research

and development expense capitalization and federal research tax credit, the Company has provided a 100 % valuation allowance on

its deferred tax assets as of December 31, 2025 and 2024.

The valuation allowance increased from $ 5.4 million to approx imately

$ 8.1 million in 2025.

In terms of research and development expense capitalization

attributed to deferred tax assets, the Company capitalized research and development expense of approximately $ 3.7 million and $ 10.3 million

for the year end June 30, 2024 and 2023, respectively.

The research and development expense capitalization were mainly derived from Eureka’s

license, service agreement and SOW would be amortized over 5 years for income tax purposes.

attributed to deferred tax assets, the Company capitalized no research and development

expense for the year ended December 31, 2025, following the enactment of the One Big Beautiful Bill Act (“OBBBA”)

in 2025, as no U.S.

or foreign research and development costs were required to be capitalized.

For the six-month transition period

ended December 31, 2024, the Company capitalized approximately $ 2.9 million of research and development costs.

The research and

development expense capitalization were mainly derived from Eureka’s license, service agreement and SOW would be amortized

over 5 years for income tax purposes.

As a result of the enactment of the OBBBA, which repealed the mandatory

capitalization and amortization of research and experimental expenditures under IRC§174 for tax years beginning after December

31, 2024, the Company elected to accelerate the amortization of previously capitalized §174 costs and deduct the remaining

unamortized balance over a two-year period (2025 and 2026).

This change in law increased the Company’s §174 amortization

deduction by approximately $ 2.7 million for the year ended December 31, 2025, and no foreign research expenditures incurred during

the year were capitalized under IRC §174.

The Company accounts for uncertain tax positions

5 unchanged sentences

facts and circumstances.

As of June 30, 2024 and 2023, the Company had no uncertain tax positions, and no interest or penalties have

been charged to the Company.

As of December 31, 2025 and 2024, the Company had no uncertain tax positions, and total unrecognized income tax

benefits were $0.0 million.

For the years ended December 31, 2025 and 2024, the Company recognized no interest and penalties associated

with unrecognized tax benefits.

If incurred, the Company will classify any interest and penalties as a component of interest expense and

operating expense, respectively.

The Company’s ability to utilize the net

operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of past or future ownership

changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws.

In the event the Company should experience

an ownership change, as defined under Section 382, utilization of the Company’s net operating loss carryforward and tax credit

could be limited.

The Company files corporation tax returns in

the United States, California and other States.

The Company’s ability

to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of

past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws.

In the event the Company

should experience an ownership change, as defined under Section 382, utilization of the Company’s net operating loss carryforward

and tax credit could be limited.

The Company files corporation

tax returns in the United States, California and other States.

The Company has been in an overall net operating loss position since inception.

the significant federal and state tax attribute carryovers, the Company is subject to examination by taxing authorities for all tax years

since inception.

Due to the significant federal and state tax attribute carryovers, the Company is subject to examination by taxing authorities for all

tax years since inception.

Note 10 — Leases

On July 6, 2022, the Company entered into an

office lease contract with Eureka, a related party (“Lease 1”).

Under the original lease contract, the sublease agreement

commenced on August 1, 2022 and expires on September 30, 2023.

In November 2022, the sublease’s expiration date was amended to

July 31, 2023.

On October 1, 2023 Estrella entered into an office

lease contract with Eureka, a related party (“Lease 2”) for nine months without any renewal option.

The Company’s office lease was classified

as an operating lease.

The Company’s lease agreement does not contain any material residual value guarantees or material restrictive

The Company elected not to apply the ROU and

lease liability recognition requirements to above mentioned short-term lease in accordance with ASC 842-20-25-2.

As a result of the lease

amendment, the Company then reduced the corresponding ROU and lease liability to $ 0 from Lease 1 and continued to recognize the lease

monthly payments in profit or loss on a straight–line basis over the remaining lease term period.

Rent expense for the years ended June 30, 2024

and 2023 was $ 20,000 and $ 22,000 , respectively.

ESTRELLA IMMUNOPHARMA, INC

Notes to Consolidated Financial Statements

On October 1, 2023 Estrella

entered into an office lease contract with Eureka, a related party (“Lease 1”) for nine months without any renewal option.

On July 1, 2024, the Company

entered into an office sublease agreement with Eureka (“Lease 2”) for six months without any renewal option.

On Ja nuary 1,

2025, the Company entered into an office sublease agreement with Eureka (“Lease 3”) for six months without any renewal

July 1, 2025, the Company entered into an office sublease agreement with Eureka (“Lease 4”) for six months without

any renewal option.

Company’s office lease was classified as an operating lease.

The Company’s lease agreement does not contain any material

residual value guarantees or material restrictive covenants.

Company elected not to apply the ROU and lease liability recognition requirements to above mentioned short-term lease in accordance with

ASC 842-20-25-2 and continued to recognize the lease monthly payments in profit or loss on a straight-line basis over the remaining

lease term period.

expense for the year ended December 31, 2025 and during the six-month transition period ended December 31, 2024 was $ 24,000 and

$ 12,000 , respectively.

11 — Segment Information

The Company conducts its business

as a single operating and reportable segment based on its organizational and management structure and the manner in which the Chief

Operating Decision Maker (“CODM”) reviews financial information to allocate resources and access performance, consistent

with the Company’s segment reporting policy described in Note 2.

The accounting policies of the Company’s single operating

segment are the same as those described in Note 2.

The key measure of segment profitability used by the CODM to allocate resources

and assess performance is net income (loss), as reported on the consolidated statements of operations.

The following table presents

the significant expense categories of the Company’s single operating segment for the periods presented.

December 31, 2024

Operating expenses:

Clinical trial related service fee, a related party (see Note 5)

Consulting fee

Stock-based compensation

Salary expense

Professional fee

Insurance expense

Other general and administrative fee

Loss before income tax

Income tax expense

Note 12 — Transition Period Comparative

The following table shows

financial information for the twelve months ended December 31, 2025 and the comparative period ended December 31, 2024 (the

“Comparative Period”).

The Comparative Period information is derived from the Company’s unaudited, consolidated and

combined financial statements.

Consolidated Statements of Operations

Twelve Months Ended

Operating expenses

Research and development

General and administrative

Total operating expenses

Loss from Operations

( 13,062,674 )

( 8,845,941 )

Loss before income taxes

( 13,062,674 )

( 8,845,941 )

Income taxes provision

$ ( 13,063,512 )

$ ( 8,847,629 )

Net loss applicable to common stock per share, basic and diluted

Weighted average common stock outstanding, basic and diluted

Consolidated Statements of Cash Flows:

Twelve Months Ended December 31,

Cash Flows from Operating Activities:

$ ( 13,063,512 )

$ ( 8,847,629 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation

Change in fair value of derivative liabilities

Changes in operating assets and liabilities:

Prepaid expenses and other receivable

Prepaid expenses - related party

( 1,500,000 )

Accounts payable - related party

Other payables and accrued liabilities

Accrued liability - related party

Franchise tax payable

Income tax payables

Net cash used in operating activities

( 1,785,679 )

( 7,639,673 )

Cash Flows from Financing Activities:

Payments of transactions cost

Proceeds from issuance of common stock through stock purchase agreement

Proceeds from issuance of common stock for PIPE investment

Purchase of treasury stock

Net cash provided by (used in) financing activities

Net Change in Cash

( 8,129,099 )

Cash at beginning of the period

Cash at end of the period

Supplemental Cash Flow Information

Cash paid for income tax

Cash paid for interest

Supplemental Disclosure of Non-cash Financing Activities

Recognition of derivative liabilities upon closing of the PIPE investment

Note 13 — Subsequent Events

The Company evaluated subsequent events and transactions

that occurred after the balance sheet date through the issuance date.

Except as described below, there were no material subsequent events

that required recognition or disclosure in the financial statements.

Stock Repurchase

From July 01, 2024 to September 20, 2024, the

Company repurchased 98,180 shares of its Common Stock in open market transactions for $ 137,078 at a weighted average price per share of

Registered Direct Offering and Private Placement

On January 5, 2026, the Company entered into a Securities Purchase

Agreement with a healthcare-focused institutional investor.

On January 6, 2026, the Company consummated a Registered Direct Offering and

a concurrent Private Placement, resulting in gross proceeds of approximately $ 8.0 million, before deducting placement agent fees and other

offering expenses.

The Company issued 4,063,290

shares of Common Stock and Pre-Funded Warrants to purchase 1,000,000 shares of Common Stock at an exercise price of $ 0.00001 per warrant

These securities were offered pursuant to a shelf registration statement on Form S-3 (File No.

The Company issued PIPE Common

Warrants exercisable for up to 7,594,935 shares of Common Stock at an exercise price of $ 1.39 per warrant share.

These warrants expire

on the fifth anniversary of the issuance date.

On January 16, 2026, the Company filed a Form S-1 relating to the offer

and resale by certain selling stockholders of up to 9,236,141 shares of Common Stock.

This registration statement includes shares issued

in private placements in September 2025, shares issuable under contingent “true-up” provisions, and the 7,594,935 shares of

Common Stock issuable upon exercise of the PIPE Common Warrants issued on January 6, 2026.

The registration statement became effective

on January 23, 2026.

Nasdaq Compliance

On January 7, 2026, we received

a notice from Nasdaq that we are not in compliance with Nasdaq Listing Rule 5620(a) because we have not yet held an annual meeting of

shareholders within twelve months of the end of the transition period ended December 31, 2024.

On February 27, 2026, Nasdaq notified us that it has granted an extension until June 29, 2026, to regain compliance

by holding an annual meeting of shareholders.

As outlined in our plan of compliance submitted to Nasdaq on February 24, 2026, we intend

to satisfy this requirement by holding a joint 2025/2026 annual meeting.

Office Sublease Agreement

On July 1, 2024, the Company entered into an

office sublease agreement (“Sublease Agreement”) with Eureka, a related party.

Pursuant to the Sublease Agreement, the sublease

commenced on July 1, 2024 and expires on December 31, 2024 with $ 2,000 sublease fee per month.

Consulting Agreement with One Nine

On July 3, 2024, the Company entered into a consulting

agreement (“Consulting Agreement”) with One Nine Limited (the “Consultant”) with the Consultant to provide financing

advice and service in connection with the sale of equity interests in the Company of no less than $ 30,000,000 on terms acceptable to

Development Milestones and Payments under

the Licensing Agreement and Statement of Work #001

With the dosing of the first patient in July

2024 in the STARLIGHT-1 clinical trial, the development milestone pursuant to Section 8.2.1 (First Patient Dosed in the First Clinical

Trial of a Licensed Product) in the Licensing Agreement with Eureka was met.

As a result, Estrella made a payment of $ 50,000 to Eureka

for this milestone.

As of September 2024, two patients have been dosed in the STARLIGHT-1 clinical trial.

Appointment of Hong Zhang

In August 2024, Ms.

Hong Zhang was appointed as

a director and chairperson by the Board of Directors.

On January 1, 2026, the Company entered into an

office sublease agreement (“Lease 5”) with Eureka, a related party.

Pursuant to this agreement, the sublease commenced on

January 1, 2026 and expires on June 30, 2026 with $ 2,000 sublease fee per month.

Milestones under Statement of Work #001

In January 2026, one additional

patient was dosed in the STARLIGHT-1 clinical trial.

The Company accrued an additional $ 1.375 million for this milestone under this SOW.

Pursuant to the requirements

2 unchanged sentences

ESTRELLA IMMUNOPHARMA, INC.

September 26, 2024

March 17, 2026

/s/ Cheng Liu

5 unchanged sentences

Chief Executive Officer and Director

September 26, 2024

March 17, 2026

(Principal Executive Officer)

Chief Financial Officer

September 26, 2024

March 17, 2026

(Principal Financial and Accounting Officer)

1 unchanged sentence

Chairperson and Director

September 26, 2024

March 17, 2026

/s/ Marsha Roberts

September 26, 2024

March 17, 2026

Marsha Roberts

September 26, 2024

March 17, 2026

/s/ Janelle Wu

September 26, 2024

March 17, 2026

/s/ Dengyao Jia

March 17, 2026

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 9A. Controls and Procedures