Note 3. Reverse Merger

As discussed within Note 1, on December 13, 2024 the Reverse Merger between Pieris, Merger Sub, and the Company was consummated. Pursuant to the Merger Agreement, upon Closing, Merger Sub merged with and into the Company, with the Company surviving as a wholly owned subsidiary and surviving corporation of the Reverse Merger. In connection with the completion of the Reverse Merger, the Company changed its name from “Pieris Pharmaceuticals, Inc.” to “Palvella Therapeutics, Inc.,” and the business conducted by the Company became primarily the business conducted by Palvella Therapeutics, Inc. The Reverse Merger was contemplated and consummated, along with the PIPE Financing, to generate capital resources to support the advancement of the Company’s pipeline and future operations.

The Reverse Merger was accounted for as a reverse recapitalization pursuant to ASC 805, Business Combinations as Pieris did not meet the definition of a business and had nominal assets, thereby meeting the definition of a public shell company. Therefore, the transaction was treated as the equivalent of the Company issuing stock to acquire the net assets of Pieris.

In connection with the Reverse Merger, the Company incurred transaction costs of $2.5 million. The $2.5 million of transaction costs were initially recorded as deferred financing costs on the consolidated balance sheets and then were reclassified to offset to equity upon Closing.