What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-14 · 906 added, 177 removed, 4 unchanged (100% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction

with the financial statements and the notes thereto contained elsewhere in this report.

Note Regarding Forward-Looking Statements

statements other than statements of historical fact included in this section and elsewhere in this Quarterly Report on Form 10-Q (this

“Quarterly Report”) regarding the Company’s financial position, business strategy and the plans and objectives of management

for future operations, are forward-looking statements.

When used in this Quarterly Report, words such as “anticipate,” “believe,”

“estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s

management, identify forward-looking statements.

Such forward-looking statements are based on the beliefs of management, as well as assumptions

made by, and information currently available to, the Company’s management.

Actual results could differ materially from those contemplated

by the forward looking statements as a result of certain factors detailed in our filings with the SEC.

and Recent Developments

are a blank check company incorporated on November 3, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger,

share exchange, asset acquisition, share purchase, reorganization or similar Business Combination with one or more businesses or entities.

July 8, 2024, we completed our Business Combination with Stardust Power.

activity from our formation through June 30, 2024 relates to our formation and our initial public offering (“Initial Public Offering”),

and subsequent to the Initial Public Offering, identifying a target company for a Business Combination and consummating the Business

Combination with Stardust.

We will not generate any operating revenues until after the completion of our initial Business Combination,

at the earliest.

following discussion and analysis of the financial condition and results of operations should be read together with our unaudited condensed

consolidated financial statements for the three and nine months ended September 30, 2024, and the related notes thereto contained elsewhere

in this Quarterly Report.

the context otherwise requires, all references in this section to “we,” “us,” “our,” or the “Company”,

“Stardust” or “Stardust Power” refer to Stardust Power Inc.

and its consolidated subsidiaries at or after the consummation

of the business combination (the “Business Combination”).

Terms otherwise not defined herein, have the meaning given to such

terms in the Proxy Statement/Prospectus in the section titled “Certain Defined Terms” beginning on page iii thereof, and

such definitions are incorporated herein by reference.

Cautionary Note Regarding Forward-Looking

Certain of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report

on Form 10-Q, including information with respect to plans and strategy for our business, includes forward-looking statements that involve

risks and uncertainties.

As a result of many factors, including those factors described

or referenced in this Quarterly Report under the heading “Risk Factors,” our actual results could differ materially from

the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

You should carefully

read the section titled “Risk Factors” in this Quarterly Report to gain an understanding of the important factors that could

cause actual results to differ materially from our forward-looking statements.

Please also see the section titled “Cautionary Statement

Regarding Forward-Looking Statements” in this Quarterly Report.

Overview and History

December 5, 2022, Stardust Power LLC was organized as a limited liability company in the State of Delaware.

On March 16, 2023,

Stardust Power Operating Inc.

(f/k/a Stardust Power Inc.

prior to the consummation of the Business Combination, “Legacy Stardust Power”) was organized as a corporation in the State of Delaware with

operations commencing on March 16, 2023.

The ownership interests of Stardust Power LLC were subsequently transferred to Stardust

On July 8, 2024, former Stardust Power Inc.

was renamed Stardust Power Operating Inc.

Power is a U.S.-based development stage battery grade lithium manufacturer designed to foster clean energy independence for America.

The Company is in the process of creating capacity to manufacture battery grade lithium products, primarily for the electric vehicle

(“EV”) market, by developing a large-scale lithium refinery in the United States.

Stardust Power seeks to become a sustainable, cost-effective

supplier of battery grade lithium products, by its innovative approach in the development of a large central refinery optimized for multiple

inputs of lithium brine inputs (the “Facility”) in Oklahoma.

Power intends to source lithium brine feedstock from various suppliers and may make investments upstream to secure additional feedstock.

We seek to sell our products to EV manufacturers as our primary market, with potential applications in other areas such as battery manufacturers,

military, and original equipment manufacturers (“OEMs”) .

of the key driving factors are the demand for battery grade lithium products, fueled largely by the demand and production of electric

vehicles and automotive OEMs and battery manufacturers seeking domestic supply options, leading to demand for minerals used in battery

cells, such as lithium, governmental incentives for American manufacturing and evolving geopolitical climate that is creating a national

security priority for the U.S.

February 2023, Stardust Power LLC received an illustrative incentive analysis for up to $257 million in performance-based incentives

from the State of Oklahoma and potential federal incentives, which also contained potential for further eligible

federal grants.

The state incentives were based on initial job creation, equipment procurement, training and recruitment incentives,

property tax exemptions, sales tax exemptions, and capital expenditure projections submitted to the Oklahoma Department of Commerce in

the first quarter of 2023 and could be subject to changes as the Company would progress in setting up the Facility and commercial production of battery

grade lithium in the future.

These incentives may change based on the actual financial metrics of the Company in the future, which may

be lower or higher.

Power believes that it is well poised to address these opportunities by emerging as a leading, fully integrated domestic lithium supplier,

and contribute to restoring American sustainable energy independence, thereby bridging the gap in the domestic supply of battery grade

lithium products.

and Sale Agreement for Site

January 10, 2024, Stardust Power entered into a purchase and sale agreement with the City of Muskogee to purchase the site in Southside Industrial Park, Muskogee, Oklahoma for a

total of $1,662,030.

As of the date of the issue of these financial statements, the deadline for payment had passed, but the Company obtained

an extension from the City of Muskogee until November 19, 2024 to complete payment and transfer of title to the land.

November 21, 2023, Legacy Stardust Power entered into a business combination agreement (the “Business Combination

Agreement”) with Global Partner Acquisition Corp II (“GPAC II”), a Cayman Islands exempted company, Strike Merger

(“First Merger Sub”), a Delaware corporation and direct wholly owned subsidiary of GPAC II, and Strike

Merger Sub II LLC (“Second Merger Sub”), a Delaware limited liability company and direct wholly owned subsidiary of

July 8, 2024 (the “Closing Date”), Legacy Stardust Power completed the Business Combination contemplated by the Business

Combination Agreement.

GPAC II deregistered as a Cayman Islands exempted company and domesticated in the State of Delaware as a

Delaware corporation.

As per the Business Combination Agreement, First Merger Sub merged into Legacy Stardust Power, with Legacy Stardust Power being

the surviving corporation (the effective time of such merger being the “First Effective Time”).

The Legacy Stardust Power then merged

into Second Merger Sub, with Second Merger Sub being the surviving entity.

Upon the completion of the Business Combination, GPAC II was renamed Stardust Power

(also referred to herein as the “Combined Company” or “Stardust Power”).

per the Business Combination Agreement:

share of common stock of Legacy Stardust Power (“Legacy Stardust Power Common Stock”) issued and outstanding immediately

prior to the First Effective Time converted into

the right to receive the number of shares of combined company (“Newco”) common stock (“Newco Stock”) equal

to the merger consideration divided by the number of shares of the Company fully diluted stock.

outstanding option to purchase Legacy Stardust Power Common Stock (each a “Legacy Stardust Power Option”), whether

vested or unvested, automatically converted into an option to purchase a number of shares of Newco Stock equal to the

number of shares of Newco Stock subject to such Stardust Power Option immediately prior to the First Effective Time

multiplied by the per share consideration.

share of Legacy Stardust Power Restricted Stock (as defined in the Business Combination Agreement) outstanding immediately prior to

the First Effective Time converted into a number of

shares of Newco Stock equal to the number of shares of Legacy Stardust Power Common Stock subject to such Stardust Power

Restricted Stock multiplied by the per share consideration.

All outstanding redeemable public warrants and private warrants of GPAC II representing the right to purchase

one Class A ordinary share were adjusted to represent the right to purchase one share of the Newco Stock.

All outstanding GPAC Class A (after redemptions) and

Class B common shares were cancelled and converted into shares of the Newco Stock.

As consideration for certain Class A ordinary shareholders entering into NRAs agreeing not to redeem or to reverse

any redemption demands previously submitted, the Company issued 127,777 ordinary shares of Stardust Power at a price per share of approximately

$10.00 per share at closing of the Business Combination.

Additionally, the Combined Company issued one million

shares of Newco Stock to the Sponsor as additional merger consideration that vest in the event that prior to the eighth anniversary

of the closing of the Business Combination.

Fifty percent

of the Sponsor Earnout Shares will vest when the volume-weighted average price (“VWAP”) of the Common Stock price equals

or exceeds $12.00 per share for a period of 20 trading days in a 30 trading day period, and the remaining fifty percent of the

Sponsor Earnout Shares will vest when the VWAP of the Common Stock price equals or exceeds $14.00 per share for a period of 20

trading days in a 30 trading day period, or are otherwise forfeited.

Upon the occurrence of a change in control, any remaining unvested Sponsor Earnout Shares become vested.

Additionally,

the Combined Company will issue five million shares of Newco Stock to the holders of Legacy Stardust Power as additional merger

consideration that vest in the event that prior to the eighth anniversary of the closing of the Business Combination, the

volume-weighted average price of GPAC II common stock is greater than or equal to $12.00 per share for a period of 20 trading days

in any 30-trading-day period or there is a change of control, or are otherwise forfeited.

prior to the closing of the Business Combination, the SAFE notes automatically converted into the 138,393 shares of Legacy Stardust

Power Common Stock.

prior to the closing of the Business Combination, the convertible notes automatically converted into 55,889 shares of Legacy

Stardust Power Common Stock.

Power issued 1,077,541 shares of Combined Company Common Stock in exchange for $10,075,002 of cash in accordance with the terms of

the PIPE Subscription Agreement in connection with the Business Combination.

Common Stock Purchase Agreement

October 7, 2024, the Company entered into the Purchase Agreement and the related Registration Rights Agreement with B.

Principal Capital II.

Upon the terms and subject to the satisfaction of the conditions set forth in the Purchase Agreement, the

Company will have the right, in its sole discretion, to sell up to $50,000,000 of newly issued shares of the Company’s Common

Riley Principal Capital II, subject to certain conditions and limitations contained in the Purchase Agreement, from time

to time during the term of the Purchase Agreement.

Sales of Common Stock pursuant to the Purchase Agreement, and the timing of any

sales, are solely at the option of the Company.

August 4, 2024, the Company entered into an engineering agreement (the “Primero Agreement”) with Primero USA, Inc.

(“Primero”) pursuant to which Primero agreed to provide certain engineering, design and consultancy professional

services, including to assist in procurement of major equipment, engage relevant third parties for construction and provide a Front

End Loading-3 report of the Company’s Muskogee Lithium facility at Southside Industrial Park, in Muskogee, Oklahoma.

The total amount due pursuant to the Primero Agreement, assuming full performance, is approximately $4.7 million, in the

aggregate, subject to customary potential adjustments.

and Convertible Equity Agreement Transactions

June 6, 2023, Legacy Stardust Power received $2,000,000 in cash from a single investor and funded a simple agreement for future

equity on August 15, 2023 (the “August 2023 SAFE Note”).

The funds were received from American Investor Group Direct LLC

(“AIGD”), an unrelated third party, through its entity which is currently being managed under the purview of an

investment management agreement between them and VIKASA Capital Partners LLC (or “VCP”) (a related party) in

consideration for which VCP is paid investment management fees.

Additionally, the August 2023 SAFE note provides AIGD with certain

rights of conversion upon an equity financing, or cash repayment or other form of repayment upon a change in control or dissolution.

On November 18, 2023, Legacy Stardust Power amended the August 2023 SAFE note (the “amended August 2023 SAFE”), which

introduced a discount rate of 20% to (a) the lowest price per share of preferred stock sold in the preferred stock purchase or (b)

the listing price of the Combined Company Common Stock upon consummation of a SPAC transaction or IPO.

On November 18, 2023, Legacy

Stardust Power also entered into a second simple agreement for future equity with AIGD for an aggregate amount of $3,000,000 (the

“November 2023 SAFE note”) under the same terms and conditions as the amended August 2023 SAFE note.

On February 23,

2024, Legacy Stardust Power entered into a third SAFE note with an individual for an aggregate amount of $200,000 (the

“February 2024 SAFE note”, and together with the August 2023 SAFE note and the November 2023 SAFE note, the “SAFE

The SAFE notes provided Legacy Stardust Power an option to call for additional preferred stock up to $25,000,000 based on the

contingent event of SAFE note conversion and notice issued by the Board, and achievement of certain milestones, for up to 42 months

following such conversion.

March 21, 2024, Legacy Stardust Power entered into a financing commitment and equity line of credit agreement with AIGD.

agreement replaced the above contingent commitment feature of the SAFE notes granting Legacy Stardust Power an option to drawdown up

to an additional $15,000,000 on terms similar to the SAFE notes prior to the First Effective Time.

On April 24, 2024, Legacy

Stardust Power amended and restated the August 2023 SAFE note and the November 2023 SAFE note.

On May 1, 2024, Legacy Stardust Power amended and

restated the February 2024 SAFE note.

These amendments clarified the conversion mechanism in connection with the Business Combination.

Immediately prior to the First Effective Time, the cash received pursuant to the SAFE notes automatically converted into 138,393 shares

of Stardust Power Common Stock.

Stardust Power entered into a convertible equity agreement with AIGD on April 24, 2024 for $2,000,000 and additionally entered into

separate convertible equity agreements with other individuals for a total of $100,000 in April 2024, based on similar terms.

Immediately prior to the First Effective Time, the cash received pursuant to the convertible equity agreements automatically

converted into 55,889 shares of Legacy Stardust Power Common Stock.

Notes with Related Parties

March 2023, Legacy Stardust Power issued unsecured notes to three related parties.

These notes payable provided Legacy Stardust Power the ability to

draw up to $1,000,000 in the aggregate in the following timing:

$160,000 until December 31, 2023 and $840,000 until December 31, 2025.

As of September 30, 2024, the Company has repaid all the notes payable.

in QX Resources

October 2023, Legacy Stardust Power purchased 13,949,579 ordinary shares (1.26% of the total equity) of QX Resources Limited (“QXR”),

a limited liability company whose ordinary shares are listed on the Australian Securities Exchange, for $200,000.

This investment in

the ordinary shares of QXR has been made for strategic purposes and specifically with an intention to gain access for conducting

feasibility studies for the production of lithium products from the lithium brine surface anomaly identified over the 102 square-kilometer

Liberty Lithium Brine Project in SaltFire Flat, California (the “Project”), for which QXR has a binding option to

purchase agreement and operating agreement to earn a 75% interest from IG Lithium LLC (the “Earn-in Venture”).

Legacy Stardust Power is not a direct party to the Earn-in Venture and accordingly has no direct or indirect economic or controlling interest either

in the Project or in any of the associated rights originating from the Earn-in Venture held by QXR.

No formal off-take agreement

has been executed as of September 30, 2024.

Further, no material expenses have been incurred towards the feasibility studies during the

three and nine months ended September 30, 2024.

The Company neither has a controlling financial interest nor does it exercise significant

influence over QXR.

Accordingly, the investment in QXR’s ordinary shares does not result in either the consolidation

or application of equity method of accounting for the Company.

Factors Affecting Our Performance

believe that our performance and future success depend on a number of factors that present significant opportunities for us but also

pose risks and challenges, including competition from other lithium brine and other brine producers, changes to existing federal and

state level incentive framework, changes in regulations, and other factors discussed under the section titled “Risk Factors”

in our Prospectus and this Quarterly Report.

We believe the factors described below are key to our success.

Commercial Operations

are a development stage company, and have executed a purchase and sale agreement, effective

January 10, 2024, with the City of Muskogee.

The critical issue analysis, phase I ESA, geotechnical study, and readiness assessment of the site in

Southside Industrial Park, Muskogee, Oklahoma has been

conducted, while the feasibility study for construction of an electrical substation is underway, and we may be required to conduct other

relevant studies.

Power is developing a large central refinery in a phased approach.

The first phase is the construction of a production line with up to

25,000 tons per annum (“tpa”).

The second phase is to add a second production line with up to 25,000 tpa, to create a total

capacity of up to 50,000 tpa.

technological innovation of Stardust Power’s planned refinery is the ability for the Facility to refine different sources of lithium

brine inputs.

The Facility is being designed to accept lithium brines, of a certain approved chemical composition.

It is Stardust Power’s

intention that the Facility will be able to dilute and pretreat feedstock as necessary, to ensure that various lithium feedstock can

be blended, in order to produce a consistent feedstock.

Stardust Power’s strategy is to differentiate itself by screening for a

broader set of contaminants, in comparison to other lithium refineries.

success will depend on whether we can execute and expand our ecosystem of commercial arrangements with additional suppliers of brine

and executing agreements with them at favorable terms.

The availability of brine for the purpose of extracting lithium is still in a

nascent stage and we would require access to multiple sources as we start commercial production and grow our business.

management team frequently evaluates current and future sources of supplies for reliability of supply and geographic locations for

logistics and cost efficiency.

We would also require to maintain technology arrangements with existing strategic affiliations on

whose patented and proprietary processes we depend on, as well as forge new technology affiliations as exploration, extraction and

purification processes evolve, to obtain raw materials required to manufacture high-quality lithium suitable for consumption by the

EV industry, and other potential usages.

These affiliations will enable us to refine and sell battery grade lithium at competitive

prices, which in turn helps secure the growth and profitability of our business operations in the long term.

Capital Raise

success of our refinery’s activities relating to producing battery grade lithium from brine and the success of our ability to

obtain relevant permits in a timely manner require significant capital investment and financing to fund the initial investment in

all aspects of setting up the operations, and may subsequently be impacted by our operating losses, competition from substitute

products and services from larger companies, protection of proprietary technology of our strategic partners, and dependence on key

unaudited condensed consolidated financial statements have been presented on the basis that the Company is a going concern, which

contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has not

earned any revenue and has been operating at a loss since inception.

The Company has an accumulated deficit and stockholders’

We believe that the cash on hand and additional investments available through issuance of new Common Stock will be

inadequate to satisfy the Company’s working capital and capital expenditure requirements for at least the next twelve months.

These conditions raise substantial doubt about our ability to continue as a going concern for one year from the issuance of these

unaudited condensed consolidated financial statements.

As a development stage company, Stardust Power needs to raise additional

capital to realize its business objectives.

Our long-term success and ability to continue as a going concern is dependent upon our

ability to successfully raise additional capital or financing, or successfully enter into strategic partnerships.

Until commercial

production is achieved from our planned operations, we will continue to incur operating and investing net cash outflows associated

with, among other things, maintaining and acquiring exploration properties and undertaking ongoing exploration

Operating History

have a limited operating history and there is limited historical financial information upon which to base an evaluation of our

Our business and financial condition must be considered in light of the uncertainties, risks, expenses, and

difficulties frequently encountered by companies in their early stages of operation.

As Legacy Stardust Power was incorporated

on March 16, 2023 (inception date), the period from March 16, 2023 to September 30, 2023 is not comparable to the nine months ended

September 30, 2024.

Business Metrics, Non-GAAP Measure

we have yet to start the construction of our Facility and associated commercial production, we do not have financial information on key

business metrics.

However, based on our experience and industry knowledge, we expect the following would be key business metrics:

Material Cost/ton :

This includes the input cost of lithium chloride for the plant.

As this may be obtained from various sources,

the weighted average cost will be calculated to arrive at the raw material cost per ton and reflects the Company’s ability

to procure high-quality raw materials at an appropriate price.

The weighted average method also helps in calculating the gross margin

on a per-ton basis.

The technology implemented and the efficiency of the operations are also reflected on the gross margin per ton.

This multiple is driven by the demand and supply of the lithium price as well as the efficient operations of the

The computation of the selling price may be based on the output sold per long-term contract, which is expected to have a floor

and a cap, as well as the spot price on the date of placing a purchase order by the customer, with the Company and the customer sharing

the difference between the floor and spot price.

This reflects the Capex incurred on a per-ton basis.

It includes both direct and indirect costs.

It also has contingency costs built

in for any impact on Capex, to account for unforeseen events.

The key is to optimize plant efficiency in long-term operations with

the appropriate technology and set-up.

This includes the ongoing expenses incurred from the day-to-day running of the operations.

It helps in measuring how much profit

a company makes on a dollar of sales after paying for variable costs of production, such as wages and raw materials, but before paying

interest or tax.

The lower multiple reflects the efficient functioning of the management.

Utilization :

This measures how much output a plant is producing, compared to its maximum potential output, which is dependent

on two key factors:

(a) design capacity, which impacts the operational efficiency of the plant, and (b) the plant’s downtime

for its maintenance.

Timely maintenance is also the key to running any efficient operations.

since we are yet to generate revenue, non-GAAP measures such as EBITDA and EBITDA margins, cannot be captured currently, but will be

stated once we have commenced commercial production and selling of battery grade lithium to our intended customers.

and Macroeconomic Conditions

business and financial condition has been, and we believe will continue to be, impacted by adverse and uncertain macroeconomic conditions

and events, including higher inflation, higher interest rates, supply chain and logistics challenges, banking crises, and fluctuations

or volatility in capital markets.

of Results of Operations

have not generated any revenue to date.

We expect to generate a significant portion of our future revenue from the sale of battery

grade lithium primarily to the EV market.

We expect that we will enter into long-term contracts (typically 10 years), driven by

industry dynamics of the EV industry, with a pricing structure at cap and ceiling, and sharing of variable price between customers

and the Company.

of Goods Sold

have not sourced any raw material to date.

We expect to source brine from lithium producing suppliers including the oil and gas industry

as a byproduct of their exploration and extraction processes.

We are in the process of negotiating with multiple suppliers for brine feedstock,

including producers from the oil and gas industry.

The length, tenure and pricing of these contracts will depend largely on the type

of supply and is expected to vary from supplier to supplier.

and Administrative

and administrative expense consists of costs to maintain our daily operations and administer the business that are not directly

attributable to generating revenue or cost of goods or raw material.

These consist primarily of consulting services (including

advisory services for organization setup and administrative related services from contractors, consultants), professional services

such as accounting advisory, statutory auditor fees, technical consultants, and business consulting, as well as personnel related

expenses (including stock based compensation), legal and book-keeping services, insurance expenses (including director and

officer’s insurance), investor relations activities and marketing expenses.

We expect our general and administrative expenses

will increase in absolute dollars over time as we continue to invest in initially setting up our Facility, recruit more employees,

and subsequently in the growth of our business and incur costs associated with being a publicly traded company with respect to

compliance with the regulations of the SEC and the Nasdaq Global Market.

Income (Expenses)

income is comprised of interest earned on promissory notes issued during the current quarter.

During the three months ended September 30, 2024, the Company issued promissory notes of

$176,000 and $316,000 to IGX Minerals LLC and IG Lithium LLC respectively.

These notes carry an interest rate of 6% with maturity date

of December 16, 2024 and July 1, 2025, respectively.

expense is comprised of interest payable on short-term loans.

The Company entered into a financing agreement of $465,838 for the purchase

of a D&O insurance policy with AFCO Insurance Premium Finance.

The debt is payable in monthly installments of $44,162 per month for

Payments include a stated interest rate of 8.46% and are secured against a lien on the insurance policy.

expense prior to the quarter ended September 30, 2024 comprised of interest payable on short-term loans.

Legacy Stardust Power entered into a

financing agreement of $80,800 for the purchase of an insurance policy with First Insurance Funding.

Payments include a stated

interest rate of 8.25% and are secured against a lien on the insurance policy.

The debt was fully paid off as at September 30,

in fair value of investment in equity securities

in fair value of investment in equity securities relates to movements in fair value of investment in equity securities of strategic investments

such as the investment in QX Resources, that need to be recorded in the statement of operations for each reporting period, based on readily

available quoted prices for such investment.

in fair value of SAFE notes and convertible notes

Change in fair value of SAFE notes and convertible notes relates to movements in fair value of SAFE notes and convertible notes that have been

classified as liability instruments in the financial statements, which need to be recorded in the statement of operations for each

reporting period, based on third party valuations carried out at period end.

Upon consummation of the Business Combination on July

8, 2024, the SAFE notes and convertible notes were converted into Common Stock of the Company.

in fair value of earnout shares

in fair value of earnout shares relates to movements in fair value of earnout shares issued to the Sponsor which have been classified

as liability instruments in the financial statements, that need to be recorded in the statement of operations for each reporting period,

based on third party valuations carried out at period end.

in fair value of warrants

in fair value of warrants relates to movements in fair value of Public Warrants and Private Placement Warrants which have been classified as liability

instruments in the financial statements, that need to be recorded in the statement of operations for each reporting period, based on

fair value at period end.

for income taxes

are constituted as a Delaware corporation and are subject to U.S.

federal and state income taxes based on enacted rates, as adjusted for allowable

credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax law.

of Operations

the period from November 3, 2020 (date of inception) to June 30, 2024, our activities consisted of formation and preparation for the

Public Offering and, subsequent to completion of the public offering on January 14, 2021, identifying and completing a suitable initial

Business Combination.

As such, we had no operations or significant operating expenses until after the completion of the Public Offering

in January 2021.

normal operating costs since January 14, 2021 include costs associated with our search for an initial Business Combination (see below),

costs associated with our governance and public reporting (see below), and a charge of $25,000 per month from our Sponsor for administrative

During the three months ended June 30, 2024, the Sponsor waived the administrative fee payable.

Costs for such Sponsor provided

administrative services aggregate approximately ($350,000) and ($275,000) respectively for the three and six months ended June 30, 2024

and approximately $75,000 and $150,000 respectively for the three and six months ended June 30, 2023.

Costs associated with our governance and public

reporting have increased since the Public Offering and were approximately $194,000 and $353,000, respectively, for the three and six

months ended June 30, 2024 and approximately $135,000 and $241,000, respectively, for the three and six months ended June 30, 2023.

costs for work associated with reviewing potential Business Combinations as well as with the January 2024 and 2023 proxy and Extension

Meetings was approximately $1,618,000 and $3,475,000 respectively, in the three and six months ended June 30, 2024 and approximately

$96,000 and $840,000 for the three and six months ended June 30, 2023.

the six months ended June 30, 2024, the Company negotiated settlement and release agreements with various creditors in exchange for

certain payments made and resulting in the reversal of accruals totaling approximately $2,961,000 which is included as a credit to operating

expenses in the accompanying unaudited condensed consolidated statements of operations.

income (expense) includes both interest income and the change in the fair value of the Public Warrants and Private Placement

Warrants at each reporting date.

Interest income was approximately $215,000 and 488,000 respectively, for the three and six months

ended June 30, 2024 and approximately $471,000 and 1,392,000 respectively, for the three and six months ended June 30, 2023.

variation in interest income reflects market conditions as well as changing Trust Account balances due to redemptions.

is required to measure the fair value of the Public Warrants and Private Placement Warrants at the end of each reporting period and

recognize changes in the fair value from the prior period in the Company’s operating results for each current period.

change in fair value of warrants was item of other expense of an aggregate of approximately $928,000 and $1,569,000, respectively in

the three and six months ended June 30, 2024 and was an item of other income of approximately $1,964,000 and other expenses of

$56,000, respectively in the three and six months ended June 30, 2023.

were no income tax expenses for the three and six months ended June 30, 2024 or 2023 because we are a Cayman Islands exempted

company and are not subject to income tax in the United States or in the Cayman Islands.

We did not withdraw any interest from the

Trust Account in the three and six months ended June 30, 2024 or 2023.

following table sets forth our unaudited condensed statements of operations information for the period indicated:

Nine Months Ended

Period from March 16, 2023 (inception)

and administrative expenses

(11,483,389 )

income (expenses)

note issuance costs

transaction costs

in fair value of earnout shares

in fair value of warrant liability

in fair value of investment in equity securities

in fair value of convertible equity

in fair value of SAFE notes

other expenses

(10,092,312 )

(14,185,887 )

(11,357,302 )

Legacy Stardust Power was incorporated on March 16, 2023 (inception date), hence the period from March 16, 2023 to September 30, 2023 is not comparable

to the nine months ended September 30, 2024.

did not earn any revenue since inception.

of Goods Sold

did not manufacture any products, and hence did not incur any direct costs related to production or carrying inventory, since inception.

and Administrative Expenses

and administrative expenses primarily attributable to fees for professional consulting fees, mainly comprising formation and organization

structure, advisory marketing advisory services and other consulting, legal services and advisory services with respect to the Company’s

organization, fees for strategic investments evaluation and employee related compensation expenses representing base salary, benefits

and stock based compensation expense.

The details of these expenses are as follows:

March 16, 2023

Professional and

consulting fees

Legal and book-keeping services

Payroll and related taxes

Marketing and Advertisement

the three months ended September 30, 2024, general and administrative expenses increased compared to three months ended September

30, 2023, primarily due to higher employee related costs driven by an increase in stock based

compensation and increase in the number of employees, increase in legal fees, professional and consulting fees, and in

other administrative expenses in line with growth in operations.

The increase was partially offset by decrease in, marketing advisory services and other consulting,

legal services and advisory services with respect to the Company’s organization incurred in comparative

the nine months ended September 30, 2024, general and administrative expenses increased compared to the period March 16, 2023

(inception) to September 30, 2023, primarily due to higher employee related costs driven by an increase in stock based compensation

expense and number of employees, increase in legal and professional services such as legal fees, professional and consulting fees,

accounting advisory, statutory auditor fees, technical consultants and business consulting and an increase in business development and other administrative expenses in line with

growth in operations.

The increase was partially offset by decrease in marketing advisory services and other consulting,

legal services and advisory services with respect to the Company’s organization incurred in comparative

Income (Expenses)

note issuance costs

note issuance costs of Nil for the three and nine months ended September 30, 2024 and $29,655 and $466,302 for the three months

ended September 30, 2023 and period since March 16, 2023 (inception) through September 30, 2023, respectively, primarily represent

$435,000 of capital advisory services fees paid to related party for sourcing the SAFE note commitment from the investor and $31,302

of legal costs incurred towards setting up and executing the SAFE note agreements.

transaction costs

transaction costs of Nil for the three and nine months ended September 30, 2024 and $35,690 and $452,519 for the three months ended

September 30, 2023 and period since March 16, 2023 (inception) through September 30, 2023, respectively, relate to costs that

represent fees and expenses, primarily legal expenses associated with evaluation of potential other SPAC merger opportunities that

the Company ultimately did not execute, including $100,000 of fees paid to a related party.

the three months ended September 30, 2024, interest expenses increased compared to three months ended September 30, 2023, primarily

due to interest expense incurred on the financing agreement for the Company’s purchase of D&O and other insurance policies.

The Company had no financing agreement during the comparative period.

the nine months ended September 30, 2024, interest expenses increased compared to the period March 16, 2023 (inception) to September

30, 2023, primarily due to interest expense incurred on the financing agreement for purchase

of general insurance policies.

in fair value of investment in equity securities

increase in fair value of investment in equity securities of $11,678 and decrease in the fair value of investment of $150,994 during

the three and nine months ended September 30, 2024, respectively, is due to change in fair value of investment in QXR based on

readily available quoted prices for such investment.

The Company did not have any such investment in the comparative

in fair value of SAFE notes

increase in fair value of SAFE notes of Nil and $955,000 during the three and nine months ended September 30, 2024, respectively, is due

to changes in estimates related to inputs used in the valuation, which have been classified as liability instruments, based on third

party valuations, prior to the conversion of the instruments into Common Stock.

The SAFE notes, which had previously been classified as

liability instruments, were converted to equity following the consummation of the Business Combination with GPAC II on July 8, 2024.

The Company had not issued any such SAFE notes in the comparative period.

in fair value of convertible notes

increase in fair value of convertible notes of Nil and $471,400 during the three and nine months ended September 30, 2024, is due to changes

in estimates related to inputs used in the valuation, which have been classified as liability instruments, based on third party valuations.

The convertible notes, which had previously been classified as liability instruments, were converted to equity following the consummation

of the Business Combination with GPAC II on July 8, 2024.

The Company had not issued any such convertible notes in the comparative period.

in fair value of earnout shares

in fair value of earnout shares decreased by $1,636,100 for the three and nine months ended September 30, 2024, relates to movements in fair value

of earnout shares issued to the Sponsor, at the closing of the Business Combination, which have been classified as liability instruments in the financial statements, that need to

be recorded in the statement of operations for each reporting period, based on third party valuations carried out at period end.

Company had not issued any such earnout shares in the comparative period.

in fair value of warrants

in fair value of warrants which was an increase of $2,753,964 for the three and nine months ended September 30, 2024, relates to

movements in fair value of public and private placement warrants which have been classified as liability instruments in the

financial statements, that need to be recorded in the statement of operations for each reporting period, based on fair value at

The Company had not issued any such warrants in the comparative period.

the three and nine months ended September 30, 2024, three months ended September 30, 2023 and period since March 16, 2023 (inception)

through September 30, 2023, the tax expense is Nil, due to net losses incurred during these periods.

We do not carry any deferred tax

assets on the balance sheet as at September 30, 2024 and December 31, 2023, primarily due to net operating loss carryforwards resulting

from historically incurred net operating losses and full valuations allowance of those losses, as our ability to realize future tax benefits

related to these assets is largely dependent upon operational profitability, which is uncertain.

As a result of this uncertainty, we

have established a full valuation allowance, and have not recognized a net provision or benefit for income taxes in the periods reported.

the three and nine months ended September 30, 2024, the Company incurred a net loss of $10,092,312 and $14,185,887 respectively, and

for the three months ended September 30, 2023 and for the period from March 16, 2023 (inception) through September 30, 2023, the

Company incurred a net loss of $843,800 and $2,828,585 respectively.

Since the Company is yet to start commercial production of

battery grade lithium, the operating expenses are expected to increase, as the Company starts to recruit more personnel to perform

general operational tasks and set up the Facility and executed supply agreements.

and Capital Resources

January 14, 2021, we consummated the Public Offering of an aggregate of 30,000,000 Units at a price of $10.00 per unit generating gross

proceeds of approximately $300,000,000 before underwriting discounts and expenses.

Simultaneously with the consummation of the Public

Offering, we consummated the private placement of 5,566,667 Private Placement Warrants, each exercisable to purchase one share of our

Class A Ordinary Shares at $11.50 per share, to the Sponsor, at a price of $1.50 per Private Placement Warrant, generating gross proceeds,

before expenses, of approximately $8,350,000.

At that time, the proceeds in the Trust Account were initially invested in cash.

At June 30, 2024 and December 31, 2023, the proceeds in the Trust Account were invested in cash.

net proceeds from the Public Offering and private placement were approximately $301,471,000, net of the non-deferred portion of the underwriting

commissions of $6,000,000 and offering costs and other expenses of approximately $904,000 (including approximately $554,000 of offering

expenses and approximately $350,000 of insurance that is accounted for as prepaid expense).

$300,000,000 of the proceeds of the Public

Offering and the private placement have been deposited in the Trust Account and are not available to us for operations (except certain

amounts to pay taxes, if any).

At June 30, 2024 and December 30, 2023, we had approximately $0 and $22,000, respectively, of cash available

outside of the Trust Account to fund our activities until we consummate an initial Business Combination.

January 11, 2023, certain shareholders elected to redeem 26,068,281 Class A Ordinary Shares at $10.167 per share, approximately $265,050,000,

from the Trust Account following the 2023 Extension Meeting.

January 9, 2024, in connection with the 2024 Extension Meeting, holders of 2,137,134 Class A Ordinary Shares exercised their right to

redeem their shares for cash at a redemption price of approximately $11.05 per share, for an aggregate redemption amount of approximately

Following the redemptions, 1,794,585 Class A Ordinary Shares remain outstanding.

Further, in connection with the 2024 Extension

Meeting, the Company entered into Non-Redemption Agreements with holders of 1,503,254 Class A Ordinary Shares in exchange for the transfer

of 127,777 shares.

June 27, 2024, in connection with the shareholder meeting to approve the Business Combination and other related matters, the holders

of 1,660,035 Class A Ordinary Shares of the Company exercised their right to redeem their shares for cash at a redemption price of approximately

$11.38 per share for an aggregate redemption amount of approximately $18,893,209 reducing the number of Class A Ordinary Shares from

1,794,585 to 134,550.

Subsequently on July 3, 2024 holders of 2,877 GPAC II Class A Ordinary Shares

reversed their redemptions , resulting in a total of 137,427

GPAC II Class A Ordinary Shares outstanding as of July 3, 2024 .

the consummation of the Public Offering, the Company’s only sources of liquidity were an initial purchase of our Class B Ordinary

Shares for $25,000 by the Sponsor, and the availability of loans to us of up to $300,000 by our Sponsor under the Note, a total of $199,000

was actually loaned by the Sponsor against the issuance of the Note.

The Note was non-interest bearing and was paid in full on January

14, 2021 in connection with the closing of the Public Offering, accordingly, no amounts are available or were outstanding under the Note

at June 30, 2024 and December 31, 2023.

June 30, 2024, the Company had approximately $0 in cash and approximately $11,389,000 in working capital deficit.

The Company has incurred

significant costs and expects to continue to incur additional costs in pursuit of its Business Combination.

Until June 30, 2024, and

through the closing date, the Company used the funds from Sponsor loans in connection with consummating the Business Combination with

completion of the Business Combination with Stardust Power Inc.

on July 8, 2024, the Company’s consolidated cash balance increased

due to the PIPE investments of $10,075,000, and $1,481,835 of trust account proceeds, net of redemptions and related fees.

company is also required to make various payments including SPAC transaction costs incurred upon the close of the Business Combination.

of the date on which the accompanying unaudited condensed consolidated financial statements were available to be issued, we believe

that the cash on hand and additional investments obtained through the Business Combination will be inadequate to satisfy

Company’s working capital and capital expenditure requirements for at least the next twelve months.

The ability of the Company

to continue as a going concern is dependent upon management’s plan to raise additional capital from issuance of equity or

receive additional borrowings to fund the Company’s operating and investing activities over the next year.

Management intends to finance operations over the next twelve months through

additional issuance of equity or borrowings.

If adequate funds are not available, we may be required to curtail, delay, or eliminate some

or all of our planned activities, or raise additional financing to continue to fund operations, and may not be able to continue as a going

No assurance can be given that any future financing will be available or,

if available, that it will be on terms that are satisfactory to us.

Even if we are able to obtain additional financing, it may contain

undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of

equity financing.

Failure to secure adequate financing could have a material adverse effect on the business, operations and financial

sheet financing arrangements

have no obligations, assets or liabilities which would be considered off-balance sheet arrangements.

We do not participate in transactions

that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which

would have been established for the purpose of facilitating off-balance sheet arrangements.

have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or

commitments of other entities, or entered into any agreements for non-financial assets.

June 30, 2024, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.

connection with the Public Offering, we entered into an Administrative Support Agreement with the Sponsor, pursuant to which the Company

pays the Sponsor $25,000 per month for office space, utilities and secretarial and administrative support.

During the three months ended

June 30, 2024, the Sponsor waived the administrative fees.

connection with identifying an initial Business Combination candidate and negotiating an initial Business Combination, the Company may

enter into engagement letters or agreements with various consultants, advisors, professionals and others in connection with an initial

Business Combination.

The services under these engagement letters and agreements can be material in amount and in some instances can

include contingent or success fees.

Contingent or success fees (but not deferred underwriting compensation) would be charged to operations

in the quarter that an initial Business Combination is consummated.

In most instances (except with respect to our independent registered

public accounting firm), these engagement letters and agreements are expected to specifically provide that such counterparties waive

their rights to seek repayment from the funds in the Trust Account.

JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements

based on the effective date for private (not publicly traded) companies.

We are electing to delay the adoption of new or revised accounting

standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such

standards is required for non-emerging growth companies.

As a result, our financial statements may not be comparable to companies that

comply with new or revised accounting pronouncements as of public company effective dates.

We have devoted substantial efforts and financial resources to raising capital and organizing and staffing the Company, and

as a result, have incurred significant operating losses.

As of September 30, 2024 and December 31, 2023, we had an accumulated deficit

of $43.0 million and $3.8 million respectively.

have not earned any revenue and have been operating at a loss since inception.

We have an accumulated deficit and stockholders’

primary requirements for liquidity and capital are investment in new facilities, new technologies, working capital and general corporate

Specifically, in this regard, the total refinery cost, which includes all direct and indirect costs and contingencies needed to

build the refinery, has been estimated at $1,165 million.

We intend to finance our project cost through a mix of debt, equity and potential

government grants.

We expect our operational expenditures to increase for the foreseeable future in connection with ongoing and future

Specifically, expenditures will increase as we:

and build facilities;

in research and development activities to advance the development of our technologies;

additional expenses associated with transitioning to, and operating as, a public company.

current and ongoing liquidity requirements will depend on many factors, including:

our launch cadence, the timing and extent of spending

to support additional development efforts, the introduction of new and enhanced offerings, the continuing market adoption of our offerings,

the timing and extent of additional capital expenditures to invest in manufacturing facilities and additional spaceports.

we may, in the future, enter into arrangements to acquire or invest in complementary businesses, business offerings and technologies.

However, we do not have agreements or commitments to enter into any such acquisitions or investments at this time.

of Liquidity and Going Concern

have funded our operations with proceeds from sales of Legacy Stardust Power Common Stock, promissory notes, SAFE notes, and convertible

equity agreements.

As of September 30, 2024, our promissory notes were fully repaid.

To continue as a going concern, we anticipate

funding our near-term operations through the sale of equity securities, promissory notes, additional SAFE notes, debt financing or from

other capital sources.

If adequate funds are not available, we may be required to curtail, delay, or eliminate some or all of our

planned activities, or raise additional financing to continue to fund operations, and may not be able to continue as a going

unaudited condensed consolidated financial statements have been presented on the basis that it is a going concern, which

contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company is a

development stage entity having no revenues, has incurred net loss since inception of $43,050,972 and has stockholders’

deficit of $13,304,610 as at September 30, 2024.

The Company expects to continue to incur significant costs in pursuit of its

operating and investment plans.

These costs exceed the Company’s existing cash balance and net working capital.

October 7, 2024, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a related

Registration Rights Agreement (the “Registration Rights Agreement”) with B.

Riley Principal Capital II, LLC (“B.

Riley Principal Capital II”).

Upon the terms and subject to the satisfaction of the conditions set forth in the Purchase

Agreement, the Company will have the right, in its sole discretion, to sell up to $50,000,000 of newly issued shares of the

Company’s Common Stock to B.

Riley Principal Capital II, subject to certain conditions and limitations contained in the

Purchase Agreement, from time to time during the term of the Purchase Agreement.

Sales of Common Stock pursuant to the Purchase

Agreement, and the timing of any sales, are solely at the option of the Company.

We believe that the cash on hand, and additional

investments available through issuance of new Common Stock, will be inadequate to satisfy the Company’s working capital and

capital expenditure requirements for at least the next twelve months.

The ability of the Company to continue as a going concern is

dependent upon management’s plan to raise additional capital from the issuance of equity or receive additional borrowings to

fund the Company’s operating and investing activities over the next year.

These unaudited condensed consolidated financial

statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of

liabilities that might be necessary should the Company be unable to continue as a going concern.

assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to

Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing,

or cause substantial dilution for our stockholders, in the case of equity financing.

Failure to secure adequate financing could have

a material adverse effect on the business, operations and financial performance of the Company.

March 2023, Legacy Stardust Power issued unsecured notes to three related parties.

The notes payable provided the Company the ability to draw

up to $1 million in aggregate in the following timing:

$160,000 until December 31, 2023, and $840,000 until December 31, 2025.

facilities accrue interest, compounding semi-annually, at the long-term semiannual Federal rate, as established by the Internal Revenue

Service, which effectively was 3.71% for the period from March 2023, when the notes were drawn.

of September 30, 2023, Legacy Stardust Power utilized the entirety of the available facilities, and $160,000 was payable by December 31, 2023, and $840,000

was payable by December 31, 2025.

As of September 30, 2024 and December 31, 2023, the Company has repaid all of the notes payable.

funding borrowing

November 19, 2023, Legacy Stardust Power borrowed $80,800 from First Insurance Funding (a Wintrust Company) to finance its insurance

The total of premium, taxes and fees aggregated to $101,000, of which an initial down payment of $20,200 was paid by

Stardust Power, and the balance financed through First Insurance Funding.

The loan has an annual percentage rate of 8.25%, and is

payable in 10 installments through September 21, 2024.

As at September 30, 2024, the loan was fully repaid.

July 18, 2024, the Company entered into a financing agreement of $465,838 for the purchase of an insurance policy with

AFCO Insurance Premium Finance.

The debt is payable in monthly installments of $44,162 per month for 11 months.

Payments include a

stated interest rate of 8.46% and are secured against a lien on the insurance policy.

notes and convertible notes

June 6, 2023, Legacy Stardust Power received $2,000,000 in cash from a single investor and funded the August 2023 SAFE note on

August 15, 2023.

The funds were received from an unrelated third party, through its entity which is currently being managed under

the purview of an investment management agreement between them and VIKASA Capital Advisors, LLC (a related party) in consideration

for which VIKASA Capital Advisors, LLC is paid investment management fees.

November 18, 2023, Legacy Stardust Power amended the August 2023 SAFE note (the “amended August 2023 SAFE note”), which

introduced a discount rate of 20% to (a) the lowest price per share of preferred stock sold in the preferred stock purchase, or (b)

the listing price of the Combined Company Common Stock upon consummation of a SPAC transaction or IPO.

On November 18, 2023, Legacy

Stardust Power also entered into the November 2023 SAFE note for an aggregate amount of $3 million with the same investor under the

same terms and conditions as the amended August 2023 SAFE note.

Each of the SAFE notes converted, immediately prior to the First

Effective Time, into Legacy Stardust Power Common Stock.

February 23, 2024, Legacy Stardust Power signed the February 2024 SAFE note for an amount of $200,000.

In accordance with the terms

of the February 2024 SAFE note, the SAFE notes converted into shares of Legacy Stardust Power Common Stock, immediately prior to the

First Effective Time on similar terms to the other SAFE notes.

SAFE notes are classified as liabilities based on evaluating characteristics of the instruments and are presented at fair value as

non-current liabilities in the Company’s unaudited condensed consolidated balance sheet.

SAFE notes provided Legacy Stardust Power an option to call for additional preferred stock up to 25,000,000 based on the contingent

event of SAFE note conversion and notice issued by the Stardust Power board of directors (the “Board”), and achievement

of certain milestones, for up to 42 months following such conversion.

This feature was determined to be an embedded feature and is

valued as part of the liability value associated with the instrument as a whole.

Additionally, the SAFE notes provided the investor

certain rights upon an equity financing, change in control or dissolution as described in Note 6 of the unaudited condensed

consolidated financial statements of the Company.

The estimated fair value of the SAFE notes considered the timing of issuance and

whether there were changes in the various scenarios since issuance.

As of December 31, 2023, the fair value of the SAFE notes was

$5,212,200 and were classified as a non-current liability.

The SAFE notes had no interest rate or maturity date, description of

dividend and participation rights.

The liquidation preference of the SAFE notes was junior to other outstanding indebtedness and

creditor claims, on par with payments for other SAFE notes and/or preferred equity, and senior to payments for other equity of the

Company that were not SAFE notes and/or pari preferred equity.

March 21, 2024, Legacy Stardust Power entered into a financing commitment and equity line of credit agreement with AIGD.

agreement replaced the above contingent commitment feature of the SAFE notes with granting Legacy Stardust Power an option to

drawdown up an additional $15,000,000 on terms similar to existing SAFE notes prior to the First Effective Time.

On April 24, 2024,

Legacy Stardust Power amended and restated the August 2023 SAFE note and the November 2023 SAFE note.

On May 1, 2024, Legacy Stardust Power

amended and restated the February 2024 SAFE note.

These amendments clarified the conversion mechanism in connection with the Business

In accordance with the terms of the convertible equity agreements, immediately prior to the First Effective Time, the

cash received pursuant to the SAFE note agreements automatically converted into 636,916 shares of Combined Company Common

April 24, 2024, Legacy Stardust Power entered into a convertible equity agreement for $2,000,000 with AIGD.

Further, Legacy Stardust Power entered into separate

convertible equity agreements with other individuals for a total of $100,000 in April 2024, entered into based on similar terms to the

AIGD convertible equity agreement.

In accordance with the terms of the convertible equity agreements, immediately prior to the First

Effective Time, the cash received pursuant to the convertible equity agreements automatically converted into 257,216 shares of Combined

Company Common Stock.

following table summarizes our cash flows for the periods presented:

Nine months ended

September 30, 2024

March 16, 2023

September 30, 2023

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net change in cash

Flows Used in Operating Activities

the nine months ended September 30, 2024, net cash used in operating activities was $8.5 million, consisting of a $14.2 million net

loss, adjusted for $9.7 million non-cash charge for change in fair value of SAFE notes, convertible notes, investments, stock based

compensation, warrant liability, earnout shares and a $4.1 million net change in operating assets and liabilities, primarily driven

by an increase of $3.6 million in accounts payable and other current liabilities which represent the various costs that are expected

to be incurred as we set up operations during this period, and $0.4 million in prepaid expenses.

the period March 16, 2023 (inception) to September 30, 2023, net cash used in operating activities was $1.6 million, consisting of a

$2.8 million net loss, adjusted for $0.4 million charge for SAFE note issuance costs and $0.8 million net change in operating assets

and liabilities, primarily driven by an increase of $0.8 million in accounts payable, due to related parties and other current

liabilities which primarily represent the various costs that are expected to be incurred as we set up operations during this period

partially offset by $0.02 million prepaid expenses.

Flows Used in Investing Activities

the nine months ended September 30, 2024, net cash used in investing activities was $1.3 million, primarily representing $0.7 million

on account of pre-acquisition capital project costs related to construction of the refinery, $0.1 million investments in other long-term

assets and $0.5 million used in the promissory notes issued.

For the period March 16, 2023 (inception) to September 30, 2023, net cash

used in investing activities was $0.03 million, primarily representing $0.03 million on account of pre-acquisition capital project costs

related to acquisition of land.

Flows from Financing Activities

the nine months ended September 30, 2024, net cash provided by financing activities was $10.1 million related primarily to cash

received from proceeds for issuance of convertible notes of $2.1 million, SAFE notes of $0.2 million, exercise of warrants of $1.6

million, proceeds from a short-term loan of $0.5 million and proceeds from closing of the Business Combination including issuance of

PIPE shares of $11.6 million, offset partially by deferred Business Combination transaction costs of $4.1 million, repayment of

short-term loans of $0.2 million and repayment of notes payable to related parties of $1.6 million.

cash provided by financing activities was $2.6 million for the period March 16, 2023 (inception) to September 30, 2023, related

primarily to $2.0 million received for SAFE notes and $1.0 million cash received from the proceeds from investor deposit offset

partially by payment of SAFE notes issuance cost to related parties of $0.4 million.

Additionally,

we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions

we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over

financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required

of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement

that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s

report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose

certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of

the Chief Executive Officer’s compensation to median employee compensation.

These exemptions will apply for a period of five years

following the completion of our Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

Accounting Estimates

requirement under 229.303 (Item 303) Management’s discussion and analysis of financial condition and results of operations is:

Critical accounting estimates.

Critical accounting estimates are those estimates made in accordance with generally accepted accounting

principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact

on the financial condition or results of operations of the registrant.

Critical accounting estimates provide qualitative and quantitative

information necessary to understand the estimation uncertainty and the impact the critical accounting estimate has had or is reasonably

likely to have on financial condition or results of operations to the extent the information is material and reasonably available.

information should include why each critical accounting estimate is subject to uncertainty and, to the extent the information is material

and reasonably available, how much each estimate and/or assumption has changed over a relevant period, and the sensitivity of the reported

amount to the methods, assumptions and estimates underlying its calculation.

preparation of financial statements and related disclosures in conformity with U.S.

GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial

statements, and income and expenses during the periods reported.

results could materially differ from those estimates.

Management has determined that the Company has no critical accounting estimates.

during the period, we drew down and repaid our notes payable to related parties.

and Capital Expenditure Requirements

Company has not earned any revenue and has been operating at a loss since inception.

The Company has an accumulated deficit and stockholders’

These conditions raise substantial doubt about its ability to continue to finance operations over the next twelve

months and is dependent upon management’s plan to raise additional capital from issuance of equity or receive additional borrowings

to fund the Company’s operating and investing activities over the next one year.

Our intended capital requirements depends on many factors including the capital expenditures required

to set up our Facility, and undertake all activities necessary to start commercial production, prices of capital equipment, and preliminary

In the future, it will depend on our expansion of acquiring new assets/sites to have access and potential ownership of raw material.

We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual

property rights.

We may be required to seek additional equity or debt financing.

If additional financing is required from outside sources,

over and above what we are intending to raise currently, we may not be able to raise it on acceptable terms or at all.

If we are unable

to raise additional capital when desired, our business, results of operations and financial condition would be materially and adversely

affected and may not be able to continue our intended operations as a going concern.

and Contractual Obligations

have entered into an engineering agreement with Primero USA, Inc.

for $4.7 million to provide a Front End Loading-3 report.

While the Company has not entered into any other binding commitments, other strategic partnerships are being evaluated which

could lead to future contractual obligations.

of Critical Accounting Estimates

believe that the following accounting policies and estimates involve a high degree of judgment and complexity.

Accordingly, these are

the policies we believe are the most critical to aid in fully understanding and evaluating our unaudited condensed consolidated financial

condition and results of our operations.

See Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere

in this Quarterly Report for a description of our other significant accounting policies.

The preparation of our unaudited condensed consolidated

financial statements in conformity with U.S.

GAAP requires us to make estimates and judgments that affect the amounts reported in those

financial statements and accompanying notes.

Although we believe that the estimates we use are reasonable, due to the inherent uncertainty

involved in making those estimates, actual results reported in future periods could differ from those estimates.

the inception of a contract, we assess whether the contract is, or contains, a lease.

Our assessment is based on whether:

(1) the contract

involves the use of a distinct identified asset, (2) we obtain the right to substantially all the economic benefit from the use of the

asset throughout the term of the contract, and (3) we have the right to direct the use of the asset.

are classified as either finance leases or operating leases.

A lease is classified as a finance lease if any one of the following criteria

(1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the

asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset, (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset, or (5) the leased asset

is so specialized that the asset will have little to no value at the end of the lease term.

A lease is classified as an operating lease

if it does not meet any one of the above criteria.

have elected the practical expedient to account for lease and non-lease components as a single lease component.

We also elected not to

record right of use assets and associated lease liabilities on the unaudited condensed consolidated balance sheet for leases that have

a term, including any reasonably assured renewal terms, of 12 months or less at the lease commencement date.

We recognize lease payments

for these short-term leases in the unaudited condensed consolidated statement of operations on a straight-line basis over the lease term

and variable lease payments in the period in which the obligation for those payments is incurred.

have one short-term lease for office space in Oklahoma City, Oklahoma.

Transaction Costs

accordance with ‘Codification of Staff Accounting Bulletins – Topic 5:

Miscellaneous Accounting A.

Offering’ (“SAB Topic 5”), public offering related costs, including legal fees and advisory and consulting fees,

are deferred until consummation/completion of the proposed public offering.

Legacy Stardust Power has deferred $1,005,109 of related

costs incurred towards proposed public offering which are presented within current assets in the unaudited condensed consolidated

balance sheets as at December 31, 2023.

During the nine months ended September 30, 2024,

Legacy Stardust Power deferred $6,496,114 of related costs incurred towards the proposed public offering.

After the consummation of

the Business Combination, costs allocated to equity-classified instruments amounting to $7, 501 ,223

were recorded as a reduction to additional paid-in capital.

to the quarter end, the Company entered into the Purchase Agreement with B.

Riley Principal Capital II.

The Company has

deferred $199,724 of related costs incurred towards this offering which is presented within current assets in the unaudited condensed

consolidated balance sheets as at September 30, 2024.

If the offering is terminated, the deferred

offering costs will be expensed.

taxes are recorded in accordance with ASC 740, “Income Taxes” (“ASC 740”), which provides for deferred taxes

using an asset and liability approach.

We recognize deferred tax assets and liabilities for the expected future tax consequences of events

that have been included in the financial statements or tax returns.

Deferred tax assets and liabilities are determined based on the difference

between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences

are expected to reverse.

Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not

that some or all of the deferred tax assets will not be realized.

We account for uncertain tax positions in accordance with the provisions

When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit would more

likely than not be realized assuming examination by the taxing authority.

The determination as to whether the tax benefit will more likely

than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

We recognize any interest and penalties accrued related to unrecognized tax benefits as income tax expense.

Share Liability, SAFE Notes, and Convertible Notes

account for the earnout share liability, SAFE notes, and convertible notes in accordance with the guidance in ASC 480,

“Distinguishing Liabilities from Equity” and ASC 815-40, “Derivatives and Hedging,” whereby it is accounted

for as a liability which requires initial and subsequent measurements at fair value.

This liability is subject to re-measurement at

each balance sheet date until a triggering event, equity financing, change in control or dissolution occurs, and any change in fair

value is recognized in the Company’s unaudited condensed consolidated statements of operations.

The fair value estimate

includes significant inputs not observable in market, which represents a Level 3 measurement within the fair value hierarchy.

valuation uses probabilities considering pay-offs under various scenarios as follows:

(i) an equity financing where the SAFE notes

and convertible note will convert into certain preferred stock;

(ii) a change in control where the SAFE note and convertible note

holders will have an option to receive a portion of the cash and other assets equal to the purchase amount;

(iii) a dissolution

event where the SAFE notes and convertible note holders will be entitled to the purchase amount subject to liquidation priority and (iv)

achievement of Combined Company Common Stock price targets, where the earnout share liability will convert into certain number of

shares of Common Stock.

The value of the instrument is likely to vary significantly based on the probability of each of the

conversion scenarios that occurs, and management will reassess such probability at each reporting period.

These probabilities will

ultimately be factored into the valuation of the instrument and will require third party valuation experts to assist in the

determination of this value.

The changes in value of the instrument could impact the unaudited condensed consolidated financial

statements materially and therefore constitute a critical estimate.

Value of Common Stock

to the absence of an active market for our Common Stock prior to consummation of the business combination, and in accordance with the American Institute of Certified Public

Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation, the fair value of our

Common Stock is estimated based on valuation carried out by third party appraisers and approved by our Board based on current

available information and after exercising reasonable judgment.

This estimate requires significant judgment and considers several

factors, including:

third-party valuations of our Common Stock;

probabilities of future liquidation scenarios;

future cash flows provided by management;

public company information;

actual operating and financial performance;

business conditions and projections;

stage of development;

and global capital markets conditions;

volatility based on comparable public company stock performance over the time period being measured.

weightings assigned to potential liquidity scenarios were based on management’s expected near-term and long-term funding requirements

and assessment of the most attractive liquidation possibilities at the time of the valuation.

In the most heavily weighted scenarios,

the enterprise valuation was calculated using a valuation approach based on a combination of the guideline public company approach, an

income approach analysis with an option pricing model and a cost approach, to determine the amount of aggregate equity value allocated

to our Common Stock.

all scenarios, a discount for lack of marketability (“DLOM”) was applied to arrive at a fair value of common shares.

accounts for the lack of marketability of shares that are not publicly traded.

of these approaches and methodologies involves the use of estimates, judgment and assumptions that are complex and subjective, such

as those regarding our expected future revenue, expenses, operations and cash flows, discount rates, industry and economic outlook,

and the probability of and timing associated with potential future events.

Changes in any or all estimates and assumptions or the

relationships between those assumptions impact our valuations as of each relevant valuation date and may have a material impact on

the valuation of our Common Stock.

Estimates of the fair value of the Common Stock are used in the measurement of stock based

compensation.

Following the Business Combination, it is no longer necessary to determine the fair value of our business as the

Stardust Power Common Stock is now publicly traded.

Accounting Pronouncements

Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this report for additional details regarding

recent accounting pronouncements.

Company reports segment information in the same way management internally organizes the business in assessing performance and making

decisions regarding allocation of resources in accordance with ASC Topic 280, “ Segment Reporting .” The Company has

a single reportable operating segment which operates as a single business platform.

In reaching this conclusion, management considered

the definition of the Chief Operating Decision Maker (“CODM”), how the business is defined by the CODM, the nature of the

information provided to the CODM, how the CODM uses such information to make operating decisions, and how resources and performance are

The Company has a single, common management team and our cash flows are reported and reviewed with no distinct cash flows.

Party Transactions

Stardust Power entered into a service agreement with VCP, an affiliate of Roshen Pujari (hereinafter,

Roshan Pujari), on March 16, 2023, for services associated with setting up a lithium refinery.

VCP provides formation and

organization structure advisory, capital market advisory, marketing advisory services and other consulting and advisory services

with respect to the Company’s organization.

Under the service agreement and subsequent amendments, VCP can be compensated for

advisory services up to total of $1,050,000.

March 16, 2023, Legacy Stardust Power entered into a consulting agreement with 7636 Holdings LLC, which was subsequently

amended on April 1, 2023.

The agreement primarily provides compensation for strategic, business, financial, operations and industry advisory

services to the Company’s planned development of a lithium refinery operation.

the period from March 16, 2023 (inception) to September 30, 2023, Legacy Stardust Power incurred total consulting expenses of $980,000 to VCP, $180,806

to 7636 Holdings LLC and $146,129 to VIKASA Capital LLC.

Other expenses that were incurred on behalf of Legacy Stardust Power was $44,186, in aggregate,

including $34,318 by VIKASA Capital LLC and $9,868 by VCP, respectively.

During the three months ended September 30, 2023, Legacy Stardust Power incurred

total consulting expenses of, $79,000 to 7636 Holdings LLC and $68,497 to VIKASA Capital LLC.

of September 30, 2024 and December 31, 2023, no amounts were due to related parties of the Company.

the period from March 16, 2023 (inception) through September 30, 2023, Legacy Stardust Power entered into notes payable agreements for $1,000,000 with

related parties, including $750,000 with Energy Transition Investors LLC, $160,000 with VIKASA Clean Energy I LP and $90,000 with Roshan

VIKASA Capital LLC facilitated the initial funding of the notes obtained on behalf of the related parties.

The same notes were

repaid during the period ended September 30, 2023.

Placement Warrants

Sponsor purchased from GPAC II an aggregate of 5,566,667 warrants at a price of $1.50 per warrant in a private placement that

occurred simultaneously with the completion of the Company’s initial public offering (the “Private Placement

At closing of the Business Combination, Stardust Power acquired the net liabilities for GPAC II including the

Private Placement Warrants.

Each Private Placement Warrant entitles the holder to purchase one share of Common Stock at $11.50 per

At September 30, 2024 there were 5,566,667 Private Placement Warrants outstanding.

As at September 30, 2024, the fair value

of Private Placement Warrants amounted to $2,505,000.

The Company valued its Private Placement Warrants based on the closing price

of the Public Warrants since they are similar instruments.

Related Party Loans

closing of the Business Combination, the Company acquired the liabilities for GPAC II including the sponsor working capital loan

amounting to $4,127,189.

As part of the closing of the Business Combination, the Sponsor forgave a portion of the loan amounting to

The Company repaid the balance of $1,562,834 on closing.

Earnout Shares

part of the closing of the Business Combination, the Company issued 1,000,000 shares to the Sponsor.

These shares are subject

to vesting (or forfeiture) based on achieving certain trading price thresholds following the closing (“Sponsor Earnout Shares”).

Fifty percent of the Sponsor Earnout Shares will vest when the VWAP of the Combined Company

Common Stock price equals or exceeds $12.00 per share for a period of 20 trading days in a 30 trading day period, and the remaining fifty

percent of the Sponsor Earnout Shares will vest when the VWAP of the Combined Company Common Stock price equals or exceeds

$14.00 per share for a period of 20 trading days in a 30 trading day period.

Upon the occurrence of a change in control, any remaining

unvested Sponsor Earnout Shares become vested.

Unvested Sponsor Earnout Shares will be forfeited if vesting does not occur prior to the

eighth anniversary of the Closing Date.

The Company assesses the fair value of expected earnout consideration at each reporting period

using the Monte Carlo Method, which is consistent with the initial measurement of the expected earnout consideration.

As at September

30, 2024, the fair value of Sponsor Earnout Shares amounted to $2,972,800.

Note 15 to our unaudited condensed consolidated financial statements included elsewhere in this report for additional details regarding

subsequent events.

Power’s Risk Management Framework

commodity prices, especially for lithium hydroxide and, or lithium carbonate and other “battery metals” changes may impact

the margins and produce less revenue or losses for the Company.

Global lithium commodities market are still somewhat nascent and as the

global supply chain changes this could impact the prices of commodities.

The costs of lithium inputs could be affected as well further

impacting margins and profitability.

In order to address this risk, the Company is negotiating fixed price off take agreement with suppliers

of raw material required.

Also, we seek to enter into long-term partnerships to limit potential volatility in pricing.

Additionally,

in the future, we intend to enter into strategic partnerships that would create long-term alignment with buyers.

there has been significant recent softness and reduced demand in respect of EVs and a significant decrease in the price of lithium, we

believe that the long-term prospects for both remain positive.

Demand and Product Pricing Risk

supplies of lithium and the emergence of new refiners both here in the United States and globally, could impact the global supply chain

and product prices.

Existing companies may be seeking to increase their capacity to provide lithium products and new companies seek to

bring capacity online further increasing supply.

Other companies may seek to enter the market.

Also, the demand for lithium may be impacted

by emerging technologies and other battery chemistries that may decrease the reliance on lithium and could result in reducing product

In order to address fluctuations in product price, and in lines with industry norms, the Company is intending to enter into 10-year

long-term sales contracts with EV manufacturers, whereby we expect to have a cap and floor pricing strategy, and both, customer and the

Company, sharing the difference between actual price and cap or floor pricing.

We may further limit chemistry risk by refining to lithium

carbonate prior to potentially refining to lithium hydroxide so we can meet market demands for either product.

We stay informed on current

trends in battery chemistry to project market demand.

nature of these risks is such that liabilities could exceed any applicable insurance policy limits or could be excluded from coverage.

There are also risks against which we cannot insure or against which we may elect not to insure.

The potential costs, which could be

associated with any liabilities not covered by insurance or in excess of insurance coverage, or compliance with applicable laws and regulations

may cause substantial delays and require significant capital outlays, adversely affecting our future earnings and competitive position

and potentially our financial viability.

We may limit insurance risk by being proactive in our policies for environmental impact and

climate change impact.

Through strict adherence to company protocols we may limit certain types of risk.

Also, we intend to work only

with best-in-class providers, who are adept at assessing various risks in our line of business adequately.

risk represents the risk associated with executive management failing to develop and execute on the appropriate strategic vision which

demonstrates a commitment to our culture, leverages our core competencies, appropriately responds to external factors in the marketplace,

and is in the best interests of our clients, employees, and members.

By working with best-in-class partners and consultants who are industry

experts, as well as by leveraging the knowledge of our senior executive team, we expect to be able to limit or address strategic risk

and execution risk.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis