The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated as a
We presently have no revenue, have had losses since inception from incurring formation and operating costs and have had no operations other than identifying and evaluating suitable acquisition transaction candidates. We have relied upon the sale of our securities and loans from the Sponsor to fund our operations.
On
15 Table of Contents
On
Our management has broad discretion with respect to the specific application of the net proceeds of the IPO and the Private Placement, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
UPTD initially had until
As a result of the 2022 Special Meeting, 3,519,780 shares of Common Stock were
rendered for redemption and approximately
Under the Current Charter, the Company may extend the Combination Deadline until
As provided in the Merger Agreement, Estrella has agreed to, upon request by the
founders of the Company, deposit the agreed reasonable amount to the Company's
trust in order to effectuate extension of the Company's deadline to consummate a
business combination. Pursuant to the Merger Agreement, Estrella made two
Monthly Extension Payments to the Trust Account, as a result of which, the
current Combination Deadline is
If UPTD is not able to consummate the Business Combination with Estrella or
another business combination by up to
Proposed Business Combination with Estrella
After the consummation of the IPO, UPTD's management began their search for a
suitable target for a business combination. In addition, they were contacted by
a number of individuals and entities with respect to potential business
combination opportunities. UPTD has reviewed in varying degrees approximately 22
potential business combination candidates involved in various industries and
sectors, including manufacturing, high technology, education, biotech and
pharmaceutical, infrastructure, and energy. In
Estrella is a preclinical-stage biopharmaceutical company developing CD19 and CD22-targeted ARTEMIS®? T-cell therapies with the capacity to address treatment and safety challenges for patients with blood cancers and solid tumors. Estrella's mission is to harness the evolutionary power of the human immune system to transform the lives of patients fighting cancer. For more information regarding the business of Estrella and the proposed Business Combination, see the Form S-4.
Merger Agreement
On
16 Table of Contents
Pursuant to the Merger Agreement, stockholders of Estrella immediately prior to
the Effective Time collectively will receive from us, in the aggregate, a number
of newly issued shares of Common Stock equal to: (i)
The Merger also calls for additional agreements, including, among others, the
Lock-Up Agreement and the Support Agreement, as described elsewhere in the Form
S-4 (as defined below), as amended from time to time, initially filed with the
Outstanding Promissory Notes and Loans
On
Pursuant to the Merger Agreement, Estrella made two Monthly Extension Payments
to the Trust Account, as a result of which, the current Combination Deadline is
The payees of the Notes and Extension Notes (collectively, the "Payees") have
the right, but not the obligation, to convert the Extension Notes, in whole or
in part, respectively, into private shares of the Common Stock (the "Conversion
Shares") of the Company, as described in the prospectus of the Company (File
No.: 333-253322), by providing the Company with written notice of the intention
to convert at least two business days prior to the closing of the business
combination. The number of Conversion Shares to be received by the Payees in
connection with such conversion shall be an amount determined by dividing (x)
the sum of the outstanding principal amount payable to the Payees by (y)
The issuance of the Notes and Extension Notes was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
Results of Operations
Our entire activity from inception up to date was related to the Company's formation, the IPO and general and administrative activities. Since the IPO, our activity has been limited to the evaluation of business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We generate non-operating income in the form of interest income on investments. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the year endedDecember 31, 2022 , we had had net loss of$ 996,104 , consisting of$1,368,219 of operating costs, consisting mostly of general and administrative expenses,$201,308 of franchise tax expenses , and$80,648 of income taxes provision , offset by$654,071 of interest income from investments in the Trust Account.
For the period from
Liquidity and Capital Resources
For the year ended
17 Table of Contents
Until consummation of the business combination, we will be using the funds not held in the Trust Account, and any additional funding that may be loaned to us by our Sponsor, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the business combination.
If our estimates of the costs of undertaking in-depth due diligence and
negotiating business combination are less than the actual amount necessary to do
so, we may have insufficient funds available to operate its business prior to
the business combination and will need to raise additional capital. In this
event, our officers, directors or their affiliates may, but are not obligated
to, loan us funds as may be required. If we consummate an initial business
combination, we would repay such loaned amounts out of the proceeds of the Trust
Account released to us upon consummation of the business combination, or, at the
lender's discretion, up to
Moreover, we may need to obtain additional financing either to consummate our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial business combination. Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
As of
Off-Balance Sheet Financing Arraignments
We have no obligations, assets or liabilities that would be considered
off-balance sheet arrangements as of
Contractual Obligations
As of
The holders of the founder shares, the Private Shares, and any Conversion Shares will be entitled to registration rights pursuant to a registration and shareholder rights agreement entered into in connection with the IPO. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to our completion of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
We are obligated to pay the Representatives the Business Combination Fee equal
to 3.5% of the gross proceeds of the IPO and the sale of over-allotment Option
Units. The Business Combination Fee of
As of the date hereof, we have outstanding loans from various related parties in
the aggregated amount of
Critical Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with US 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 expenses during the reporting period. Actual results could differ from those estimates.
18 Table of Contents
Investments held in Trust Account
At
We classify its
Warrants
We account 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
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. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
Common Stock Subject to Possible Redemption
We account for our Common Stock subject to possible redemption in accordance
with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity."
Common Stock subject to mandatory redemption (if any) are classified as a
liability instrument and are measured at fair value. Conditionally redeemable
Common Stock (including Common Stock that feature redemption rights that are
either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within our control) are classified as
temporary equity. At all other times, Common Stock are classified as
stockholders' equity. Our public shares feature certain redemption rights that
are considered to be outside of our control and subject to occurrence of
uncertain future events. Accordingly, as of
Fair Value of Financial Instruments
The fair value of our assets and liabilities approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
The fair value of our financial assets and liabilities reflects management's estimate of amounts that we would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, we seek to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
? Level 1 - inputs to the valuation methodology are quoted prices (unadjusted)
for identical assets or liabilities in active market.
? Level 2 - inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for
the assets or liability, either directly or indirectly, for substantially the
full term of the financial instruments.
? Level 3 - inputs to the valuation methodology are unobservable and significant
to the fair value. Income Taxes
We account for income taxes under ASC 740 Income Taxes ("ASC 740"). ASC 740 requires the recognition of 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. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process for 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
19 Table of Contents
We recognize accrued interest and penalties related to unrecognized tax benefits
as income tax expense. There were no unrecognized tax benefits and no amounts
accrued for interest and penalties as of
We have identified
We 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. Our management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
We are incorporated in the
On
Because the Company is a
Net Income (Loss) per Share
We comply with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. In order to determine the net income (loss) attributable to both the redeemable shares and non-redeemable shares, we first considered the undistributed income (loss) allocable to both the redeemable Common Stock and non-redeemable Common Stock and the undistributed income (loss) is calculated using the total net loss less any dividends paid. We then allocated the undistributed income (loss) ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable Common Stock. Any remeasurement of the accretion to redemption value of the Common Stock subject to possible redemption was considered to be dividends paid to the public stockholders
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
© Edgar Online, source