Financial Performance - The company has an accumulated deficit of approximately $15.5 million as of March 31, 2024[177]. - The net loss for the three months ended March 31, 2024, was approximately $0.5 million, down from $2.7 million for the same period in 2023[188]. - The net loss for the nine months ended March 31, 2024, was approximately $3.4 million, compared to $8.4 million for the same period in 2023[193]. - Net cash used in operating activities was approximately $15.8 million for the nine months ended March 31, 2024, primarily due to a net loss of $3.4 million and significant payments to Eureka[207]. Research and Development Expenses - Research and development expenses for the three months ended March 31, 2024, were approximately $25,000, a significant decrease from $2.6 million for the same period in 2023[185]. - For the nine months ended March 31, 2024, research and development expenses were approximately $0.6 million, a decrease from $7.9 million for the same period in 2023[190]. - The company anticipates significant increases in expenses related to ongoing research and development and public company operations following the Business Combination[197]. General and Administrative Expenses - General and administrative expenses increased to approximately $0.4 million for the three months ended March 31, 2024, compared to $0.1 million for the same period in 2023[187]. - General and administrative expenses for the nine months ended March 31, 2024, were approximately $2.8 million, up from $0.5 million for the same period in 2023[192]. Cash and Financing - As of March 31, 2024, the company had cash of approximately $4.7 million[194]. - Net cash provided by financing activities was approximately $13.1 million for the nine months ended March 31, 2024, driven by $20 million in net proceeds from the Business Combination[212]. - Estrella received net proceeds of approximately $20.1 million from the Business Combination after deducting $5.07 million for stock redemptions and transaction expenses[198]. - The company plans to raise additional capital in the future to support research and development, but market conditions may affect the availability of financing[206]. Stock and Equity - The Common Stock Purchase Agreement with White Lion allows the company to sell up to $50 million in shares, but majority stockholder approval is required for issuances exceeding 20% of outstanding shares[205][221]. - The company has issued 312,200 Founder Shares and 1,107,500 Private Shares, which are entitled to registration rights under a registration rights agreement[223]. - A registration statement was filed with the SEC on October 10, 2023, and was declared effective on December 28, 2023, covering various shares including Founder Shares and Equity Line Shares[223]. Licensing and Payments - Estrella agreed to pay Eureka total fees of $33 million for clinical trial services related to the EB103 product candidate, with $3.5 million prepaid for initial milestones[200][220]. - The company has fully paid the license fee to Eureka, with a milestone payment of $50,000 related to the submission of EB103 to the FDA made on October 10, 2023[216]. Market Conditions and Revenue - The company has not generated any revenue to date and does not expect to do so for at least the next few years[196]. - As of May 13, 2024, the closing price of the Common Stock was $1.07 per share, significantly lower than the $11.50 exercise price of the Warrants, making it unlikely for warrant holders to exercise[204]. Accounting and Reporting - The company prepares its financial statements in accordance with U.S. GAAP, requiring estimates and judgments that affect reported amounts of assets, liabilities, revenues, and expenses[224]. - Stock-based compensation costs are recognized over the requisite service period based on fair value measurements using the Black-Scholes-Merton option-pricing model[225]. - The fair value of stock options is amortized as compensation cost on a straight-line basis over the vesting period, which is generally the requisite service period[225]. - The company accounts for equity instruments issued to non-employees using the fair value of services received or the fair value of the equity instrument, whichever is more reliable[227]. - Compensation expense for awards with graded vesting is recognized over the requisite service period applicable to each individual award[228]. - The company is classified as a smaller reporting company and is not required to provide additional market risk disclosures[229].
TRADEUP ACQUISIT(UPTD) - 2024 Q1 - Quarterly Report