PowerUp Acquisition (PWUP) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides the unaudited interim financial information, including statements, notes, and management's analysis of financial condition and operations Item 1. Interim Financial Statements This section presents the unaudited condensed consolidated financial statements for Aspire Biopharma Holdings, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in shareholders' deficit, and cash flows, along with detailed notes explaining the company's organization, liquidity, significant accounting policies, and recent financial transactions Condensed Consolidated Balance Sheets This table presents the unaudited consolidated balance sheets, detailing assets, liabilities, and shareholders' deficit as of June 30, 2025, and December 31, 2024 | ASSETS/LIABILITIES | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------- | :------------ | :---------------- | | Cash | $206,233 | $3,633 | | Total current assets | $989,422 | $147,989 | | Total assets | $989,422 | $147,989 | | Total current liabilities | $10,556,922 | $1,688,077 | | Total liabilities | $10,606,207 | $1,688,077 | | Total shareholders' deficit | $(9,616,785) | $(1,540,088) | Condensed Consolidated Statements of Operations This section provides the unaudited consolidated statements of operations, detailing revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 Operating Metrics (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :------------------------- | :------------------------------- | :------------------------------- | | General and administrative | $395,692 | $86,423 | | Research and development | $352,887 | $10,500 | | Sales and Marketing | $51,311 | $- | | Total operating expenses | $(799,890) | $(96,923) | | Interest expense | $(527,893) | $- | | Change in fair value of derivative liability | $(289,401) | $- | | Loss on extinguishment of debt | $(364,109) | $- | | Net loss | $(1,981,293) | $(96,923) | | Basic and diluted net (loss) income per share | $(0.04) | $(0.00) | Operating Metrics (Six Months Ended June 30) | Metric | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $15,469,240 | $219,227 | | Research and development | $615,980 | $21,000 | | Sales and Marketing | $271,150 | $87,666 | | Total operating expenses | $(16,356,370) | $(327,893) | | Interest expense | $(817,824) | $- | | Change in fair value of derivative liability | $(384,318) | $- | | Loss on extinguishment of debt | $(364,109) | $- | | Net loss | $(17,922,621) | $(327,893) | | Basic and diluted net (loss) income per share | $(0.41) | $(0.01) | Condensed Consolidated Statements of Changes in Shareholders' Deficit This section outlines changes in shareholders' deficit, including common stock, additional paid-in capital, and accumulated deficit for the periods ended June 30, 2025 and 2024 | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Class A Common Stock Shares | 49,525,970 | 27,601,767 | | Class A Common Stock Amount ($) | $4,953 | $2,760 | | Additional Paid-in Capital ($) | $11,078,116 | $1,234,385 | | Accumulated Deficit ($) | $(20,699,854) | $(2,777,233) | | Total Shareholders' Deficit ($) | $(9,616,785) | $(1,540,088) | - The accumulated deficit significantly increased from $(2,777,233) at January 1, 2025, to $(20,699,854) at June 30, 2025, primarily due to a net loss of $(15,941,328) for the period ending March 31, 2025, and an additional net loss of $(1,981,293) for the subsequent three months[15] - Stock-based compensation of $14,131,250 was recognized for the six months ended June 30, 2025, contributing to the increase in additional paid-in capital[15] Condensed Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,891,838) | $(249,215) | | Net cash provided by financing activities | $3,094,438 | $257,645 | | Net change in cash | $202,600 | $8,430 | | Cash, beginning of the period | $3,633 | $11,174 | | Cash, end of the period | $206,233 | $19,604 | - Noncash activities for the six months ended June 30, 2025, included $14,448,500 for the issuance of Class A ordinary shares for services[19] Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, covering significant accounting policies and financial transactions NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS This note describes the Company's incorporation, business focus on novel sublingual delivery mechanisms, and recent corporate transactions - Aspire Biopharma Holdings, Inc. was incorporated in Delaware in February 2025 and is an early-stage biopharmaceutical company focused on developing and marketing novel sublingual delivery mechanisms for drugs and supplements[22] - The Company consummated a Business Combination on February 17, 2025, with PowerUp Acquisition Corp., which subsequently changed its name to Aspire Biopharma Holdings, Inc[24] - A wholly-owned subsidiary, Buzz Bomb Caffeine Co. LC, was formed on May 5, 2025[24] NOTE 2. LIQUIDITY AND GOING CONCERN This note addresses the Company's financial position, including accumulated deficit and working capital, and management's assessment of its ability to continue as a going concern - As of June 30, 2025, the Company had an accumulated deficit of $20,699,854, a working capital deficit of $9,567,500, and cash of $206,233[25] - The Company received approximately $265,827 in proceeds from the Business Combination and an additional $3,000,000 post-combination, but requires additional financing for future capital requirements[26] - Management has determined that the Company's liquidity condition raises substantial doubt about its ability to continue as a going concern through the next twelve months[27] NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and methods used in preparing the financial statements, including GAAP compliance and critical estimates - The financial statements are prepared in accordance with U.S. GAAP for interim financial information, condensing certain disclosures as permitted by SEC rules[28] - The Company is an emerging growth company and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[31] - Management makes significant estimates and assumptions, particularly for the fair value of subscription agreements and convertible notes, which could differ from actual results[34] - The Company operates as a single reportable segment, with the Chief Executive Officer (CODM) reviewing overall assets, operating results, and financial metrics[35] NOTE 4. RECAPITALIZATION This note details the Business Combination with PowerUp Acquisition Corp., its accounting treatment as a reverse recapitalization, and the resulting share structure - On February 17, 2025, PowerUp Acquisition Corp. completed a Business Combination with Aspire Biopharma, Inc., resulting in PowerUp changing its name to Aspire Biopharma Holdings, Inc[24][62] - The Business Combination was accounted for as a reverse recapitalization, with Aspire Biopharma, Inc. treated as the accounting acquirer, and PowerUp as the acquired company for financial reporting purposes[65][66] | Item | Amount ($) | | :------------------------------------ | :----------- | | Gross proceeds from Business Combination | $811,370 | | Less: transaction costs, paid | $(545,543) | | Net proceeds from the Business Combination | $265,827 | | Reverse recapitalization, net | $(4,602,576) | - Immediately after the Business Combination, 46,007,497 shares of Class A and B Common Stock were outstanding[69] NOTE 5. RELATED PARTY TRANSACTIONS This note discloses transactions with related parties, including assumed liabilities, subscription agreement loans, and promissory notes - The Company assumed $499,214 in liabilities related to working capital loans from the New Sponsor and affiliates at the close of the Business Combination[77] - At June 30, 2025, $1,500,000 from First and Second Subscription Agreements is included in the subscription agreement loan balance[82] - A Promissory Note Fee of $1,000,000 to the Sponsor for taking a significant risk on behalf of the Company is outstanding and payable as of June 30, 2025[84] - Total notes payable to related parties, inclusive of unamortized debt discount, amounted to $1,331,357 at June 30, 2025, up from $1,266,832 at December 31, 2024[85] NOTE 6. NOTES PAYABLE This note provides details on the Company's non-convertible notes payable, including outstanding balances, interest expense, and maturity date extensions - Aspire Biopharma, Inc. issued several non-convertible 20% OID notes payable to related parties for working capital, with total outstanding balances of $1,331,356 at June 30, 2025[86][93] - For the three and six months ended June 30, 2025, total amortized debt discount included in interest expense was $68,733 and $139,052, respectively, for the September 27, 2024 notes[86] - Some notes' maturity dates were extended to September 10, 2025, pursuant to a Settlement Agreement[86][87] NOTE 7. SUBSCRIPTION AGREEMENT LOANS This note describes amendments to subscription agreements, the recording of a loss on extinguishment of debt, and the fair value of outstanding subscription agreement loans - The Blackstone Subscription Agreement was amended in April 2025 to extend the maturity date to August 15, 2025, and included a $60,000 addition to principal for a waiver of default rights[94] - A loss on extinguishment of debt of $364,109 was recorded for the three and six months ended June 30, 2025, due to the amendment of the Blackstone Note[94] - At June 30, 2025, the total fair value of subscription agreement loans was $2,025,344, including $1,500,000 from the First and Second Subscription Agreements[94][95] NOTE 8. CONVERTIBLE NOTES This note details the issuance of senior secured convertible debentures, their conversion terms, fair value, and associated interest and fair value change expenses - On February 17, 2025, the Company issued 20% original issue discount senior secured convertible debentures with an aggregate principal amount of $3,750,000[96] - The conversion price for these debentures is 92.5% of the lowest daily VWAP, with a floor price of $4.00 per share[96] - At June 30, 2025, the fair value of these Convertible Notes was $3,617,508[97] - For the three and six months ended June 30, 2025, interest expense included $187,500 and $274,038, respectively, from debt discount amortization, and changes in fair value of $254,654 and $343,470, respectively, were recognized[97] NOTE 9. COMMITMENTS AND CONTINGENCIES This note outlines the Company's registration rights agreements, the Equity Line of Credit agreement, and the forward purchase agreement liability - The Company has registration rights agreements for Private Placement Warrants and warrants from working capital loans[98] - An Equity Line of Credit (ELOC) Agreement was entered into on February 13, 2025, allowing Arena to purchase up to $100,000,000 in common stock, with 2,000,000 Commitment Fee Shares issued to Arena[99] - At June 30, 2025, a forward purchase agreement liability of $49,285 was included on the balance sheet, with a gain of $18 and a loss of $251 recognized in fair value changes for the three and six months ended June 30, 2025, respectively[100] NOTE 10. SHAREHOLDERS' DEFICIT This note details changes in Class A common stock, outstanding warrants, stock-based compensation, and the conversion of Aspire Biopharma Inc. warrants - As of June 30, 2025, there were 49,525,970 shares of Class A common stock issued and outstanding, an increase from 27,601,767 shares at December 31, 2024[102] - The Company has 14,374,969 Public Warrants and 9,763,333 Private Placement Warrants outstanding as of June 30, 2025, which are equity classified[103][107] - Stock-based compensation of $14,131,250 was recognized in February 2025 for 1,662,500 shares issued to an advisory firm upon consummation of the Business Combination[108] - Aspire Biopharma Inc. warrants totaling 91,500,000 were converted into 5,735,717 Class A common stock of the Company on January 21, 2025[109] NOTE 11. FAIR VALUE MEASUREMENTS This note explains the Company's classification of financial instruments within a three-level fair value hierarchy and the valuation methods used for Level 3 liabilities - The Company classifies financial assets and liabilities into a three-level fair value hierarchy based on the observability of inputs[110][111] | Liabilities (June 30, 2025) | Level | Unobservable Inputs (Level 3) ($) | | :-------------------------- | :---- | :---------------------------- | | Subscription financial liabilities | 3 | $2,025,344 | | Convertible Notes | 3 | $3,617,508 | | Loan and Transfer note payable | 3 | $499,214 | | Forward Purchase Agreement liabilities | 3 | $49,285 | - Subscription financial liabilities and Loan and Transfer notes payable are valued using a Probability Weighted Expected Return Model (PWERM) and Black Scholes Model, utilizing Level 3 inputs[115][116] - Convertible notes are valued using a Monte Carlo Model, also relying on Level 3 inputs[117] NOTE 12. SEGMENT INFORMATION This note clarifies that the Company operates as a single reportable segment, with the CODM assessing performance based on net loss and total assets - The Company operates as a single reportable segment, with the Chief Financial Officer identified as the Chief Operating Decision Maker (CODM)[122] - The CODM assesses performance and allocates resources based on net loss and total assets, reviewing operating expenses (general and administrative, other expenses) to manage cash and ensure contractual alignment[123] NOTE 13. SUBSEQUENT EVENTS This note reports significant events occurring after the reporting period, including changes in executive leadership and board appointments - On July 24, 2025, Michael Howe stepped down as Director and CEO, and Gary Stein and Barbara Sher resigned as Directors[126] - Kraig Higginson, Chairman of the Board, was appointed Interim Chief Executive Officer, and Howard Doss was appointed Director and Chairman of the Audit Committee[126] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, including an overview of its business, growth strategy, recent developments, critical accounting estimates, and a detailed analysis of financial performance and liquidity for the three and six months ended June 30, 2025 and 2024 Overview This section provides a brief introduction to Aspire Biopharma Holdings, Inc., an early-stage biopharmaceutical company, and its recent Business Combination - Aspire Biopharma Holdings, Inc. is an early-stage biopharmaceutical and supplements company, incorporated in Delaware in February 2025, focused on novel sublingual delivery mechanisms[129] - The Company completed its Business Combination with Aspire Biopharma Holdings, Inc. (formerly PowerUp Acquisition Corp.) on February 17, 2025[130] Growth Strategy and Outlook This section outlines the Company's strategy to develop and market drugs using sublingual delivery technology, including product pipeline, commercialization plans, and competitive landscape - The Company's strategy is to generate revenue by developing and marketing drugs and nutraceuticals using its novel sublingual delivery technology, potentially through licensing or collaboration agreements[131] - Aspire contracts with third parties for manufacturing and plans to build a focused sales and marketing organization in the U.S. for commercialization, while seeking distribution partners internationally[132][138] - Aspire has developed disruptive sublingual delivery technologies for rapid, high-dose absorption, with patent applications filed for aspirin formulations (March 2023 and October 2024)[141] - A clinical trial for high-dose sublingual aspirin concluded in July 2025, with results expected in mid-August 2025, aiming for FDA 505(b)(2) Fast Track designation[135][142] - The product pipeline includes sublingually administered melatonin, vitamins D, E, K, testosterone, semaglutide, and caffeine products (Buzz Bomb Caffeine Co. LC), with initial caffeine product sales planned for Q3 2025[150][151][152][153][154] - The Company faces intense competition from major pharmaceutical and biotechnology companies with greater resources[157] - Aspire's primary patent properties covering its aspirin formulation technology are pending applications PCT/US2024/022318 and 63/702,381, with nominal expirations of March 29, 2044, and October 1, 2045, respectively[163][165] Recent Development This section highlights key recent events, including the Business Combination, Equity Line of Credit, convertible debenture issuance, Nasdaq compliance notices, and leadership changes - The Business Combination on February 17, 2025, involved PowerUp Acquisition Corp. merging with Aspire Biopharma, Inc., with Aspire Biopharma, Inc. being the accounting acquirer in a reverse recapitalization[168][169][177][178] - On February 13, 2025, the Company entered into an Equity Line of Credit (ELOC) Agreement with Arena Business Solutions Global SPC II, Ltd., allowing Arena to purchase up to $100,000,000 in common stock[179] - On February 17, 2025, a Securities Purchase Agreement was executed, issuing $3,750,000 in 20% OID senior secured convertible debentures for a purchase price of $3,000,000[185][186] - On April 16, 2025, Nasdaq issued notices of non-compliance for failing to maintain a minimum Market Value of Listed Securities ($50,000,000) and a minimum bid price ($1.00 per share)[188][189] - A Settlement Agreement on April 24, 2025, resolved default notices, extended maturity dates of promissory notes, and involved the issuance of 625,000 shares of common stock to Blackstone Capital Advisors, Inc[193][194][195] - Michael Howe stepped down as CEO and Director on July 24, 2025, with Kraig Higginson appointed Interim CEO[197] Key Financial Definitions/Components of Results This section defines the primary financial components and categories of expenses relevant to understanding the Company's results of operations - The Company anticipates generating revenue from product sales or licensing, but no revenue was earned as of June 30, 2025[199] - Operating expenses are categorized into General and administrative, Research and development, and Sales and marketing[203] Critical Accounting Estimates This section discusses the significant management judgments and assumptions involved in preparing the financial statements, particularly for fair value measurements and business combinations - The preparation of financial statements requires significant management estimates and assumptions, particularly for the fair value of subscription agreements and convertible notes[202] - The Company operates as a single reportable segment, with the Chairman as the Chief Operating Decision Maker (CODM)[204] - Business combinations are accounted for using the acquisition method, measuring goodwill as the fair value of consideration transferred less net identifiable assets and liabilities[207] - Share-based compensation is measured at grant date fair value and recognized over the service period, with warrants classified as liabilities or stockholders' deficit based on specific criteria[210][211][212] Results of Operations This section provides a detailed analysis of the Company's financial performance, including operating expenses and net loss, for the three and six months ended June 30, 2025 and 2024 Operating Expenses (Three Months Ended June 30) | Expense Category | 2025 ($) | 2024 ($) | Dollar Change ($) | | :------------------------- | :----------- | :---------- | :------------ | | General and administrative | $395,692 | $86,423 | $309,269 | | Research and development | $352,887 | $10,500 | $342,387 | | Sales and marketing | $51,311 | $- | $51,311 | | Loss from operations | $(799,890) | $(96,923) | $(702,967) | | Interest expense | $(527,893) | $- | $(527,893) | | Change in fair value of derivative liabilities and convertible notes | $(289,401) | $- | $(289,401) | | Loss on extinguishment of debt | $(364,109) | $- | $(364,109) | | Net loss | $(1,981,293) | $(96,923) | $(1,884,370) | Operating Expenses (Six Months Ended June 30) | Expense Category | 2025 ($) | 2024 ($) | Dollar Change ($) | | :------------------------- | :------------- | :---------- | :-------------- | | General and administrative | $15,469,240 | $219,227 | $15,250,013 | | Research and development | $615,980 | $21,000 | $594,980 | | Sales and marketing | $271,150 | $87,666 | $183,484 | | Loss from operations | $(16,356,370) | $(327,893) | $(16,028,477) | | Interest expense | $(817,824) | $- | $(817,824) | | Change in fair value of derivative liabilities and convertible notes | $(384,318) | $- | $(384,318) | | Loss on extinguishment of debt | $(364,109) | $- | $(364,109) | | Net loss | $(17,922,621) | $(327,893) | $(17,594,728) | - The significant increase in General and Administrative expenses for the six months ended June 30, 2025, was primarily due to $14,131,250 in one-time stock-based compensation[223] Liquidity and Capital Resources This section assesses the Company's ability to meet its short-term and long-term obligations, detailing its cash position, working capital, and need for additional financing - As of June 30, 2025, the Company had an accumulated deficit of $20,699,854, a working capital deficit of $9,567,500, and cash of $206,233[230] - The Company received approximately $265,827 from the Business Combination and an additional $3,000,000 post-combination, but needs to raise additional financing for future operations[231] - Management has determined that the Company's liquidity condition raises substantial doubt about its ability to continue as a going concern for the next twelve months[233] Cash flows for the six months ended June 30, 2025 and 2024 This section analyzes the Company's cash flow activities, distinguishing between operating and financing cash flows for the six months ended June 30, 2025 and 2024 | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,891,838) | $(249,215) | | Net cash provided by financing activities | $3,094,438 | $257,645 | - The increase in net cash used in operating activities for the six months ended June 30, 2025, was primarily due to the net loss, stock-based compensation, and increases in prepaid expenses and due from related parties[235] - Net cash provided by financing activities increased significantly due to higher proceeds from the issuance of Legacy Aspire's common stock and convertible notes[236] Off-Balance Sheet Financing Arrangements This section confirms the absence of any off-balance sheet financing arrangements as of June 30, 2025 - As of June 30, 2025, the Company has no obligations, assets, or liabilities considered off-balance sheet arrangements[237] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Aspire Biopharma Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing disclosures under this item as it is a smaller reporting company[239] Item 4. Control and Procedures This section addresses the effectiveness of the Company's disclosure controls and procedures and internal control over financial reporting, noting deficiencies in disclosure controls as of June 30, 2025 - As of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective, particularly concerning complex accounting areas like recapitalization[241] - Management acknowledges that control systems provide only reasonable, not absolute, assurance and can be subject to inherent limitations such as faulty judgments, errors, or circumvention[242] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[243] PART II – OTHER INFORMATION This section includes additional information not covered in the financial statements, such as risk factors, equity sales, and other disclosures Item 1A. Risk Factors As a smaller reporting company, Aspire Biopharma Holdings, Inc. is not required to provide disclosure under this item - The Company is exempt from providing disclosures under this item as it is a smaller reporting company[246] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section details the Company's unregistered sales of equity securities, specifically the ELOC Agreement and Securities Purchase Agreement, and confirms no use of proceeds or issuer purchases of equity securities - On February 13, 2025, the Company entered into an ELOC Agreement with Arena Business Solutions Global SPC II, Ltd., allowing Arena to purchase up to $100,000,000 in common stock[247] - On February 17, 2025, a Securities Purchase Agreement was executed, resulting in the issuance of $3,750,000 in 20% OID senior secured convertible debentures for a purchase price of $3,000,000[248] - There were no proceeds from unregistered sales of equity securities used, nor any issuer purchases of equity securities during the period[249][250] Item 5. Other Information This section reiterates details of the Subscription Agreements (ELOC and Securities Purchase Agreement) and provides an update on the Nasdaq compliance notices regarding minimum market value and bid price - The Company entered into an ELOC Agreement on February 13, 2025, with Arena Business Solutions Global SPC II, Ltd., for potential common stock purchases up to $100,000,000[251] - A Securities Purchase Agreement was signed on February 17, 2025, leading to the issuance of $3,750,000 in 20% OID senior secured convertible debentures[252][253] - On April 16, 2025, Nasdaq notified the Company of non-compliance with the minimum Market Value of Listed Securities ($50,000,000) and minimum bid price ($1.00 per share) rules, providing a 180-day period to regain compliance[254][255] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including various agreements, certifications, and XBRL documents - Exhibits include forms of Purchase Agreement, Leak Out Agreement, Securities Purchase Agreement, and Debenture, incorporated by reference from previous 8-K filings[258] - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are filed or furnished[258] - Inline XBRL documents (Instance, Taxonomy Extension Calculation, Schema, Definition, Labels, Presentation Linkbase Documents) and the Cover Page Interactive Data File are included[258] SIGNATURES This section contains the required signatures of the registrant's authorized officers, confirming the filing of the report - The report is signed by Kraig T. Higginson, Chief Executive Officer and Chairman (Principal Executive Officer), and Ernest J. Scheidemann, Chief Financial Officer (Principal Financial and Accounting Officer), on August 13, 2025[264]