What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-12 · 145 added, 189 removed, 265 unchanged (56% of the section changed)

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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Unless the context otherwise

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

to Estrella Immunopharma, Inc.

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

to Estrella Biopharma, Inc.

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

(“UPTD”) on September 29, 2023.

The following discussion and analysis of our results of operations and financial condition

should be read together with our unaudited condensed consolidated financial statements and the notes thereto, which are included elsewhere

in this Report and our Transition Report on Form 10-KT for the six months ended December 31, 2024 filed with the SEC on March 25, 2025.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and

uncertainties.

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America (“U.S.

The Company is a clinical-stage

biopharmaceutical company developing T-cell therapies with the capacity to address treatment challenges for patients with blood cancers

and solid tumors.

We believe T-cell therapy continues to represent a revolutionary step towards providing a potential solution for many

forms of cancer, including cancers poorly addressed by current approaches.

On June 28, 2022, pursuant

to the Contribution Agreement, Eureka contributed certain assets related to T-cell therapies targeting CD19 and/or CD22 to Estrella in

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

Eureka determined that the Separation

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

capital markets, allow for greater focus on the product candidates contributed to Estrella, and result in a dedicated management team.

As part of the Separation,

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

with Eureka, and Eureka contributed and assigned the Collaboration Agreement between Eureka and Imugene to Estrella.

The License Agreement

grants Estrella an exclusive license to develop CD19 and CD22-targeted T-cell therapies using Eureka’s ARTEMIS ® platform.

Under the Services Agreement, Eureka has agreed to perform certain services for us in connection with the development of our product candidates,

EB103 and EB104, and researching the use of EB103 in conjunction with CF33-CD19t.

The Collaboration Agreement establishes our collaboration

with Imugene related to the development of solid tumor treatments using CF33-CD19t in conjunction with EB103.

On March 2, 2023, the FDA

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

On March 4, 2024, Estrella and Eureka entered into Statement of Work

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 $33.0 million for achievement of all milestones.

clinical trial has been initiated and six patients have been dosed as of June 30, 2025, and we have accrued approximately $8.8 million

in accrued liabilities – related party, for the corresponding dosing milestones.

As of June 30, 2025, Estrella has paid $3.5 million

to Eureka for covering the fees associated with the study initiation milestones that have been achieved.

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 $33.0 million

for achievement of all milestones.

The clinical trial has been initiated and nine patients have been dosed as of September 30, 2025, and

we have accrued approximately $12.9 million in accrued liabilities – related party, for the corresponding dosing milestones.

of September 30, 2025, Estrella has paid $3.5 million to Eureka for covering the fees associated with the study initiation milestones

that have been achieved.

To date, Estrella has funded

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

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

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

$20.1 million raised from completion of the Business Combination on September 29, 2023, and net proceed of approximately $2.3 million

raised from various stock purchase agreements entered from May 2025 to September 2025.

We have a limited operating history.

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for sale and have not generated any revenue from product sales.

As of June 30, 2025, we had

an accumulated deficit of approximately $31.6 million.

We have remitted payment of approximately $11.2 million to Eureka, for the upfront

payment incurred under the License Agreement and for services provided by Eureka under the Services Agreement on October 10, 2023.

addition, in March 2024, we have paid $3.5 million to Eureka for covering the fees associated with the milestones achieved under SOW#001.

As of September 30, 2025,

we had an accumulated deficit of approximately $36.4 million.

We have remitted payment of approximately $11.2 million to Eureka, for the

upfront payment incurred under the License Agreement and for services provided by Eureka under the Services Agreement on October 10, 2023.

In addition, in March 2024, we have paid $3.5 million to Eureka for covering the fees associated with the milestones achieved under SOW#001.

In June 2024, we made a deposit of $1.5 million towards patient treatment expenses, which will be applied to the final invoice, with the

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Company established a wholly owned subsidiary in Hong Kong.

On April 30, 2025, the Company

received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC therein stating that for the 30 consecutive

business day period between March 14, 2025 through April 28, 2025, the common stock of the Company had not maintained a minimum closing

bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the

“Bid Price Rule”).

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar

days, or until October 27, 2025 (the “Compliance Period”), to regain compliance with the Bid Price Rule.

Results of Operations

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Results of Operations for the three months

ended June 30, 2025 and 2024 (unaudited)

ended September 30, 2025 and 2024 (unaudited)

There are two major expenses

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Research and development expenses

consist primarily of costs related to conducting work related to IND-enabling, IND-filing the preparation and conduct of clinical trial,

which were mainly performed by Eureka.

For the three months ended June 30, 2025 and 2024, we incurred approximately $4.7 million and $3.5

million of research and development expenses, respectively.

All research and development expense incurred for the periods presented above

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

The increase in research and development

expenses was mainly due to Estrella incurring higher service fees during the clinical phase and the completion of three patient dosings,

and one site activation under the SOW for the three months ended June 30, 2025 compared to the same period in 2024.

consist primarily of costs related to conducting work related to the conduct of the STARLIGHT-1 clinical trial, which was mainly performed

For the three months ended September 30, 2025 and 2024, we incurred approximately $4.2 million and $2.8 million of research

and development expenses, respectively.

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

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

The increase in research and development expenses

was mainly due to Estrella incurring higher service fees during the clinical phase and the completion of three patient dosings, under

the SOW for the three months ended September 30, 2025 compared to two patient dosed during the same period in 2024.

Our breakdown of research

and development expenses by categories for the three months ended June 30, 2025 and 2024 are summarized below:

and development expenses by categories for the three months ended September 30, 2025 and 2024 are summarized below:

September 30,

Consulting and laboratory related fee

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For the three months ended

June 30, 2025, and 2024, we incurred approximately $0.9 million and $0.4 million in general and administrative expenses, respectively.

The increase was mainly due to professional fees and stock-based compensation expenses during the three months ended June 30, 2025 for

stock options granted in October 2024, under the 2023 Omnibus Incentive Plan (the “2023 Plan”).

September 30, 2025, and 2024, we incurred approximately $649,000 and $551,000 in general and administrative expenses, respectively.

increase was mainly due to increase of stock-based compensation expenses during the three months ended September 30, 2025 for stock options

granted in October 2024, under the 2023 Omnibus Incentive Plan (the “2023 Plan”).

We incurred a net loss of

approximately $5.5 million and $4.0 million for the three months ended June 30, 2025 and 2024, respectively.

We expect our research and

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

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

trials, scale up our clinical and regulatory capabilities, adapt our regulatory compliance efforts to incorporate requirements applicable

to marketed products, maintain, expand, and protect our intellectual property portfolio, add operational, financial, and management information

systems and personnel, including personnel to support our product development and planned future commercialization efforts, and incur

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

Results of Operations for the six months ended

June 30, 2025 and 2024 (unaudited)

approximately $4.8 million and $3.4 million for the three months ended September 30, 2025 and 2024, respectively.

We expect our research

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

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

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

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

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

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

Results of Operations for the nine months ended

September 30, 2025 and 2024 (unaudited)

There are two major expenses

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Research and Development Expenses

Research and development expenses consist primarily of costs related

to conducting work related to IND-enabling, IND-filing the preparation and conduct of clinical trial, which were mainly performed by Eureka.

For the six months ended June 30, 2025 and 2024, we incurred approximately $6.1 million and $3.6 million of research and development expenses,

respectively.

All research and development expense incurred for the periods presented above were dedicated to the development of ARTEMIS ®

T-cell therapies targeting CD19 and CD22.

The increase in research and development expenses was mainly due to Estrella incurring higher

service fees during the clinical phase and the completion of four patient dosings, and one site activation under the SOW for the six months

ended June 30, 2025 compared to the same period in 2024.

Research and development expenses

consist primarily of costs related to conducting work related to the conduct of the STARLIGHT-1 clinical trial, which was mainly performed

For the nine months ended September 30, 2025 and 2024, we incurred approximately $10.2 million and $6.4 million of research

and development expenses, respectively.

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

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

The increase in research and development expenses

was mainly due to Estrella incurring higher service fees during the clinical phase and the completion of seven patient dosings, and one

site activation under the SOW for the nine months ended September 30, 2025 compared to two patients dosed during the same period in 2024.

In addition, for the nine months ended September 30, 2024, we have incurred $3.5 million R&D expense from Eureka for achieving the

milestones related to SOW.

Our breakdown of research

and development expenses by categories for the six months ended June 30, 2025 and 2024 are summarized below:

and development expenses by categories for the nine months ended September 30, 2025 and 2024 are summarized below:

September 30,

Consulting and laboratory related fee

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General and administrative expense

For the six months ended June

30, 2025, and 2024, we incurred approximately $1.6 million and $0.9 million in general and administrative expenses, respectively.

increase was mainly due to professional fees and stock-based compensation expenses during the six months ended June 30, 2025 for stock

options granted in October 2024, under the 2023 Omnibus Incentive Plan (the “2023 Plan”).

For the nine months ended

September 30, 2025, and 2024, we incurred approximately $2.2 million and $1.4 million in general and administrative expenses, respectively.

The increase was mainly due to professional fees and stock-based compensation expenses during the nine months ended September 30, 2025

for stock options granted in October 2024, under the 2023 Omnibus Incentive Plan (the “2023 Plan”).

We incurred a net loss of

approximately $7.6 million and $4.4 million for the six months ended June 30, 2025 and 2024, respectively.

We expect our research and

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

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

trials, scale up our clinical and regulatory capabilities, adapt our regulatory compliance efforts to incorporate requirements applicable

to marketed products, maintain, expand, and protect our intellectual property portfolio, add operational, financial, and management information

systems and personnel, including personnel to support our product development and planned future commercialization efforts, and incur

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

approximately $12.5 million and $7.8 million for the nine months ended September 30, 2025 and 2024, respectively.

We expect our research

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

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

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

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

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

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

Liquidity and Capital Resources

As of June 30, 2025, we had

cash of approximately $1.3 million and working capital deficit of approximately $7.6 million.

Our ability to fund our operations is dependent

on the amount of cash on hand, our ability to raise debt or additional equity financing, and ultimately our ability to generate sufficient

We have expended substantial funds on research and development, have experienced losses and negative cash flows from operations

since our inception, and expect losses and negative cash flows from operations to continue until such time that our product candidates

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

As of September 30, 2025,

we had cash of approximately $1.6 million and working capital deficit of approximately $11.3 million.

Our ability to fund our operations

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

sufficient revenue.

We have expended substantial funds on research and development, have experienced losses and negative cash flows from

operations since our inception, and expect losses and negative cash flows from operations to continue until such time that our product

candidates receive regulatory approval and we generate sufficient revenue and positive cash flow from operations, if ever.

To date, we have not generated

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provided that Eureka shall make commercially reasonable efforts to cancel or reduce any such amounts.

As of June 30, 2025, the Company

had expensed approximately $12.3 million to Eureka for covering the fees associated with the milestones achieved.

In addition, we deposited

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

once all fees are settled.

As of September 30, 2025,

the Company had expensed approximately $16.4 million to Eureka for covering the fees associated with the milestones achieved.

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

refunded once all fees are settled.

Our future operations are

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

In addition, even though we may obtain additional funds through the

exercise of outstanding tradeable warrants, there is no assurance that any tradeable warrant holders will exercise their warrants, especially

any warrants that are currently out of the money.

As of August 6, 2025, the closing price of our common stock was $0.84 per share,

which is significantly lower than the exercise price of the tradeable warrants of $11.50 per share.

Therefore, it is unlikely that the

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

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

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

will ever be exercised.

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

In addition, even though

we may obtain additional funds through the exercise of outstanding tradeable warrants, there is no assurance that any tradeable

warrant holders will exercise their warrants, especially any warrants that are currently out of the money.

As of November 5, 2025,

the closing price of our common stock was $2.56 per share, which is significantly lower than the exercise price of the tradeable

warrants of $11.50 per share.

Therefore, it is unlikely that the tradeable warrant holders will exercise their warrants unless the

market price of our Common Stock increases substantially above the exercise price.

The cash proceeds associated with the exercise of

the Warrants are dependent on the stock price and the number of Warrants being exercised.

We cannot predict when or if any Warrants

will be exercised, and it is possible that none or only a small number of Warrants will ever be exercised.

Therefore, we may not be

able to rely on the warrant exercise as a source of liquidity or capital resources.

Furthermore, although the

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On December 28, 2023, the Company’s registration statement on Form S-1 related to the Equity Line Shares was declared

As of June 30, 2025, 70,000 Equity Line Shares have been issued to White Lion under the Equity Line Agreement for an aggregate

As of September 30, 2025, 70,000 Equity Line Shares have been issued to White Lion under the Equity Line Agreement for an aggregate

consideration of $79,491.

On May 30, 2025, we entered

into securities purchase agreements (the “Securities Purchase Agreement”) with certain investors (the “Purchasers”),

pursuant to which we agreed to issue and sell in private placement offering (the “Private Placement”) an aggregate total of

2,233,334 shares of common stock of the Company at a purchase price of $1.50 per share for gross proceeds of approximately $3.35 million,

before the deduction of offering expenses.

As of June 30, 2025, we had received gross proceeds of approximately $1.35 million.

From May 2025 to September

2025, we entered into securities purchase agreements (the “Securities Purchase Agreement”) with certain investors (the “Purchasers”).

As of September 30, 2025, we have received gross proceeds of approximately $2.4 million.

We plan to raise additional

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Net cash used in operating

activities was approximately $0.9 million for the six months ended June 30, 2025, and was primarily attributable to (a) a net loss of

approximately $7.6 million, and (b) approximately $91,000 decrease in other payables and accrued liabilities primarily due to the settlement

of various previously accrued expenses, offset by (i) approximately $6.0 million increase in accrued liability – related party as

additional service charges were incurred from Eureka following the completion of four patients dosing and a site activation milestone,

(ii) approximately $0.3 million increase in non-cash item of stock-based Compensation under the 2023 Plan, and (iii) approximately $0.6

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

the six months ended June 30, 2025.

activities was approximately $1.6 million for the nine months ended September 30, 2025, and was primarily attributable to (a) a net loss

of approximately $12.5 million, and (b) approximately $0.1 million decrease in other payables and accrued liabilities primarily due to

the settlement of various previously accrued expenses, offset by (i) approximately $10.1 million increase in accrued liability –

related party as additional service charges were incurred from Eureka following the completion of seven patients dosing and an additional

site activation milestone, (ii) approximately $0.5 million increase in non-cash item of stock-based Compensation under the 2023 Plan,

and approximately $67,000 loss from change in fair value of derivative liabilities and (iii) approximately $0.3 million decrease in prepaid

expenses and other receivable primarily due to the utilization of previously recorded prepaid expenses during the nine months ended September

Net cash used in operating

activities was approximately $4.5 million for the six months ended June 30, 2024, and was primarily attributable to (a) a net loss of

approximately $4.4 million, and (b) approximately $0.1 million decrease in other payables and accrued liabilities as we paid off accrued

professional fee over the previous period, offset by approximately $0.1 million decrease in prepaid expenses and other receivable primarily

due to the utilization of previously recorded prepaid expenses during the six months ended June 30, 2024

activities was approximately $6.7 million for the nine months ended September 30, 2024, and was primarily attributable to (a) a net loss

of approximately $7.8 million, (b) approximately $0.1 million decrease in other payables and accrued liabilities as we paid off accrued

professional fee over the previous period, (c) approximately $1.5 million prepaid expense to Eureka for patient treatment expenses, which

will be applied to the final invoice, with any unused portion refunded once all fees are settled, offset by approximately $2.7 million

increase in accrued liability – related party as additional service charges were incurred from Eureka.

Financing activities

Net cash provided by financing

activities were approximately $1.3 million for the six months ended June 30, 2025, and was primarily attributable to approximately $1.4

million gross proceed received from Private Placement, payment of $40,000 transaction cost related to Private Placement, and approximately

$29,000 payment in stock repurchase.

activities were approximately $2.3 million for the nine months ended September 30, 2025, and was primarily attributable to approximately

$2.4 million gross proceed received from Private Placement, payment of approximately $53,000 transaction cost related to Private Placement,

and approximately $29,000 payment in stock repurchase.

Net cash used in financing

activities were approximately $0.4 million for the six months ended June 30, 2024, and was primarily attributable to stock repurchase.

activities were approximately $0.5 million for the nine months ended September 30, 2024, and was primarily attributable to stock repurchase.

Off-Balance Sheet Arrangements

As of June 30, 2025 and December

31, 2024, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of

As of September 30, 2025 and

December 31, 2024, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations

Commitments & Contingencies

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

As of June 30, 2025, we have

fully paid the $1.0 million license fee to Eureka.

As of June 30, 2025, two development

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

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

The $50,000 milestone payment

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

As of September 30, 2025,

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

As of September 30, 2025,

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

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

The $50,000 milestone

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

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

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sale and have not generated any revenue from product sales.

Collaboration Agreement

Pursuant to the Collaboration

Agreement, we and Imugene will be separately responsible for all qualified full-time person (“FTE”) and other internal costs

incurred in the performance of its research, as well as the full cost of procurement of leukopaks and purification of T-cells from two

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

Any joint cost will be shared equally.

we or Imugene incurs out-of-pocket costs in excess of the amount budgeted for such costs in the applicable research budget plus allowable

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

unless the joint steering committee approves such excess costs (either before or after such costs have been incurred).

The research plan

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

Services Agreement

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

For the three months ended June 30, 2025, there

was $0 in pass-through cost for services provided pursuant to the Services Agreement.

For the nine months ended September 30, 2025,

there was $0 in pass-through cost for services provided pursuant to the Services Agreement.

Statement of Work

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

As of June 30,

2025, we had paid $3.5 million to Eureka for covering the fees associated with milestones achieved, and deposited $1.5 million for patient

treatment expenses, which will be applied to the final invoice, with any unused portion refunded once all fees are settled.

Six patients’

dosing and a site activation milestones have been completed as of June 30, 2025, and the Company has accrued approximately $8.8 million

in accrued liabilities - related party, for the corresponding milestones as of June 30, 2025.

As of September

30, 2025, we had paid $3.5 million to Eureka for covering the fees associated with milestones achieved, and deposited $1.5 million for

patient treatment expenses, which will be applied to the final invoice, with any unused portion refunded once all fees are settled.

Nine patients’

dosing and a second site activation milestones have been completed as of September 30, 2025, and the Company has accrued approximately

$12.9 million in accrued liabilities - related party, for the corresponding milestones as of September 30, 2025.

Equity Financing Commitment

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

As of June 30, 2025, 70,000 Equity Line Shares

have been issued to White Lion pursuant to the Common Stock Purchase Agreement for an aggregate consideration of $79,491.

As of September 30, 2025, 70,000 Equity Line

Shares have been issued to White Lion pursuant to the Common Stock Purchase Agreement for an aggregate consideration of $79,491.

Critical Accounting Policies and Estimates

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Derivative Liabilities

We evaluate all of its financial instruments,

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

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

We evaluate all of its financial

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

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

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

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

As of June 30, 2025, the fair value of the derivative liability related

to the True-Up Shares was independently valued at $187,941 using a Monte Carlo Simulation model.

Key inputs included a one-year volatility

of 110%, a risk-free rate of 4.0%, and a spot price of $0.96 per share.

The model captured the path-dependent payoff structure of the

True-Up obligation and incorporated the terms of the contingent settlement feature, including the $0.99 True-Up Price and the Contractual

Floor Price of $0.20 per share.

As of September 30, 2025,

the fair value of the derivative liability related to the True-Up Shares was valued at $385,355 using a Monte Carlo Simulation model.

Key inputs included volatility of 87% to 90%, a risk-free rate of 3.7% to 3.8%, and a spot price of $1.15 per share.

The model captured

the path-dependent payoff structure of the True-Up obligation and incorporated the terms of the contingent settlement feature, including

the $0.99 to $1.08 True-Up Price and the Contractual Floor Price of $0.20 per share.

Stock-Based Compensation

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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-Q

Item 2. Management’s Discussion and Analysis