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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
The following unaudited pro forma condensed combined
financial information present the combination of the financial information of TradeUP Acquisition Corp. ("UPTD") and Estrella
Biopharma, Inc. ("Estrella") adjusted to give effect to the Business Combination. The following unaudited pro forma condensed
combined financial information has been prepared in accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combined balance
sheet as of June 30, 2023 combines the historical condensed consolidated balance sheet of UPTD as of June 30, 2023, the historical balance
sheet of Estrella as of June 30, 2023, respectively, on a pro forma basis as if the Business Combination had been consummated on June
30, 2023. The unaudited pro forma condensed combined statement of operations for the year ended June 30, 2023 combine the historical financial
information of UPTD for the twelve months ended June 30, 2023 and the historical statement of operations of Estrella for the year ended
June 30, 2023, on a pro forma basis as if the Business Combination had been consummated on July 1, 2022, the beginning of the earliest
The unaudited pro forma condensed combined balance
sheet as of June 30, 2023 has been prepared using, and should be read in conjunction with, the following:
| UPTD's unaudited balance sheet as of June 30, 2023 and the related notes included in UPTD's Quarterly Report on Form 10-Q filed on August 1, 2023; and | ||
| Estrella's balance sheet as of June 30, 2023, which are incorporated in the Current Report on Form 8-K under Exhibit 99.2. |
The unaudited pro forma condensed combined statement
of operations for the year ended June 30, 2023 has been prepared using, and should be read in conjunction with, the following:
| UPTD's unaudited statement of operations for the twelve months ended June 30, 2023 derived from the historical information of UPTD; and | ||
| Estrella's statement of operations for the year end June 30, 2023 and the related notes in the Current Report on Form 8-K under Exhibit 99.2. |
Description of the Business Combination
On September 29, 2023 (the "Closing Date"),
UPTD consummated the previously announced 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 Estrella. 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 (the "Surviving Company") (such transaction, the
In accordance with the terms and subject to the
conditions of the Merger Agreement:
Accounting for the Business Combination
The Business Combination will be accounted for
as a "reverse recapitalization" in accordance with U.S. GAAP. Under this method of accounting, UPTD will be treated as the
"acquired" company for financial reporting purposes. This determination is primarily based on the fact that subsequent to
the Business Combination, Estrella's stockholders are expected to have a majority of the voting power of the Combined Company, Estrella
will comprise all of the ongoing operations of the Combined Company, Estrella will comprise a majority of the governing body of the Combined
Company, and Estrella's senior management will comprise all of the senior management of the Combined Company. Accordingly, for accounting
purposes, the Business Combination will be treated as the equivalent of Estrella issuing shares for the net assets of UPTD, accompanied
by a recapitalization. The net assets of UPTD will be stated at historical costs. No goodwill or other intangible assets will be recorded.
Operations prior to the Business Combination will be those of Estrella.
Basis of Pro Forma Presentation
The unaudited pro forma combined financial information included in
this Exhibit has been prepared using actual redemption of UPTD's ordinary shares.
We are providing this information to aid you in
your analysis of the financial aspects of the Business Combination. The unaudited pro forma condensed combined financial statements described
above and the assumption and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined
financial statements should be read in conjunction with UPTD's historical financial statements, Estrella's historical financial
statements, and the related notes thereto. The pro forma adjustments are preliminary, and the unaudited pro forma information have been
presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that may
have actually occurred had the Business Combination taken place on the dates noted, or of the Combined Company's future financial
position or operating results. Further, the unaudited pro forma condensed combined financial statements do not purport to project the
future operating results or financial position of the Combined Company following the completion of the Business Combination. The unaudited
pro forma adjustments represent management's estimates based on information available as of the date of these unaudited pro forma
condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
| (2) | ||||||||||||||||||||||||||||||||
| Estrella | Actual Redemptions | |||||||||||||||||||||||||||||||
| (1) | Transaction | Transaction | ||||||||||||||||||||||||||||||
| UPTD (Historical) | (Historical) | Accounting Adjustments | Note | (Pro Forma) | Accounting Adjustments | Note | Pro Forma Combined | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||||||||||||
| Cash | $ | 34,688 | $ | 2,479,146 | $ | 9,750,000 | (A) | $ | 12,229,146 | $ | 10,000,000 | (B) | $ | 21,066,024 | ||||||||||||||||||
| 3,059,023 | (C) | |||||||||||||||||||||||||||||||
| (1,550,500 | ) | (D) | ||||||||||||||||||||||||||||||
| (1,017,903 | ) | (F) | ||||||||||||||||||||||||||||||
| (1,329,830 | ) | (G) | ||||||||||||||||||||||||||||||
| (658,600 | ) | (J) | ||||||||||||||||||||||||||||||
| 300,000 | (L) | |||||||||||||||||||||||||||||||
| Prepaid expenses and other current assets | 94,675 | - | - | - | - | 94,675 | ||||||||||||||||||||||||||
| Notes receivable - related party | - | 273,066 | - | 273,066 | (273,066 | ) | (K) | - | ||||||||||||||||||||||||
| Total current assets | 129,363 | 2,752,212 | 9,750,000 | 12,502,212 | 8,529,124 | 21,160,699 | ||||||||||||||||||||||||||
| Deferred merger costs | - | 276,187 | - | 276,187 | (276,187 | ) | (G) | - | ||||||||||||||||||||||||
| Investments held in Trust Account | 9,792,271 | - | - | - | (9,792,271 | ) | (C) | - | ||||||||||||||||||||||||
| Total Assets | $ | 9,921,634 | $ | 3,028,399 | $ | 9,750,000 | $ | 12,778,399 | $ | (1,539,334 | ) | $ | 21,160,699 | |||||||||||||||||||
| Liabilities, Temporary Equity, and Stockholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||||||||||
| Accounts payable and accrued expenses | $ | 437,822 | $ | 398,781 | $ | - | $ | 398,781 | $ | (437,775 | ) | (F) | $ | 49,961 | ||||||||||||||||||
| (348,867 | ) | (G) | ||||||||||||||||||||||||||||||
| Accounts payable - related party | - | 9,333,146 | - | 9,333,146 | - | 9,333,146 | ||||||||||||||||||||||||||
| Promissory notes | 273,066 | - | - | - | (273,066 | ) | (K) | 300,000 | ||||||||||||||||||||||||
| 300,000 | (L) | |||||||||||||||||||||||||||||||
| Working capital loans - related parties | 658,600 | - | - | - | (658,600 | ) | (J) | - | ||||||||||||||||||||||||
| Accrued liability - related party | - | 22,000 | - | 22,000 | - | 22,000 | ||||||||||||||||||||||||||
| Income tax payable | 61,644 | - | - | - | - | 61,644 | ||||||||||||||||||||||||||
| Franchise tax payable | 200 | 4,297 | - | 4,297 | - | 4,497 | ||||||||||||||||||||||||||
| Total current liabilities | 1,431,332 | 9,758,224 | - | 9,758,224 | (1,418,308 | ) | 9,771,248 | |||||||||||||||||||||||||
| Operating lease liability, non-current - related party | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Other liability | - | 12,725 | - | 12,725 | - | 12,725 | ||||||||||||||||||||||||||
| Deferred tax liability | 8,370 | - | - | - | - | 8,370 | ||||||||||||||||||||||||||
| Deferred underwriters' marketing fees | 1,550,500 | - | - | - | (1,550,500 | ) | (D) | - | ||||||||||||||||||||||||
| Total Liabilities | 2,990,202 | 9,770,949 | - | 9,770,949 | (2,968,808 | ) | 9,792,343 | |||||||||||||||||||||||||
| Commitments and Contingencies | ||||||||||||||||||||||||||||||||
| Common stock subject to possible redemption | 9,752,003 | - | - | - | (9,752,003 | ) | (C) | - | ||||||||||||||||||||||||
| Series A and AA preferred stock | - | 5,000,000 | 9,750,000 | (A) | 14,750,000 | (14,750,000 | ) | (H) | - | |||||||||||||||||||||||
| Stockholders' Equity (Deficit): | ||||||||||||||||||||||||||||||||
| Preferred stock | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Common stock | 142 | 228 | - | 228 | 100 | (B) | 3,520 | |||||||||||||||||||||||||
| 28 | (C) | |||||||||||||||||||||||||||||||
| 3,022 | (H) | |||||||||||||||||||||||||||||||
| Additional paid-in capital | - | 445,775 | - | 445,775 | 9,999,900 | (B) | 24,748,042 | |||||||||||||||||||||||||
| 3,018,727 | (C) | |||||||||||||||||||||||||||||||
| (2,820,713 | ) | (E) | ||||||||||||||||||||||||||||||
| (580,128 | ) | (F) | ||||||||||||||||||||||||||||||
| (1,257,150 | ) | (G) | ||||||||||||||||||||||||||||||
| 14,746,978 | (H) | |||||||||||||||||||||||||||||||
| 1,194,653 | (I) | |||||||||||||||||||||||||||||||
| Accumulated deficit | (2,820,713 | ) | (12,188,553 | ) | (12,188,553 | ) | 2,820,713 | (E) | (13,383,206 | ) | ||||||||||||||||||||||
| (1,194,653 | ) | (I) | ||||||||||||||||||||||||||||||
| Total Stockholders' Equity (Deficit) | (2,820,571 | ) | (11,742,550 | ) | - | (11,742,550 | ) | 25,931,477 | 11,368,356 | |||||||||||||||||||||||
| Total Liabilities, Temporary Equity, and Stockholders' Equity (Deficit) | $ | 9,921,634 | $ | 3,028,399 | $ | 9,750,000 | $ | 12,778,399 | $ | (1,539,334 | ) | $ | 21,160,699 |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE
| Actual Redemptions | ||||||||||||||||||||
| (1) | (2) | Transaction | ||||||||||||||||||
| UPTD | Estrella | Accounting | Pro Forma | |||||||||||||||||
| (Historical) | (Historical) | Adjustments | Note | Combined | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| General and administrative expenses | $ | 1,139,559 | $ | 663,190 | $ | 580,128 | (AA) | $ | 3,123,562 | |||||||||||
| 740,685 | (BB) | |||||||||||||||||||
| Research and development | - | 10,448,012 | 453,968 | (BB) | 10,901,980 | |||||||||||||||
| Franchise tax expenses | 180,150 | 3,200 | - | 183,350 | ||||||||||||||||
| Total operating expenses | 1,319,709 | 11,114,402 | 1,774,781 | 14,208,892 | ||||||||||||||||
| Loss from Operations | (1,319,709 | ) | (11,114,402 | ) | (1,774,781 | ) | (14,208,892 | ) | ||||||||||||
| Other income | ||||||||||||||||||||
| Dividend earned on investment held in Trust Account | 806,304 | - | (806,304 | ) | (CC) | - | ||||||||||||||
| Total other income | 806,304 | - | (806,304 | ) | - | |||||||||||||||
| Loss before income taxes | (513,405 | ) | (11,114,402 | ) | (2,581,085 | ) | (14,208,892 | ) | ||||||||||||
| Provision for income taxes | 121,190 | - | (121,190 | ) | (CC) | - | ||||||||||||||
| Net Loss | $ | (634,595 | ) | $ | (11,114,402 | ) | $ | (2,459,895 | ) | $ | (14,208,892 | ) | ||||||||
| Basic and diluted weighted average shares outstanding, common stock subject to possible redemption | 2,597,786 | (2,597,786 | ) | (DD) | - | |||||||||||||||
| Basic and diluted net loss per share, common stock subject to possible redemption | $ | (0.07 | ) | $ | - | |||||||||||||||
| Basic and diluted weighted average shares outstanding, common stock attributable to UPTD | 1,419,700 | 33,781,532 | (DD) | 35,201,232 | ||||||||||||||||
| Basic and diluted net loss per share, common stock attributable to UPTD | $ | (0.33 | ) | $ | (0.40 | ) | ||||||||||||||
| Basic and diluted weighted average of common stock outstanding | 1,270,041 | |||||||||||||||||||
| Basic and diluted loss per share per common stock | $ | (8.75 | ) |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
Note 1 - Description of the Business
Combination and Basic of Presentation
On September 29, 2023 (the "Closing Date"), TradeUP Acquisition
Corp. ("UPTD") consummated the previously announced 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 Estrella Biopharma, Inc. ("Estrella"). 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.
The Business Combination will be accounted for
as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, UPTD will be treated as the "acquired"
company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent
of Estrella issuing shares for the net assets of UPTD, accompanied by a recapitalization. The net assets of UPTD will be stated at historical
cost, with no goodwill or other intangible assets recorded.
The unaudited pro forma condensed combined balance
sheet as of June 30, 2023 gives pro forma effect to the Business Combination as if it had been consummated on June 30, 2023. The unaudited
pro forma condensed combined statements of operations for the year ended June 30, 2023 give pro forma effect to the Business Combination
as if it had been consummated on July 1, 2022, the beginning of the earliest period presented in the unaudited pro forma condensed
combined statements of operations.
The unaudited pro forma condensed combined balance sheet as of June
30, 2023 has been prepared using UPTD's unaudited balance sheet as of June 30, 2023 and Estrella's audited balance sheet as
The unaudited pro forma condensed combined statement of operations
for the year ended June 30, 2023 has been prepared using UPTD's unaudited historical information for the twelve months ended June
30, 2023 and Estrella's audited statement of operations for the year end June 30, 2023.
The unaudited pro forma condensed combined financial
information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business
Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial
position of the post-combination company. The unaudited pro forma adjustments represent management's estimates based on information
available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional
information becomes available and analyses are performed.
Note 2 - Accounting Policies
Upon consummation of the Business Combination,
management will perform a comprehensive review of the two entities' accounting policies. As a result of the review, management may
identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial
statements of the Post-Combination Company. Based on its initial analysis, management did not identify any differences that would have
a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed
combined financial information does not assume any differences in accounting policies.
Note 3 - Adjustments to Unaudited Pro
Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial
information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only.
The following unaudited pro forma condensed combined
financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 "Amendments
to Financial Disclosures about Acquired and Disposed Businesses." Release No. 33-10786 replaces the existing pro
forma adjustment criteria with simplified requirements to depict the accounting for the transaction ("Transaction Accounting
Adjustments") and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably