What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-25 compared with 2025-03-27 · 1557 added, 1219 removed, 929 unchanged (75% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to the Consolidated Financial Statements

to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm — PCAOB ID:

Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024

Statements of Operations for the year ended December 31, 2024 and for the period from March 16, 2023 (inception) to December 31,

Statements of Changes in Stockholders’ Equity (Deficit) for the year ended December 31, 2024 and for the period from March 16,

2023 (inception) to December 31, 2023

Statements of Cash Flows for the year ended December 31, 2024 and for the period from March 16, 2023 (inception) to December 31,

Consolidated Statements of Operations for the year ended December 31, 2025 and December 31, 2024

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the year ended December 31, 2025 and December 31, 2024

Consolidated Statements of Cash Flows for the year ended December 31, 2025 and December 31, 2024

Notes to the Consolidated Financial Statements

4 unchanged sentences

have audited the accompanying consolidated balance sheets of Stardust Power Inc.

and Subsidiaries (the Company) as of December 31, 2024

and 2023 and the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the years ended

December 31, 2024 and for the period from March 16, 2023 (inception) through December 31, 2023 and the related notes (collectively

referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material

respects, the financial position of the Company as of December 31, 2024 and December 31, 2023, and the results of its operations and

its cash flows for each of the year ended December 31, 2024 and for the period from March 16, 2023 (inception) through December

31, 2023, in conformity with accounting principles generally accepted in the United States of America.

subsidiaries (the Company) as of December 31, 2025 and 2024 and the related consolidated statements of operations, stockholders’

deficit and cash flows for each of the years in the two-year period ended December 31, 2025 and the related notes (collectively referred

to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2025 and December 31, 2024, and the results of its operations and its cash flows

for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the

United States of America.

doubt about the company’s ability to continue as a going concern

15 unchanged sentences

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

Company Accounting Oversight Board (United States) (“ PCAOB ”) and are required to be independent with respect to the

Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

15 unchanged sentences

have served as the Company’s auditor since 2023.

Stardust Power Inc.

CONSOLIDATED BALANCE SHEETS

(all amounts in USD, except number of shares)

and Subsidiaries

BALANCE SHEETS

amounts in USD, except number of shares)

As of December 31,

13 unchanged sentences

Current portion of early exercised shares option liability

Current portion of convertible note

Short-term loans from related parties (Note 16)

4 unchanged sentences

Earnout liability

Convertible note

Early exercised shares option liability

2 unchanged sentences

Stockholders’ equity (deficit)

Preferred stock, $ 0.0001 par value, 100,000,000 and Nil shares authorized, Nil shares issued and outstanding as at December 31, 2024 and December 31, 2023

Common stock, $ 0.0001 par value, 700,000,000 and 69,033,000 shares authorized, 47,736,279 and 41,499,772 shares issued and outstanding as at December 31, 2024 and December 31, 2023, respectively

Preferred stock, $ 0.0001 par value, 100,000,000 shares authorized, Nil shares issued and outstanding as at December 31, 2025, and December 31, 2024

Common stock, $ 0.0001 par value, 700,000,000 shares authorized, 9,869,558 and 4,773,628 shares issued and outstanding as at December 31, 2025, and December 31, 2024, respectively (1)

Additional paid-in capital

1 unchanged sentence

( 52,618,948 )

( 3,793,585 )

Total stockholders’ deficit

2 unchanged sentences

Total liabilities and stockholders’ deficit

Amounts have been adjusted to reflect the 1-for-10 reverse stock split that became effective on September 8, 2025.

See Note 2 “Basis of presentation and summary of significant accounting

policies” for additional details.

accompanying notes are an integral part of these consolidated financial statements.

Stardust Power Inc.

CONSOLIDATED STATEMENTS

OF OPERATIONS

(all amounts in USD, except

number of shares)

and Subsidiaries

STATEMENTS OF OPERATIONS

amounts in USD, except number of shares)

December 31, 2025

March 16, 2023 (inception) through

December 31, 2024

and administrative expenses

( 17,972,828 )

( 2,675,698 )

income (expenses)

note issuance costs

General and administrative expenses

Operating loss

( 17,972,828 )

transaction costs

Other income (expenses)

Interest income

Interest expense

( 186,903 ) 2

Finance charge

( 333,055 ) 3

in fair value of sponsor earnout shares

in fair value of warrant liability

in fair value of investment in equity securities

in fair value of convertible notes

in fair value of SAFE notes

other expenses

( 7,579,713 ) 3

Change in fair value of sponsor earnout shares

Change in fair value of warrant liability

Change in fair value of investment in equity securities

Change in fair value of convertible notes

Change in fair value of SAFE notes

Loss on write off of promissory notes and deposit

Loss on sale of investment in equity securities

Gain on extinguishment of liability

Total other income (expenses)

( 5,781,035 )

2 unchanged sentences

loss per share (4)

average common shares outstanding

related party amounts of $ 143,057

and $ 797,019

for the year ended December 31, 2024, and from March 16, 2023 (inception) to December 31, 2023, respectively.

related party amounts of $ Nil

and $ 435,000

for the year ended December 31, 2024, and from March 16, 2023 (inception) to December 31, 2023, respectively.

Weighted average common shares outstanding (4)

related party amounts of nil and $ 143,057 for the year ended December 31, 2025, and December 31, 2024, respectively.

related party amounts of $ 58,651 and $ 20,937 for the year ended December 31, 2025, and December 31, 2024, respectively.

related party amounts of nil

and $ 3,875,000

for the year ended December 31, 2024, and from March 16, 2023 (inception) to December 31, 2023, respectively.

related party amounts of $ 20,937

for the year ended December 31, 2024, and from March 16, 2023 (inception) to December 31, 2023, respectively.

related party amounts of $ 3,875,000

for the year ended December 31, 2024, and from March 16, 2023 (inception) to December 31, 2023, respectively.

for the year ended December 31, 2025,

and December 31, 2024, respectively.

have been adjusted to reflect the 1-for-10 reverse stock split that became effective on September 8, 2025.

See Note 2 “Basis

of presentation and summary of significant accounting policies” for additional details.

accompanying notes are an integral part of these consolidated financial statements.

Stardust Power Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’ EQUITY (DEFICIT)

(all amounts in USD, except

number of shares)

For the period from March 16, 2023 (inception) through December 31, 2023

Additional paid-in

Stockholder’s

Balance as at March 16, 2023 (inception)

Issuance of common stock

Retroactive application of recapitalization

Balance as at March 16, 2023 (inception)

Stock based compensation

Transfer from early exercised stock option liability on vesting

Issuance of common stock related to early exercised stock options

Repurchase of unvested early exercised common stock

Repurchase of common stock

( 1,278,042 )

( 3,793,585 )

Balance as at December 31, 2023

( 3,793,585 )

( 3,734,762 )

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

amounts in USD, except number of shares)

For the year ended December 31, 2024

Additional paid-in

Common Stock (1)

Stockholder’s

3 unchanged sentences

Retroactive application of recapitalization

Balance as at December 31, 2023

( 3,793,585 )

Retroactive application of reverse stock split

( 37,349,795 )

Balance as at December 31, 2023

( 3,793,585 )

21 unchanged sentences

( 19,385,784 )

For the year ended December 31, 2025

Common Stock (1)

Stockholder’s

Balance as at December 31, 2024

$ ( 52,618,948 )

$ ( 19,385,784 )

$ ( 52,618,948 )

$ ( 19,385,784 )

Stock based compensation (Note 8)

Issuance of common stock

Synthetic at-the-market (“ATM”) commitment fee

Issuance of common stock and warrants from January 2025 public offering, net of offering costs

Issuance of common stock upon warrant inducement, net of offering costs

Transfer from early exercised stock liability on vesting

Repurchase of unvested early exercise stock options

Issuance of common stock for settlement of RSU

Issuance of common stock to short- term loan holders (Note 7)

Issuance of common stock to short- term loan holders

Issuance of common stock to vendor

Common stock payment proposed to vendor, but not issued

Issuance of common stock under license arrangement (Note 6)

Issuance of common stock under license arrangement

Issuance of common stock to PIPE investors

Issuance of common stock from June 2025 public offering, net of offering costs

Issuance of common stock upon warrant exchange, net of offering costs

Fractional share adjustment due to reverse stock split

Fair value of equity classified warrants issued in connection with convertible

notes, net of issuance costs

Balance as at December 31, 2025

( 68,342,584 )

( 5,813,683 )

have been adjusted to reflect the 1-for-10 reverse stock split that became effective on September

See Note 2 “Basis of presentation and summary of significant accounting policies”

for additional details.

accompanying notes are an integral part of these consolidated financial statements.

Stardust Power Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(all amounts in USD, except

number of shares)

STATEMENTS OF CASH FLOWS

amounts in USD, except number of shares)

December 31, 2025

March 16, 2023

(inception) through

December 31, 2024

4 unchanged sentences

Stock based compensation

Gain on extinguishment of liability

Amortization of debt discount and debt issuance costs

Finance charges

1 unchanged sentence

Loss from change in fair value of common stock make-whole obligation

Loss on sale of investments

Change in fair value of investment in equity securities

Change in fair value of SAFE notes

Loss on write-off of promissory notes and deposit

Change in fair value of warrant liability

( 1,409,201 )

Change in fair value of 2024 convertible notes

1 unchanged sentence

( 4,076,200 )

Non-cash marketing expense for proposed stock issuance to vendor

Depreciation expense

SAFE notes issuance costs

Loss on write off of deferred transaction cost

Changes in operating assets and liabilities:

13 unchanged sentences

( 1,600,000 )

Proceeds from sale of investment in equity securities

Investment in other long-term assets

7 unchanged sentences

Payment of equity issuance costs

Proceeds from early exercise of stock option awards

Proceeds from investor for issuance of SAFE notes

Proceeds from issuance of notes payable to related parties

Repayment of notes payable to related parties

( 1,000,000 )

Proceeds from exercise of warrants

Proceeds from issuance of convertible notes

Deferred transaction costs paid

Proceeds from short-term loan from related parties (Note 16)

Repayment of short-term loan from related parties (Note 16)

( 2,000,000 )

Payment of issuance costs for SAFE notes to related parties

Proceeds from short-term loan

Repayment of short-term loan

( 1,940,393 )

Proceeds from advance received from PIPE investor

Proceeds from of business combination and issuance of PIPE shares

Proceeds from investor for issuance of SAFE notes

Proceeds from public offerings

Proceeds from warrant inducement exercises

Transaction costs associated with public offerings and warrant inducement

( 1,343,832 )

Proceeds from exercise of warrants

Proceeds from issuance of convertible notes and warrants, net of transaction costs

Deferred transaction costs paid

( 4,167,323 )

Proceeds from business combination and issuance of PIPE shares

Transaction costs associated with issuance of common stock upon warrant exchange

Repayment of sponsor promissory notes

1 unchanged sentence

Repurchase of unvested shares

cash provided by financing activities

Net (decrease)/ increase in cash

Payments for fractional share adjustment due to reverse stock

Net cash provided by financing activities

Net increase/(decrease) in cash

$ ( 359,250 )

5 unchanged sentences

Unpaid deferred transaction costs

Unpaid amount for repurchase of unvested shares

Conversion of legacy SAFE notes

4 unchanged sentences

Issuance of common stock to non-redeeming shareholders

Unpaid SAFE note issuance costs

Unpaid capital project costs

3 unchanged sentences

Finance charge related to Equity Kicker

Reclass of advances to capital project costs

Unpaid public offering issuance costs

Incremental fair value of warrant inducement

Issuance of common stock to short- term loan holders

Issuance of common stock to PIPE investors

Issuance of common stock to vendor

Issuance of common stock under license arrangement

Discount on convertible notes

accompanying notes are an integral part of these consolidated financial statements.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

1 – DESCRIPTION OF THE COMPANY

(the “Company”, “Stardust Power”) formerly known as Global Partner Acquisition Corp II, a

Delaware corporation, is an American developer of battery grade lithium products, designed to foster energy independence in the

(the “ Company ” or “ Stardust Power ”) formerly known as Global Partner Acquisition Corp

II, a Delaware corporation, is an American developer of battery grade lithium products, designed to foster energy independence in the

United States.

While the Company has not earned any revenue yet, the Company is in the process of developing a strategically

central, lithium refinery capable of producing up to 50,000

While the Company has not earned any revenue yet, the Company is in the process of developing a strategically central,

lithium refinery capable of producing up to 50,000

metric tpa of battery grade lithium.

November 21, 2023, Stardust Power Operating Inc.

entered into a business combination agreement (the “Business Combination

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

November 3, 2020, Strike Merger Sub I, Inc.

(“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 GPAC II.

entered into a business combination agreement (the “ Business Combination Agreement ”)

with Global Partner Acquisition Corp II (“ GPAC II ”), a Cayman Islands exempted company incorporated on November 3,

2020, Strike Merger Sub I, Inc.

(“ 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 GPAC II.

On July 8, 2024, former Stardust Power Inc.

was renamed Stardust Power Operating

was renamed Stardust Power Operating Inc.

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

Combination Agreement (the “ Business Combination ”).

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

GPAC II deregistered as a Cayman Islands exempted company and

redomesticated 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 ”).

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 Inc.

common stock (the “Common Stock”) and warrants of the Company are currently listed on the Nasdaq Global Market (“Nasdaq”)

under the symbol “SDST” and “SDSTW”, respectively.

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

common stock (the “ Common Stock ”) and warrants of the Company are currently listed on Nasdaq under the symbol

“SDST” and “SDSTW”, respectively.

per the Business Combination Agreement:

Each 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 (“per share

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 (“ per share consideration ”).

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 Legacy Stardust Power Option immediately prior to the First Effective Time multiplied by the per share

consideration.

Each 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

Legacy Stardust Power Option immediately prior to the First Effective Time multiplied by the per share consideration.

Each 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 (the “Exchanged Company Restricted Common Stock”).

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.

Stardust Power Inc.

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 (the “ Exchanged Company

Restricted Common Stock ”).

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.

outstanding GPAC Class A (after redemptions) and Class B common shares were cancelled and converted into shares of the Newco Stock.

and Subsidiaries

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

As consideration for certain

Class A ordinary shareholders entering into non-redemption agreements (“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 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

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

TO CONSOLIDATED FINANCIAL STATEMENTS

consideration for certain Class A ordinary shareholders entering into non-redemption agreements (“ NRAs ”) agreeing

not to redeem or to reverse any redemption demands previously submitted, the Company issued 12,777

ordinary shares of Stardust Power at a price per share

of approximately $ 100.00 per

share at closing of the Business Combination.

Additionally,

the Combined Company issued 100,000

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 $120.00 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 $140.00 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 500,000 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

1 unchanged sentence

period or there is a change of control, or are otherwise forfeited.

Immediately prior to the

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

Immediately prior to the

closing of the Business Combination, the convertible notes automatically converted into 55,889 shares of Legacy Stardust Power Common

Stardust Power issued 1,077,541

shares of Common Stock in exchange for $ 10,075,002 of cash in accordance with the terms of the PIPE Subscription Agreement (“PIPE”)

in connection with the Business Combination.

prior to the closing of the Business Combination, the SAFE notes automatically converted into the 13,839

shares of Legacy Stardust Power Common Stock.

prior to the closing of the Business Combination, the 2024 convertible notes automatically converted into 5,588

shares of Legacy Stardust Power Common Stock.

Power issued 107,754

shares of Common Stock in exchange for $ 10,075,002

of cash in accordance with the terms of the PIPE Subscription

Agreement (“ PIPE ”) in connection with the Business Combination.

Business Combination was accounted for as a reverse recapitalization.

5 unchanged sentences

accepted accounting principles (“ U.S.

GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission

consolidated balance sheet as of December 31, 2023, included herein was derived from the audited consolidated financial statements

of Legacy Stardust Power as of that date.

GAAP ”) and pursuant to the rules and regulations of the Securities and Exchange

Commission (the “ SEC ”).

consolidated financial statements include the accounts of Stardust Power Inc.

4 unchanged sentences

preparation of consolidated financial statements in conformity with U.S.

GAAP requires us to make estimates and assumptions that

affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

Those estimates and

assumptions include, but are not limited to, useful life of assets, realization of deferred tax assets, and fair valuation of

stock-based compensation, common shares purchase agreement, warrants, simple agreement for future equity notes (each a “SAFE

note”), convertible notes and sponsor earnout shares.

The Company evaluates estimates and assumptions on an ongoing basis

using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate.

future events and their effects cannot be determined with precision, actual results could differ from these estimates, and those

differences could be material to the consolidated financial statements.

Stardust Power Inc.

GAAP requires us to make estimates and assumptions that affect

the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

Those estimates and assumptions include,

but are not limited to, useful life of assets, realization of deferred tax assets, and fair valuation of stock-based compensation, common

shares purchase agreement, warrants, simple agreement for future equity notes (each a “ SAFE note ”), convertible notes

and sponsor earnout shares.

The Company evaluates estimates and assumptions on an ongoing basis using historical experience and other

factors and adjusts those estimates and assumptions when facts and circumstances dictate.

As future events and their effects cannot be

determined with precision, actual results could differ from these estimates, and those differences could be material to the consolidated

financial statements.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

Growth Company

1 unchanged sentence

until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a

class of securities registered under the Securities Exchange Act of 1934 (the “Exchange Act”)) are required to comply with

the new or revised financial accounting standards.

class of securities registered under the Securities Exchange Act of 1934 (the “ Exchange Act ”)) are required to comply

with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition

3 unchanged sentences

or revised standard at the time private companies adopt the new or revised standard.

September 8, 2025, the Company effected a 1-for-10

reverse stock split of the Company’s Common

Stock (the “ Reverse Stock Split ”).

As a result of the Reverse Stock Split, every 10 shares of the Company’s

Common Stock issued and outstanding were automatically converted into one new share of Common Stock.

Proportionate adjustments were also

made to (i) the exercise prices, and the number of shares underlying the Company’s outstanding equity awards, as applicable, (ii)

the number of shares issuable under the Company’s equity incentive plans and certain existing agreements, and (iii) the number

of shares purchasable upon exercise, and/or the exercise prices, of the Company’s outstanding warrants to purchase shares of the

Company’s Common Stock.

The Reverse Stock Split did not decrease the number of authorized shares of Common Stock and preferred

stock or otherwise affect the par value of the Common Stock.

No fractional shares were issued in connection with the Reverse Stock Split

and any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole share.

Stockholders who were

otherwise entitled to receive fractional shares as a result of the Reverse Stock Split were paid cash in lieu thereof.

All shares of

the Company’s Common Stock, per-share data and related information included in the accompanying consolidated financial statements

have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.

Company’s 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.

Company is a development stage entity having no revenues and has incurred a net loss of $ 23,753,863 for the year ended December 31,

The Company has an accumulated deficit of $ 52,618,948 and stockholders’ deficit of $ 19,385,784 as of December 31, 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.

These conditions raise substantial doubt about its ability to continue as a going concern.

of December 31, 2025, the Company has $ 3,480,151 of unrestricted cash.

Upon completion of the Business Combination, the Company’s

consolidated cash balance increased due to the PIPE investments of $ 10,075,002 , and $ 1,564,086 of trust account proceeds, net of redemptions

and related fees.

The combined company is also required to make various payments including SPAC transaction costs incurred upon the close

of the Business Combination (Refer to Note 3).

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.

The Company is a development stage entity having no revenues and

has incurred a net loss of $ 15,723,636 for the year ended December 31, 2025.

The Company has an accumulated deficit of $ 68,342,584 and

stockholders’ deficit of $ 5,813,683 as of December 31, 2025.

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.

These conditions

raise substantial doubt about its ability to continue as a going concern.

October 7, 2024, the Company entered into a Common Stock Purchase Agreement (the “ Prior B.

Riley Purchase Agreement ”)

and a related Registration Rights Agreement (the “ Prior B.

Riley Registration Rights Agreement ”, and together with

Riley Purchase Agreement, the “ Prior B.

Riley Agreements ”) 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.

During the year ended

December 31, 2024, the Company issued 55,826

common stock aggregating to net proceeds of $ 260,927

(Refer to Note 6).

December 2024, the Company entered into binding Term Sheets (“Term Sheets”) with

various lenders and received cash proceeds of $ 3,550,000 (Refer to Note 7).

December 31, 2024, the Company entered into binding term sheets with certain investors pursuant to which the Company has agreed to

sell, and the Investors have agreed to purchase, Company securities for an aggregate amount of $ 550,000

(the “Private Placement”).

The proceeds of the Private Placement are expected to be used by the Company for capital

expenditures, working capital and general corporate purposes.

The Investors have agreed to purchase, and the Company has agreed to

issue and sell, up to $ 550,000

in shares of Company common stock, par value $ 0.0001

per share (“Common Stock”) at a price equal to 95% of the closing bid price of the Common Stock on the last trading day

prior to the closing date for the Private Placement.

In addition, each Investor will receive warrants representing the right,

exercisable within five years of the closing date, to purchase up to 50% of the shares of Common Stock purchased by such Investor in

the Private Placement, with each whole warrant exercisable for one share of Common Stock at an exercise price of $ 11.50

(the “Warrants”).

As of December 31, 2024, the Company received proceeds of $ 425,000

from one of the investors and has accounted for this as Advance from PIPE investor for shares and warrants to be issued based on

purchase agreement to be entered on the consolidated balance sheet as of December 31, 2024.

Stardust Power Inc.

Riley Principal Capital II ”) to sell up to $ 50,000,000

of Common Stock to B.

Riley Principal Capital II, subject to

certain conditions and limitations contained in the Prior B.

Riley Purchase Agreement, from time to time during the term of the Prior

Riley Purchase Agreement.

During the year ended December 31, 2025, the Company issued 638,048

shares of Common Stock aggregating to net proceeds of $ 2,069,685 .

(See Note 6).

On December 11, 2025, the Company entered into a letter agreement with B.

Riley Principal Capital II, pursuant to

which the parties mutually agreed to terminate the Prior B.

Riley Purchase Agreement, as amended and the related Prior B.

Riley Registration

Rights Agreement.

As part of the termination, the Company agreed to satisfy the make-whole payment as per the terms of the Prior

Riley Agreements of $ 471,942 ,

in three equal portions:

(i) through the issuance of restricted common stock priced at $ 4.40

per share and subject to resale registration, (ii) in cash upon the Company’s next equity or convertible financing, and (iii) in

connection with a future equity line, at-the-market program, or similar financing, or otherwise in cash if unpaid by September 30, 2026.

On December 15, 2025, the Company issued 35,753

shares of common stock (“ Settlement Shares ”) to B.

Riley Principal Capital II and subsequent to the year end paid

cash to satisfy its obligation as per the terms of the Agreement (See Note 6).

Subsequent to year end, on February 12, 2026, the Company entered into a Common Stock Purchase

Agreement (the “ B.

Riley Purchase Agreement ”) and a related Registration Rights Agreement (the “ B.

Registration Rights Agreement ”, and together with the B.

Riley Purchase Agreement, the “ B.

Riley Agreements ”)

Riley Principal Capital II, the selling stockholder.

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

Riley Purchase Agreement, the Company will have the right, in its sole discretion, to sell up to $ 10,000,000

of Common Stock to B.

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

Riley Purchase Agreement,

from time to time during the term of the B.

Riley Purchase Agreement.

Sales of Common Stock pursuant to the B.

Riley Purchase Agreement,

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

The Company is under no obligation to sell any securities to B.

Riley Principal Capital II under the B.

Riley Purchase Agreement.

As of the date of this filing, the Company has issued 29,067 shares of Common Stock aggregating to net proceeds of

January 27, 2025, the Company consummated a public offering of 479,200

shares of Common Stock and accompanying warrants to purchase up to 479,200

shares of Common Stock at a public offering price of $ 12.00

per share and warrant with an exercise price of $ 13.00

generating aggregate gross proceeds of approximately $ 5,750,400

before offering expenses (See Note 6).

March 16, 2025, the Company entered into a letter agreement (the “ Inducement Letter ”) with a warrant holder (the

“ Exercising Holder ”) providing for the immediate cash exercise of outstanding warrants to purchase 479,200 shares

of the Company’s Common Stock at a reduced exercise price of $ 6.20 per

share, generating aggregate gross proceeds of approximately $ 2,971,040 before

related expenses.

In connection with such exercise, the Company agreed to issue new common stock purchase warrants (the

“ Inducement Warrants ”) to purchase up to 958,400 shares

of common stock at an exercise price of $ 7.00 per

share, subject to shareholder approval and Nasdaq rules (See Note 6).

On October 30, 2025, the Exercising Holder and the Company

entered into a ‘Securities Exchange Agreement’ (the “ Exchange Agreement ”) and agreed to exchange the 958,400 outstanding

Inducement Warrants for 730,689 shares

of Common Stock, with no other payment or any other additional consideration from the investor (See Note 6).

June 18, 2025, the Company consummated a public offering of 2,150,000

shares of Common Stock at a public offering price of $ 2.00

per share, generating aggregate gross proceeds of approximately $ 4,300,000

before offering expenses.

On June 25, 2025, the Company consummated the partial exercise of over allotment of the public offering,

shares of Common Stock at a public offering price of $ 2.00

per share, generating additional aggregate gross proceeds of approximately $ 220,000

before offering expenses (See Note 6).

December 23, 2025, the Company entered into a Securities Purchase Agreement (the “ Lind Securities Purchase

Agreement ”) with Lind Global Asset Management XIII LLC (“ Lind ”) providing for up to $ 15,000,000 in

senior secured convertible debt financing.

Simultaneously, the Company initially drew down gross proceeds of approximately $ 4,000,000 in

exchange for issuance to Lind of a Senior Secured Convertible Promissory Note in the amount of $ 4,800,000 (the

“ 2025 Convertible Note ”) and a Common Stock Purchase Warrant, for the purchase of approximately 411,245 shares.

(the “ Lind Warrant Shares ”).

After deducting a commitment fee of $ 100,000 and

other transaction-related costs, the Company received net cash proceeds of approximately $ 3,792,500

(See Note 12).

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

to the year end, the Company consummated a public offering (the “Offering”) of an aggregate of (i) 4,792,000

shares (the “Shares”) of common stock,

par value $ 0.0001

per share (the “Common Stock”) and

(ii) Common Stock purchase warrants (“Common Warrants”) to purchase up to 4,792,000

shares of Common Stock (the “Common Warrant

Each Share was sold at a public offering price of $ 1.20

and associated Common Warrant to purchase one (1) Common Warrant

Share was sold with an exercise price of $ 1.30 .

The Company received aggregate gross proceeds from the Offering of approximately $ 5,750,400 ,

before deducting placement agent fees and other offering expenses.

The Company intends to use the proceeds of the Offering primarily

for general corporate purposes and other business matters, as well to satisfy certain debts.

Further, on March 16, 2025, pursuant to

the Inducement Letter, the investor agreed to exercise, for cash, the Common Warrants to purchase an aggregate of 4,792,000

shares of common stock at the exercise price of $ 0.62

per share in exchange for the Company’s agreement to

issue to the investor a new common stock purchase warrant, to purchase up to 9,584,000

shares of common stock (the “Inducement Warrants,” and the shares issuable upon exercise of the Inducement Warrants, the

“Inducement Warrant Shares”).

TO CONSOLIDATED FINANCIAL STATEMENTS

of the date on which these consolidated financial statements were available to be issued, we believe that the cash on hand, and additional

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Risks and Uncertainties Including Business and Credit Concentrations

Company is a newly incorporated company and has yet to construct its facility and commence production.

As a result, the Company has

a limited operating history upon which to evaluate the business and future prospects, which subjects it to a number of risks and

uncertainties, including the ability to plan for and predict future growth.

Since the Company’s founding, and acquisition of

the land for the establishment of the facility, the Company has made significant progress towards site due diligence, engineering

and techno-economic analysis for assessing suitability of the land and location.

The refinery designs, brine extraction and

transportation process of the facility, process configurations, and control system of the facility are representative of an

industrial-scale battery-grade lithium production facility.

The Company is a newly incorporated company and has yet to construct its

Facility and commence production.

As a result, the Company has a limited operating history upon which to evaluate the business and future

prospects, which subjects it to a number of risks and uncertainties, including the ability to plan for and predict future growth.

the Company’s founding, and the acquisition of the land for the establishment of the Facility, the Company has made significant

progress towards site due diligence, engineering and techno-economic analysis for assessing suitability of the land and location.

refinery designs, brine extraction and transportation process of the Facility, process configurations, and control system of the Facility

are representative of an industrial-scale battery-grade lithium production facility.

Company expects that it will need to raise additional capital to support its development and commercialization activities.

2 unchanged sentences

Company’s cash balance is held at one financial institution.

As such, as at December 31, 2024, cash held with the financial

institution exceeded federally insured limits.

at December 31, 2024, the company had a promissory note receivable of $ 502,838 from two borrowers representing 23.5 % of total current

These Notes carry an interest rate of 6 % per annum.

The borrower’s financial condition and repayment

ability are monitored regularly to mitigate credit risk.

Stardust Power Inc.

As such, as at December 31, 2025, cash held with the financial institution

exceeded federally insured limits.

and Subsidiaries

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

Transaction Costs

2 unchanged sentences

Expenses of 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.

The Company has deferred $ 1,005,109 of related costs incurred towards the proposed

public offering which are presented within current assets in the consolidated balance sheets as at December 31, 2023.

the year ended December 31, 2024, the Company deferred $ 6,496,114 of related costs incurred towards the public offering.

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.

disclosed in the “Going Concern” note above, subsequent to the year end, the Company consummated a public offering.

has deferred $ 116,121 of costs incurred towards potential follow-on offerings which is presented within current assets in the consolidated

balance sheet as at December 31, 2024.

If the offering is terminated, the deferred offering costs

will be expensed.

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

until the consummation/completion of the proposed public offering.

The Company has deferred $ 1,005,109

of related costs incurred towards the proposed public offering

which was presented within current assets in the consolidated balance sheets as at December 31, 2023.

During the year ended December

31, 2024, the Company deferred $ 6,496,114

of related costs incurred towards the public offering.

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.

The Company deferred $ 116,121 of

related costs incurred towards the proposed public offering which are presented within current assets in the consolidated balance sheet

as at December 31, 2024.

The Company consummated the public offering on January 27, 2025.

After the consummation of the public offering,

costs allocated to equity-classified instruments amounting to $ 86,121

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

The remaining deferred costs of $ 30,000

attributable to a separate proposed offering was expensed as

the transaction did not materialize during the year ended December 31, 2025.

The Company deferred $ 25,000

of related costs incurred towards the B.

Riley Purchase Agreement entered by the Company subsequent to year end with B.

Riley Principal

Capital II which are presented within current assets in the consolidated balance sheet as at December 31, 2025.

Issuance Costs

issuance costs consist of expenditures associated with obtaining debt financing, principally legal and commitment fees.

are deferred and amortized over the term of the related credit arrangements using a method that approximates the effective interest method.

Debt issuance costs are included in the consolidated balance sheets as a direct deduction from the carrying amount of long-term debt

and are included in Interest expense in the consolidated statements of operations.

The payment of debt issuance costs is recorded under

financing activities in the consolidated statements of cash flows.

Project Costs and Property and Equipment, net

Company had an exclusive option purchase agreement with the City of Muskogee, Oklahoma for 66 acres of undeveloped tract (excluding

wetlands and creeks).

The option was scheduled to end on the earlier of February 29, 2024, the date the property is purchased, or

the termination of the agreement by either party.

The agreement allowed for two three-month extensions, provided that the Company is

performing due diligence and pursuing permits and approvals.

Non-refundable option payments of $ 25,000

were made on June 8, 2023, and October 10, 2023, respectively.

The Company capitalized these payments as capital project costs as at

December 31, 2023, because these payments would be credited against the full purchase price of the land upon acquisition.

10, 2024, the Company entered into an agreement to exercise the option and purchase the land for an additional amount of $ 1,562,030 .

On May 2, 2024, and July 30, 2024, the Company paid the first and second non-refundable extension payment of $ 33,333

and $ 33,333 ,

respectively.

On December 16, 2024, title to the land was transferred in the Company’s name and the Company paid the remaining

balance of $ 1,497,949 ,

including transfer expenses of $ 2,585 .

The Company capitalized an additional $ 75,950 as

land for costs incurred for obtaining permits and title.

In addition to the above, the Company capitalized $ 3,320,403

towards capital project costs related to front-end loading and environmental studies done for setting up the refinery during the

year ended December 31, 2024.

The construction of the Facility is still in progress and hence no

depreciation is charged on capital project costs.

Company had an exclusive option purchase agreement with the City of Muskogee, Oklahoma for 66 acres of undeveloped tract (excluding wetlands

On January 10, 2024, the Company entered into an agreement to exercise the option and purchase the land for an amount of

$ 1,662,030 .

The Company capitalized an additional $ 78,535 as land for costs incurred for obtaining permits and title.

On December 16,

2024, title to the land was transferred to the Company’s name.

The Company capitalized $ 3,320,403 towards capital project costs

related to front-end loading and environmental studies done for setting up the refinery during the year ended December 31, 2024.

the year ended December 31, 2025, the Company capitalized an additional amount of $ 2,034,090 towards capital project costs.

The construction

of the Facility is still in progress and hence no depreciation is charged on capital project costs.

and equipment, net is stated at cost less accumulated depreciation and accumulated impairment loss.

1 unchanged sentence

and equipment using the straight-line method over the estimated economic useful lives of the asset, which are generally three 3

Land is a non-depreciable asset and is stated at cost.

Land is a non-depreciable asset and is

stated at cost.

of Long-Lived Assets

8 unchanged sentences

orderly transaction between market participants at the measurement date.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

Value of Measurement

9 unchanged sentences

that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

There are three fair value hierarchies based upon the level of inputs that are significant to fair value measurement:

1 – Unadjusted quoted prices in active markets that are accessible at the measurement date

for identical unrestricted assets or liabilities.

2 – Observable inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly or indirectly, including quoted prices for similar

assets and liabilities in active markets;

quoted prices for identical or similar assets and

liabilities in markets that are not active;

or other inputs that are observable or can be

corroborated by observable market data by correlation or other means.

3 – Prices or valuation techniques requiring inputs that are both significant to the

fair value measurement and unobservable.

There are three fair value levels in the fair value hierarchy based upon the level of inputs that are significant to fair value measurement:

1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical unrestricted assets

or liabilities.

2 – Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly or indirectly, including quoted prices for similar assets and liabilities in active markets;

quoted prices for identical

or similar assets and liabilities in markets that are not active;

or other inputs that are observable or can be corroborated by observable

market data by correlation or other means.

3 – Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable.

categorization of a financial instrument within the fair value hierarchy is based upon the lowest level of input that is significant

2 unchanged sentences

in its entirety requires management to make judgements and consider factors specific to the asset or liability.

Company’s financial assets and liabilities are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis.

amounts of certain financial assets and liabilities, including cash, other current assets, accounts payable and short-term loans approximate

fair value because of the short maturity and liquidity of those instruments.

Company’s financial assets and liabilities are recognized or disclosed at fair value in the consolidated financial statements on

a recurring basis.

The carrying amounts of certain financial assets and liabilities, including cash, other current assets, accounts payable

and short-term loans approximate fair value because of the short maturity and liquidity of those instruments.

Company records income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities

10 unchanged sentences

are provided when necessary to reduce deferred tax assets to the amount expected to be realized.

Company recognizes tax benefits from uncertain tax positions if it is more likely than not that the tax position will be sustained

on examination by the taxing authorities based on the technical merits of the position.

Although the Company believes that it has

adequately reserved for uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters

will not be materially different.

The Company makes adjustment to these reserves when facts and circumstances change, such as the

closing of a tax audit or the refinement of an estimate.

To the extent that the final outcome of these matters is different than the

amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and

could have a material impact on our financial condition and results of operations.

Company recognizes tax benefits from uncertain tax positions if it is more likely than not that the tax position will be sustained on

examination by the taxing authorities based on the technical merits of the position.

Although the Company believes that it has adequately

reserved for uncertain tax positions, the Company can provide no assurance that the final tax outcome of these matters will not be materially

The Company makes adjustment to these reserves when facts and circumstances change, such as the closing of a tax audit or

the refinement of an estimate.

To the extent that the final outcome of these matters is different than the amounts recorded, such differences

will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our

financial condition and results of operations.

Company elects to record interest accrued and penalties related to unrecognized tax benefits in the consolidated statements of operations

1 unchanged sentence

in Equity Securities

in equity securities with readily determinable fair values are accounted in accordance with ASC 321, Investment in Equity

These investments are recorded at cost and subsequently measured at fair value with changes in fair value recognized in

the Company’s consolidated statements of operations.

Stardust Power Inc.

in equity securities with readily determinable fair values are accounted in accordance with ASC 321, Investment in Equity Securities.

These investments are recorded at cost and subsequently measured at fair value with changes in fair value recognized in the Company’s

consolidated statements of operations.

and Subsidiaries

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

notes represent instruments that provide a form of financing to the Company and possess characteristics of both a debt and equity instrument.

17 unchanged sentences

statements of operations.

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

value hierarchy.

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

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

(i) an equity financing

where the SAFE notes will convert into preferred stock;

(ii) a SPAC transaction or an initial public offering where the SAFE notes

will convert into common stock (iii) a change in control where the SAFE notes holders will have an option to receive a portion of

the cash and other assets equal to the purchase amount and (iv) dissolution event where the SAFE notes holders will be entitled to

the purchase amount subject to liquidation priority.

Issuance cost incurred during the period March 16, 2023 (inception) to December 31, 2023,

were expensed as incurred and presented separately in the consolidated statements of operations.

(i) an equity financing where the

SAFE notes will convert into preferred stock;

(ii) a SPAC transaction or an initial public offering where the SAFE notes will convert

into common stock (iii) a change in control where the SAFE notes holders will have an option to receive a portion of the cash and other

assets equal to the purchase amount and (iv) dissolution event where the SAFE notes holders will be entitled to the purchase amount subject

to liquidation priority.

Issuance cost incurred during the period March 16, 2023 (inception) to December 31, 2023, were expensed as incurred

and presented separately in the consolidated statements of operations.

Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s

1 unchanged sentence

and ASC 815, Derivatives and Hedging (“ ASC 815 ”).

Management’s assessment considers whether the warrants are

freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether

the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the

Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance

outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires the use of

professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period-end date while the warrants

are outstanding.

or modified warrants that meet all of the criteria for equity classification are recorded as a component of additional paid-in

capital at the time of issuance.

Issued or modified warrants that do not meet all the criteria for equity classification are

recorded as a liability at their initial fair value on the date of issuance and subject to remeasurement each balance sheet date

with changes in the estimated fair value of the warrants to be recognized as an unrealized gain or loss in the consolidated

statements of operations.

Cost associated with issuing the warrants accounted for as liabilities are charged to consolidated

statements of operations when warrants are issued.

Management’s assessment considers whether the warrants

are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and

whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed

to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in

a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires

the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period-end date while

the warrants are outstanding.

or modified warrants that meet all of the criteria for equity classification are recorded as a component of additional paid-in capital

at the time of issuance.

Issued or modified warrants that do not meet all the criteria for equity classification are recorded as a liability

at their initial fair value on the date of issuance and subject to remeasurement each balance sheet date with changes in the estimated

fair value of the warrants to be recognized as an unrealized gain or loss in the consolidated statements of operations.

Cost associated

with issuing the warrants accounted for as liabilities are charged to consolidated statements of operations when warrants are issued.

Company accounts for short-term loans, as a single liability measured at amortized cost.

1 unchanged sentence

proceeds received from the issuance of the loan agreements, accrued premium less debt issuance costs.

See “Note 7 – Short-term loans” for additional information.

Stardust Power Inc.

See “Note 7 – Short-term

loans” for additional information.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

the inception of a contract, the Company performs an assessment whether the contract is, or contains, a lease.

The assessment is based

(1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to substantially all

the economic benefit from the use of the asset throughout the term of the contract, and (3) the Company the right to direct the use of

TO CONSOLIDATED FINANCIAL STATEMENTS

the inception of a contract, the Company performs an assessment of whether the contract is, or contains, a lease.

The assessment is

based on whether:

(1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to

substantially all the economic benefit from the use of the asset throughout the term of the contract, and (3) the Company the right

to direct the use of the asset.

are classified as either finance leases or operating leases.

26 unchanged sentences

Company has entered into a lease agreement with Tower Lake LLC, for office space.

The Company has not recognized any ROU asset and

lease liability pursuant to this lease as it is a short-term lease.

The Company recorded rent expense of $ 31,242

and $ 24,425 for the year

ended December 31, 2024, and for the period from March 16, 2023 (inception) through December 31, 2023, respectively in the

consolidated statements of operations.

The Company has not recognized any ROU asset and lease

liability pursuant to this lease as it is a short-term lease.

The Company recorded rent expense of $ 31,242 and $ 31,242 for the year ended

December 31, 2025, and 2024, respectively in the consolidated statements of operations.

Subsequent to year end, in February 2026 the Company entered into a two-year sublease

agreement with Chesmar Homes, LLC, for office space located in Houston, Texas.

The monthly base rent under the agreement is $ 8,761 and the Company paid

a security deposit of $ 17,523 .

and Administrative Expenses

1 unchanged sentence

utilities, travel and other general overhead costs to support the Company’s operations.

costs are expensed as incurred and are included in general and administrative expenses, in accordance with ASC 720-35, “Other

Expenses – Advertising Cost”.

Transaction Costs

transaction costs consist of $ Nil and $ 450,113 for the year ended December 31, 2024, and for the period from March 16, 2023 (inception)

through December 31, 2023, respectively, and relate to costs that represent fees and expenses associated with evaluation of potential

other merger opportunities that the Company ultimately did not execute.

Organizational

accordance with ASC 720, “Other Expenses”, organizational costs, including accounting fees, legal and professional fees,

and costs of incorporation, are expensed as incurred.

The Company has incurred $ 75,136 of set-up costs expensed in the consolidated statement

of operations for the period from March 16, 2023 (inception) through December 31, 2023, representing pre-incorporation expenses for legal

and professional consulting services related to start-up activities.

costs are expensed as incurred and are included in general and administrative expenses, in accordance with ASC 720-35, “Other Expenses

– Advertising Cost”.

Company accounts for stock options, restricted share awards (“ RSAs ”), restricted stock units (“ RSUs ”),

1 unchanged sentence

fair value on the date of grant.

The fair value of the Company’s stock options is measured based on the grant-date fair value

which is calculated using a Black-Scholes option pricing model.

The Company evaluates the assumptions used to value option awards

upon each grant of stock options.

At the election of the grantees, the stock options granted by the Company are early

exercisable at any time from the date of grant but are subject to a repurchase right, under which the Company may buy back any

unvested shares in the event of an employee’s termination prior to full vesting at lower of original exercise price or fair

market value as on the date the Company delivers the Repurchase Notice.

The consideration received for an early exercise of an

unvested option is considered as deposit of the exercise price and the related amount is recorded as a liability.

The liabilities

are reclassified into common stock and additional paid-in capital as the awards vest.

The shares are included in common stock on the

consolidated statements of stockholders’ equity (deficit) as at December 31, 2024 and 2023, and are not included in the

calculation of basic net loss per share attributable to common stockholders for the year ended December 31, 2024, and for the period

from March 16, 2023 (inception) through December 31, 2023.

However, the early exercised shares are included in calculation of

diluted net loss per share attributable to common stockholders for the year ended December 31, 2024, and for the period ended

December 31, 2023, to the extent they are not anti-dilutive.

Stardust Power Inc.

The fair value of the Company’s stock options is measured based on the grant-date fair value which

is calculated using a Black-Scholes option pricing model.

The Company evaluates the assumptions used to value option awards upon each

grant of stock options.

At the election of the grantees, the stock options granted by the Company are early exercisable at any time from

the date of grant but are subject to a repurchase right, under which the Company may buy back any unvested shares in the event of an

employee’s termination prior to full vesting at lower of original exercise price or fair market value as on the date the Company

delivers the Repurchase Notice.

The consideration received for an early exercise of an unvested option is considered as deposit of the

exercise price and the related amount is recorded as a liability.

The liabilities are reclassified into common stock and additional paid-in

capital as the awards vest.

The shares are included in common stock on the consolidated statements of stockholders’ equity (deficit)

as at December 31, 2025, and 2024, and are not included in the calculation of basic net loss per share attributable to common stockholders

for the year ended December 31, 2025, and December 31, 2024.

However, the early exercised shares are included in calculation of diluted

net loss per share attributable to common stockholders for the year ended December 31, 2025, and for the period ended December 31, 2024,

to the extent they are not anti-dilutive.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

The fair value of RSUs awarded is based on the

closing price of the Company’s common stock, as reported on Nasdaq on the date of grant.

The fair value and derived service period

of PSUs with market-based conditions is estimated using the Monte Carlo valuation model.

The Company evaluates the assumptions used to

value PSU awards upon each grant of PSUs.

TO CONSOLIDATED FINANCIAL STATEMENTS

fair value of RSUs awarded is based on the closing price of the Company’s common stock, as reported on Nasdaq on the date of grant.

The fair value and derived service period of PSUs with market-based conditions is estimated using the Monte Carlo valuation model.

Company evaluates the assumptions used to value PSU awards upon each grant of PSUs.

compensation expense associated with service and market-based conditions for RSUs will be recognized over the longer of the expected

achievement period for the service condition and market condition.

Stock-based compensation expense associated with PSUs is

recognized over the longer of the expected achievement period for the performance condition and the service condition The Company

generally recognizes stock-based compensation expense for RSUs with only service condition on a straight-line basis over the vesting

term and RSUs /PSUs with service and market-based conditions, respectively, on graded vesting method over the vesting term.

The Company accounts for forfeitures as they occur.

Stock-based compensation expense associated with PSUs is recognized

over the longer of the expected achievement period for the performance condition and the service condition The Company generally recognizes

stock-based compensation expense for RSUs with only service condition on a straight-line basis over the vesting term and RSUs /PSUs with

service and market-based conditions, respectively, on graded vesting method over the vesting term.

The Company accounts for forfeitures

as they occur.

Loss per Share

11 unchanged sentences

accounting pronouncements

time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), under its ASC or other standard

setting bodies, and adopted by the Company as of the specified effective date.

time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“ FASB ”), under

its ASC or other standard setting bodies, and adopted by the Company as of the specified effective date.

adopted accounting pronouncements

November 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements

to Reportable Segment Disclosures (ASU 2023-07).

ASU 2023-07 improves reportable segment disclosure requirements, primarily through

enhanced disclosures about significant segment expenses.

The guidance is effective for public business entities for fiscal years

beginning after December 15, 2023, and interim periods within fiscal years, beginning after December 15, 2024.

Early application is

The guidance is to be applied retrospectively to all prior periods presented in the consolidated financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant

segment expense categories identified and disclosed in the period of adoption.

The Company adopted the standard for the year ended

December 31, 2024, with disclosures included in Note 15 – Segment Reporting.

Issued Accounting Pronouncements Not Yet Adopted

the exception of those listed below, the Company has reviewed the accounting pronouncements issued during the year ended December 31,

2024, and concluded they were either not applicable or not expected to have a material impact on the Company’s consolidated financial

November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which is referred to as ASU 2024-03.

ASU 2024-03 requires public entities to disclose detailed information about specific types of expenses included within the expense

captions presented on the face of the income statement.

While ASU 2024-03 does not alter the presentation of expense captions on the

face of the income statement, it introduces requirements for disaggregating certain expense captions into specified categories

within the footnotes to the consolidated financial statements.

ASU 2024-03 is effective for fiscal years beginning after December

15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently

evaluating the impact that ASU 2024-03 will have on its consolidated financial statements and accompanying footnotes.

December 2023, FASB issued ASU No.

December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

4 unchanged sentences

permitted for annual consolidated financial statements that have not yet been issued or made available for issuance.

This ASU will

likely result in the required additional disclosures being included in our consolidated financial statements, once

Stardust Power Inc.

adopted ASU 2023-09 in 2025, with prospective application.

See Note 18- Income Taxes for further information.

Issued Accounting Pronouncements Not Yet Adopted

the exception of those listed below, the Company has reviewed the accounting pronouncements issued during the year ended December 31,

2025, and concluded they were either not applicable or not expected to have a material impact on the Company’s consolidated financial

November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which is referred to as ASU 2024-03.

ASU 2024-03 requires public entities to disclose detailed information about specific types of expenses included within the expense captions

presented on the face of the income statement.

While ASU 2024-03 does not alter the presentation of expense captions on the face of the

income statement, it introduces requirements for disaggregating certain expense captions into specified categories within the footnotes

to the consolidated financial statements.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting

periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact that ASU 2024-03

will have on its consolidated financial statements and accompanying footnotes.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

3 – REVERSE RECAPITALIZATION

mentioned above in Note 1, the Business Combination was closed on July 8, 2024, and has been accounted for a reverse recapitalization

because Legacy Stardust Power has been determined to be the accounting acquirer pursuant to ASC 805, “ Accounting for Business Combinations ” , based on the evaluation of the following

facts and circumstances:

Stardust Power shareholders

who controlled Legacy Stardust Power prior to the Business Combination, retained the majority voting interest in the Combined Company

immediately after the Business Combination;

Legacy Stardust Power has

the ability to elect a majority of the members of the Combined Company’s governing body;

Legacy Stardust Power’s

senior management makes up the senior management of the Combined Company;

The Combined Company assumed

Stardust Power’s name.

because Legacy Stardust Power has been determined to be the accounting acquirer pursuant to ASC 805, “ Accounting for Business

Combinations” , based on the evaluation of the following facts and circumstances:

Power shareholders who controlled Legacy Stardust Power prior to the Business Combination, retained the majority voting interest

in the Combined Company immediately after the Business Combination;

Stardust Power has the ability to elect a majority of the members of the Combined Company’s governing body;

Stardust Power’s senior management makes up the senior management of the Combined Company;

Combined Company assumed Stardust Power’s name.

as there was no change in control, the Business Combination was accounted for as a common control transaction with respect to Legacy

5 unchanged sentences

net assets of GPAC II have been stated at historical cost, with no goodwill or other intangible assets recorded.

following the Business Combination, there were 47,736,650 shares of Common Stock outstanding with a par value of $ 0.0001 per share.

above includes 1,000,000 Sponsor Earnout Shares which were also issued at closing.

While the Earnout Shares are legally issued and restricted,

they are not considered outstanding for accounting purposes until resolution of the earnout contingency.

Immediately following the Business Combination,

there were 4,773,665 shares of Common Stock

outstanding with a par value of $ 0.0001

The above includes 100,000

Sponsor Earnout Shares which were also issued at closing.

While the Earnout Shares are legally issued and restricted, they are not considered

outstanding for accounting purposes until resolution of the earnout contingency.

Additionally, there were 5,566,667

Private Placement Warrants (defined below) and 4,999,929 of the Company’s detachable redeemable

warrants and distributable redeemable warrants (the “ Public Warrants”) outstanding representing a right to purchase

10,566,596 Newco Stock.

Placement Warrants (defined below) and 4,999,929

the Company’s detachable redeemable warrants and distributable redeemable warrants (the “ Public

Warrants ”) outstanding representing a right to purchase 1,056,659

prior to the closing of the Business Combination, the total number of Legacy Stardust Power ordinary shares issued and outstanding was

4 unchanged sentences

to the Business Combination Agreement, the former owners of Legacy Stardust Power were granted and will have the ability to earn, in

the aggregate, an additional 5,000,000 shares of Common Stock (“Merger Earnout Shares”) if the daily volume weighted average

price of the Common Stock is greater than or equal to $ 12.00 for any 20 trading days within a 30 trading day period (or a change of control

of the Company occurs), during the period commencing on the Closing Date and ending on the eighth anniversary of the Closing Date.

are no service conditions or any requirement for the participants to provide goods or services in order to vest in the Merger Earnout

the aggregate, an additional 500,000

shares of Common Stock (“ Merger Earnout Shares ”)

if the daily volume weighted average price of the Common Stock is greater than or equal to $ 120.00

for any 20 trading days within a 30 trading day period (or

a change of control of the Company occurs), during the period commencing on the Closing Date and ending on the eighth anniversary of

the Closing Date.

There are no service conditions or any requirement for the participants to provide goods or services in order to vest

in the Merger Earnout Shares.

Accordingly, we determined that the Merger Earnout Shares are not within the scope of ASC 718.

Further, since the Merger Earnout

Shares represent a freestanding equity-linked financial instrument, we evaluated the requirements of ASC 480 and concluded that the Merger

Earnout Shares should not be classified as a liability and instead is a financial instrument within the scope of ASC 815.

since the Merger Earnout Shares represent a freestanding equity-linked financial instrument, we evaluated the requirements of ASC 480

and concluded that the Merger Earnout Shares should not be classified as a liability and instead is a financial instrument within the

scope of ASC 815.

Merger Earnout Share arrangement contains two exercise contingencies – the daily volume weighted average stock price and a change

13 unchanged sentences

Dividend rate

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

number of shares of Common Stock issued and outstanding immediately following the consummation of the Business Combination were:

5 unchanged sentences

Total Shares issued and Outstanding

Includes eight shareholders,

whose shares are not subject to lock-up or transfer restrictions.

Includes (i) 894,132 shares

of Combined Company Common Stock issued in exchange for shares of Legacy Stardust Power Common Stock with the conversion of the SAFE

notes and convertible equity agreements and (ii) 41,499,772 shares of Combined Company Common Stock issued in accordance with the

Business Combination Agreement underlying the Exchanged Company Restricted Common Stock.

Excludes 4,999,929 Public

Warrants that converted automatically into a whole warrant exercisable for one share of Common Stock.

Reflects the reclassification

of $ 1,564,086 of cash held in trust account, after reversal of redemptions of 2,877 shares at $ 11.38 per share, post June 30, 2024,

resulting in a net increase of $ 1,564,086 , net of redemptions, in cash.

Excludes 5,566,667 Private

Placements Warrants that converted automatically into a whole warrant exercisable for one share of Common Stock.

Includes 1,000,000 Sponsor

Earnout Shares (as defined in the Business Combination Agreement).

While the Earnout Shares are legally issued, they are subject

to forfeiture based on vesting conditions not being met.

eight shareholders, whose shares are not subject to lock-up or transfer restrictions.

(i) 89,413 shares of Combined Company Common Stock issued in exchange for shares of Legacy Stardust Power Common Stock with the

conversion of the SAFE notes and convertible equity agreements and (ii) 4,149,977 shares of Combined Company Common Stock issued

in accordance with the Business Combination Agreement underlying the Exchanged Company Restricted Common Stock.

4,999,929 Public Warrants that converted automatically into 10 warrants exercisable for one share of Common Stock.

the reclassification of $ 1,564,086 of cash held in trust account, after reversal of redemptions of 288 shares at $ 113.8 per share,

post June 30, 2024, resulting in a net increase of $ 1,564,086 , net of redemptions, in cash.

5,566,667 Private Placements Warrants that converted automatically into 10 warrants exercisable for one share of Common Stock.

100,000 Sponsor Earnout Shares (as defined in the Business Combination Agreement).

While the Earnout Shares are legally issued, they

are subject to forfeiture based on vesting conditions not being met.

(See Note 17).

Reflects the receipt of

$ 10,075,002 of PIPE proceeds resulting in issuance of 1,077,541 shares with the corresponding impact of $ 108 in Combined Company

Common Stock and the balance impact being booked to additional paid-in capital.

Includes 127,777 shares

of Combined Company Common Stock issued to GPAC II shareholders entering into NRAs.

the receipt of $ 10,075,002 of PIPE proceeds resulting in issuance of 107,754 shares with the corresponding impact of $ 108 in Combined

Company Common Stock and the balance impact being booked to additional paid-in capital.

Includes 12,777

shares of Combined Company Common Stock issued to GPAC II shareholders entering into NRAs.

the closing of the Business Combination and the PIPE financing, the Company received net cash proceeds of $ 9,154,761 .

16 unchanged sentences

Refer Note 2 Deferred Transaction Costs

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

Earnout Shares

part of the closing of the Business Combination, the Company issued 1,000,000 shares to Global Partner Sponsor II, LLC (the “Sponsor”).

These shares are subject to vesting (or forfeiture) based on achieving certain trading price thresholds following the closing (“Sponsor

TO CONSOLIDATED FINANCIAL STATEMENTS

Earnout Shares

Fifty percent of the Sponsor Earnout Shares will vest when the 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

There are no service conditions or any requirement for the participants to provide goods or services in order to vest in

the Sponsor Earnout Shares.

part of the closing of the Business Combination, the Company issued 100,000 shares to 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 Common Stock price equals or exceeds $120.00 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 $140.00 per share for a period of 20 trading days in a 30 trading day period.

are no service conditions or any requirement for the participants to provide goods or services in order to vest in the Sponsor Earnout

Accordingly, we determined that the Sponsor Earnout Shares are not within the scope of ASC 718.

The accounting

for the Sponsor Earnout Shares was evaluated under ASC Topic 480, “Distinguishing Liabilities from Equity”, and ASC Subtopic

815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, to determine if the Sponsor Earnout Shares

should be classified as a liability or within equity.

As part of the analysis, it was determined that the Sponsor Earnout Shares subject

to vesting are freestanding from other shares of Combined Company Common Stock held by the Sponsor and do not meet the criteria in ASC

815-40 to be considered indexed to the Combined Company Common Stock, due to the settlement provisions including a change in control

component which could impact the number of the Sponsor Earnout Shares are ultimately settled for, which is not an input to a fixed-for-fixed

option pricing model.

As a result, the Sponsor Earnout Shares will be classified as a liability.

Subsequent changes in the fair value

of the Sponsor Earnout shares will be reflected in the consolidated statements of operations.

The accounting for the Sponsor

Earnout Shares was evaluated under ASC Topic 480, “Distinguishing Liabilities from Equity”, and ASC Subtopic 815-40, “Derivatives

and Hedging — Contracts in Entity’s Own Equity”, to determine if the Sponsor Earnout Shares should be classified as

a liability or within equity.

As part of the analysis, it was determined that the Sponsor Earnout Shares subject to vesting are freestanding

from other shares of Combined Company Common Stock held by the Sponsor and do not meet the criteria in ASC 815-40 to be considered indexed

to the Combined Company Common Stock, due to the settlement provisions including a change in control component which could impact the

number of the Sponsor Earnout Shares are ultimately settled for, which is not an input to a fixed-for-fixed option pricing model.

a result, the Sponsor Earnout Shares will be classified as a liability.

Subsequent changes in the fair value of the Sponsor Earnout shares

will be reflected in the consolidated statements of operations.

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 December 31, 2024, the fair value of Sponsor Earnout Shares amounted to $ 532,700 .

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.

The Company did not perform a fair valuation of expected earnout consideration

using the Monte Carlo method as of December 31, 2025, as the Company determined that change in fair value is deemed immaterial to

the fair value of earnout consideration.

As at December 31, 2025, and 2024, the fair value of Sponsor Earnout Shares amounted to

and $ 532,700 ,

respectively.

Sponsor Earnout Shares were valued using the following assumptions under the Monte Carlo Model that assumes optimal exercise of the Company’s

1 unchanged sentence

OF ASSUMPTIONS UNDER THE MONTE CARLO MODEL

March 31, 2025

December 31, 2024

20 unchanged sentences

affect the Company’s business, financial position, and results of operations or cash flows.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

March 13, 2024, Legacy Stardust Power and IGX, entered into an exclusive letter of intent (the “IGX

LOI”) to potentially acquire interests in certain mining claims (the “IGX Claims”).

The contemplated transaction is

subject to the entering into of a definitive agreement, due diligence by the Company, and other factors.

In connection with the entering

into the non-binding IGX LOI, the Company has paid a non-refundable payment of $ 30,000 in connection with obtaining a binding exclusivity

Further, Stardust Power has agreed to binding provisions relating to (i) a right of first refusal in favor of Stardust Power and

(ii) the delivery of a form promissory note in favor of IGX.

August 19, 2024, Legacy Stardust Power entered into a promissory note arrangement with IGX (the “IGX Note”) for $ 176,000

to allow the Company to potentially be able to

enter into related agreements and partnerships with IGX.

The IGX Note carries an interest rate of 6 %

with a maturity date of February

The IGX Note is secured by a letter

of intent for possible acquisition, including through a potential joint venture, of IGX’s mining claims.

The payment is made solely

for the payment of all 2024 Bureau of Land Management fees and county land maintenance fees, notice of intent and associated filing fees

for the claims owned by IGX.

If the Company acquires an interest in any of the IGX Claims, the balance of the promissory note shall be

credited as part of the Company’s investment and IGX shall not be required to repay the note.

The promissory note including interest

amounting to $ 179,877

is outstanding as on December 31, 2024, and presented

as Promissory notes issued under current assets on the consolidated balance sheet.

The Company is in active discussion in negotiating the terms for repayment and is evaluating multiple options including

a possible strategic investment.

On March 15, 2024, Legacy Stardust Power and

Usha Resources Ltd.

(“Usha Resources”) entered into a non-binding Letter of Intent (the “Jackpot LOI”),

except for certain binding terms such as those relating to the exclusivity period until June 30, 2025, as extended, to acquire an

interest in Usha Resources’ lithium brine project, situated in the United States.

Usha Resources is an established lithium

developer with multiple projects in development.

The Jackpot Lake Lithium Brine Project is a flagship asset of Usha Resources and is

a lithium brine asset located in the United States, comprising of 8,714 acres of property.

The project is currently engaged in its

maiden drill program.

The Jackpot LOI provides Stardust Power with the exclusive option to agree to acquire up to 90% of the

interests held by Usha Resources in the Jackpot Lake project, based on an indicative earn-in schedule.

As part of a definitive

agreement, Stardust Power would be required to invest into the development of the Jackpot Lake project.

The Company has made a

non-refundable payment of $ 25,000 upon

execution of the Jackpot LOI in connection with securing exclusivity and a further $ 50,000 payment

(the “Second Payment”) was made by the Company on May 14, 2024;

provided that the Second Payment shall be non-refundable

except if Usha Resources breaches the terms of the Jackpot LOI at which point Usha Resources shall refund the Second Payment

together with all out-of-pocket expenses (including the fees and expenses of legal counsel, accountants and other advisors hereof)

incurred by the Company.

The Second Payment of $ 50,000 is

presented as Other long-term assets on the consolidated balance sheet as on December 31, 2024.

TO CONSOLIDATED FINANCIAL STATEMENTS

October 10, 2023, Legacy Stardust Power entered into a non-binding (except for the confidentiality provision) letter of intent with QX

1 unchanged sentence

and in good faith to assess the lithium brines contained in QXR’s Liberty Lithium Brine Project (the “ Project ”).

is earning into 75% of the Project situated in Inyo County, California, by way of an earn-in agreement with IG Lithium LLC (“IGL”)

QXR is earning into 75% of the Project situated in Inyo County, California, by way of an earn-in agreement with IG Lithium LLC (“ IGL ”)

and QXR intends to use either evaporation or direct extraction technology to produce a concentrated lithium product or other lithium

On August 16, 2024, the Company entered into a promissory note arrangement with IGL (the “IGL Note”) for $ 316,000

to allow the Company to enter into related agreements and future partnerships with IGL on the Project.

The IGL Note carries an interest

rate of 6 % with a maturity date of July 1, 2025 .

The IGL Note is secured by first priority in all rights, title, interest, claims and

demands of IGL related to the Project and other assets of IGL.

The promissory note including interest amounting to $ 322,961 is outstanding

as on December 31, 2024, and presented as Promissory notes issued under current assets on the consolidated balance sheet.

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

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 $ 4,724,690

in the aggregate, subject to customary potential

As at December 31, 2024, the total performance pending to be performed and billed by Primero is $ 1,855,911 .

Legal proceedings

are also subject to certain routine legal and regulatory proceedings, as well as demands and claims that arise in the normal course of

our business.

We make a provision for a liability relating to legal matters when it is both probable that a liability has been incurred

and the amount of the loss can be reasonably estimated.

These provisions are reviewed at least quarterly and adjusted to reflect the

impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to

a particular matter.

In our opinion, resolution of any pending claims (either individually or in the aggregate) is not expected to have

a material adverse impact on our consolidated results of operations, cash flows or financial position, nor is it possible to provide

an estimated amount of any such loss.

However, depending on the nature and timing of any such dispute, an unfavorable resolution of a

matter could materially affect our future financial position, results of operations, or cash flows, or all in a particular period.

Stardust Power Inc.

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

(“ 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 FEL 3 report of the Company’s Facility at Southside Industrial Park, in Muskogee, Oklahoma.

The total amount

due pursuant to the Primero Agreement, assuming full performance, was approximately $ 4,724,690 in

the aggregate, subject to customary potential adjustments.

As at December 31, 2025, and December 31, 2024, the total performance

pending to be performed and billed by Primero is nil and

$ 1,855,911 ,

respectively.

On February 7, 2025 (the “ License Agreement Effective Date ”),

the Company executed an exclusive license agreement (the “ License Agreement ”) with KMX Technologies, Inc.

corporation (“ KMX ”).

Under the terms of the License Agreement, KMX agreed to irrevocably license to the Company the

use of KMX’s vacuum membrane distillation technology (“ VMD Technology ”) and associated processes and systems

(including units incorporating the VMD Technology (“ KMX VMD Units ”)) for use in the Company’s refining and upstream

Among other obligations set forth in the License Agreement, the Company shall be required to exclusively purchase all KMX

VMD Units from the Licensor during the term of the License Agreement on the terms and conditions set forth therein.

October 20, 2025, the Company entered into a non-binding letter agreement with Prairie Lithium Limited (“ Prairie ”),

an Australia-based company, for the supply of 6,000

metric tons per annum of lithium carbonate equivalent (“ LCE ”)

in the form of lithium chloride.

The lithium chloride is sourced from the Prairie Lithium Project in Saskatchewan, Canada and will be

used as feedstock at Stardust Power’s lithium processing facility in Muskogee, Oklahoma.

The initial contract term would span 6

years starting from the date on which first commercial shipment

is received by the Company, with the option for the Company to renew for two additional six year terms.

October 31, 2025, the Company entered into a non-binding letter agreement with Mandrake Resources Limited (“ Mandrake ”),

an Australia-based company, for the supply of 7,500

metric tons per annum of LCE in the form of lithium chloride.

The initial contract term would span 12

years starting from the date on which first commercial shipment

is received by the Company, with the option for the Company to renew for an additional six-year term.

From time to time we may be involved in certain legal and regulatory proceedings,

as well as demands, investigations and claims that arise in the ordinary course of our business.

The ultimate outcome of any litigation

is often uncertain, and unfavorable outcomes could have a negative impact on our results of operations and financial condition.

a provision for a liability relating to legal matters when it is probable that a liability has been incurred and the amount of the loss

can be reasonably estimated.

These provisions are reviewed at least quarterly and adjusted to reflect the impact of negotiations, estimated

settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter.

In our opinion,

resolution of any pending claims (either individually or in the aggregate) is not expected to have a material adverse impact on our consolidated

results of operations, cash flows or financial position, nor is it possible to provide an estimated amount of any such loss.

depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect our future financial

position, results of operations, or cash flows, or all in a particular period.

On July 7, 2025, a complaint was filed in the Supreme Court of the State

of New York, County of New York, captioned H.C.

Wainwright & Co., LLC v.

Stardust Power, Inc., Case No:

The complaint

names the Company as a defendant, and alleges among other things, that the Company breached an engagement agreement with the plaintiffs.

The plaintiffs seek, among other things, payment of all purported unpaid sums due under such engagement agreement.

On September 19, 2025,

the Company filed its answer in response to the complaint, in which it denied all liability and asserted several affirmative defenses.

The action is proceeding to the discovery stage and for further proceedings.

The Company plans to vigorously defend against the lawsuit.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

5 – BALANCE SHEET COMPONENTS

11 unchanged sentences

Accumulated depreciation

expense was $ 1,823 and $ 6 for the year ended December 31, 2024, and for the period from March 16, 2023 (inception) through December

31, 2023, respectively.

expense was $ 3,166 and $ 1,823 for the year ended December 31, 2025, and December 31, 2024, respectively.

Other long-term assets

14 unchanged sentences

Accrued interest

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

6 – COMMON STOCK

3 unchanged sentences

The holders of Common Stock are also entitled to receive dividends whenever funds are

legally available and when declared by the board of directors (the “Board”), subject to prior rights of the convertible preferred

stockholders.

Shares of Common Stock issued and outstanding on the consolidated balance sheet and consolidated statement of stockholders’

deficit includes shares related to restricted stock that are subject to repurchase.

Company is authorized to issue 700,000,000 and 100,000,000 shares, par value of $ 0.0001 per share, of Common Stock and Preferred stock,

respectively.

At December 31, 2024, the Company had 47,736,279 shares of Common Stock issued and outstanding.

Not reflected in the shares

issued and outstanding as of December 31, 2024, is approximately 618,626 shares of Common Stock related to restricted stock units that

vested in 2024 but have not yet been settled and issued.

As of December 31, 2023, the Company had 41,499,772 shares of common stock,

par value $ 0.0001 , issued and outstanding.

legally available and when declared by the board of directors (the “ Board ”), subject to prior rights of the convertible

preferred stockholders.

Shares of Common Stock issued and outstanding on the consolidated balance sheet and consolidated statement of

stockholders’ deficit includes shares related to restricted stock that are subject to repurchase.

Company is authorized to issue 700,000,000

and 100,000,000

shares, par value of $ 0.0001

per share, of Common Stock and Preferred stock, respectively.

At December 31, 2025, the Company had 9,869,558

shares of Common Stock issued and outstanding.

Not reflected in the shares issued and outstanding as of December 31, 2025, is

approximately 67,000 shares

of Common Stock related to shares issued to a vendor and restricted stock units that vested in 2025, but have not yet been settled

As of December 31, 2024, the Company had 4,773,628

shares of common stock, par value $ 0.0001 ,

issued and outstanding.

Stock Purchase Agreement

October 7, 2024, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement (collectively

referred to as the “Purchase Agreement”) with B.

Riley Principal Capital II, LLC.

the Purchase Agreement, the Company has the right, in its sole discretion, to sell to B.

Riley Principal Capital II, LLC up to the lesser of (i) $ 50.0 million

of newly issued shares of the Company’s common stock, and (ii) the Exchange Cap (as defined below) (subject to certain

conditions and limitations), from time to time during the 36-month term of the Purchase Agreement.

October 7, 2024, the Company entered into the Prior B.

Riley Agreements.

Pursuant to the Prior B Riley Agreements, the Company has the

right, in its sole discretion, to sell to B.

Riley Principal Capital II, LLC up to the lesser of (i) $50.0 million of Common Stock, and

(ii) the Exchange Cap (as defined below) (subject to certain conditions and limitations), from time to time during the 36-month term

of the Prior B.

Riley Agreements.

the applicable NASDAQ rules, the Company may not issue to B.

Riley Principal Capital II, LLC under the Purchase Agreement more than 9,569,701 shares of common

stock, which number of shares is equal to 19.99% of the common shares outstanding immediately prior to the execution of the Purchase

Agreement unless certain exceptions are met (the “Exchange Cap”).

The purchase price of the shares of common stock will

be determined by reference to the VWAP of the common stock during the applicable

purchase date, less a fixed 3% discount to such VWAP.

Riley Principal Capital II under the Prior B.

Riley Agreements more than

9,569,700 shares of Common Stock, which number of shares is equal to 19.99% of the common shares outstanding immediately prior to the

execution of the Prior B.

Riley Agreements unless certain exceptions are met (the “ Exchange Cap ”).

The purchase price

of the shares of common stock were determined by reference to the VWAP of the common stock during the applicable purchase date, less

a fixed 3% discount to such VWAP.

Additionally, B.

Riley Principal Capital II, LLC cannot acquire shares that would result in its

beneficial ownership exceeding 4.99% of Stardust Power’s outstanding shares.

The Exchange Cap does not apply if the average share

price exceeds $7.7020 per share but will remain in place if this threshold is not met and stockholder approval is not

The Company evaluated this common stock purchase agreement to determine whether they should be accounted for considering

the guidance in ASC 815-40, “Derivatives and Hedging - Contracts on an Entity’s Own Equity” (“ASC 815-40”)

and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value

accounting as a derivative.

The Company has analyzed the terms of the freestanding purchased put right and has concluded that it had insignificant

value as of December 31, 2024.

executing the Purchase Agreement and Registration Rights Agreement, the Company also issued 63,694 shares

of Common Stock called Commitment Shares to B.

Riley Principal Capital II cannot acquire shares that would result in its beneficial

ownership exceeding 4.99% of Stardust Power’s outstanding shares.

The Exchange Cap does not apply if the average share price exceeds

$77.020 per share but will remain in place if this threshold is not met and stockholder approval is not obtained.

The Company evaluated

this common stock purchase agreement to determine whether they should be accounted for considering the guidance in ASC 815-40, “Derivatives

and Hedging - Contracts on an Entity’s Own Equity” (“ ASC 815-40 ”) and concluded that it is an equity-linked

contract that does not qualify for equity classification, and therefore requires fair value accounting as a derivative.

The Company has

analyzed the terms of the freestanding purchased put right and has concluded that it had insignificant value as of December 31, 2024.

executing the Prior B.

Riley Agreements, the Company also issued 6,369

shares of Common Stock called Commitment Shares to B.

Riley Principal Capital II, LLC as a consideration for this agreement.

These shares,

valued at $ 7.85 each

(based on Nasdaq’s closing price on October 4, 2024), represent 1.0% of B.

Riley Principal Capital II, LLC’s $ 50 million

purchase commitment under the agreement.

shares, valued at $ 78.5

each (based on Nasdaq’s closing price on October 4, 2024), represent 1.0% of B.

Riley Principal Capital II’s $ 50

million purchase commitment under the agreement.

The cost of this on the effective date of the purchase agreement was $ 500,000

and is a component of finance charges in the accompanying consolidated statements of operations.

Regarding the aforementioned

commitment shares, the Purchase agreement specifies the following:

Riley Principal Capital II, LLC’s resale of the Commitment Shares yields less than $ 500,000

specified dates, the Company may need to pay up to $ 500,000

cash (“make-whole” payment)

and is a component of finance charges in the accompanying consolidated statements of operations for the year ended December 31, 2024.

Regarding the aforementioned commitment shares, the Prior B.

Riley Agreements specifies the following:

Riley Principal Capital II’s resale of the Commitment Shares yields less than $500,000 by specified dates, the Company

may need to pay up to $500,000 in cash (“make-whole” payment)

cash payment will be made if B.

Riley Principal Capital II, LLC’s net proceeds from reselling the shares meet

or exceed $ 500,000 .

Riley Principal Capital II, LLC’s resale proceeds exceed $ 500,000 ,

it will pay the Company 50% of the amount above $ 500,000 .

the terms of the Purchase Agreement, if the aggregate proceeds received by B.

Riley Principal Capital II, LLC from its resale of the Commitment Shares is less

than $ 500,000 then, upon notice by B.

Riley Principal Capital II, LLC, the Company must pay the difference between $ 500,000 , and the aggregate proceeds received

Riley Principal Capital II, LLC from its resale of the Commitment Shares.

Riley Principal Capital II net proceeds from reselling the shares meet or exceed $500,000.

Riley Principal Capital II’s resale proceeds exceed $500,000, it will pay the Company 50% of the amount above $500,000.

the terms of the Prior B.

Riley Agreements, if the aggregate proceeds received by B.

Riley Principal Capital II from its resale of the

Commitment Shares is less than $ 500,000 then, upon notice by B.

Riley Principal Capital II, the Company must pay the difference

between $ 500,000 , and the aggregate proceeds received by B.

Riley Principal Capital II from its resale of the Commitment Shares.

On December 31, 2024, the fair market value of the Commitment Shares was $ 227,989 .

Therefore, the Company’s make-whole obligation was $ 272,011 , and this amount was recorded in Accrued expenses and other current

liabilities in the accompanying consolidated balance sheet as at December 31, 2024.

The change in the fair value of the make-whole obligation

is recorded as a component of finance charges in the accompanying consolidated statements of operations for the year ended December 31,

Therefore, the Company’s make-whole obligation

was $ 272,011 , and this amount was recorded in Accrued expenses and other current liabilities in the accompanying consolidated balance

sheet as at December 31, 2024.

and Subsidiaries

TO CONSOLIDATED FINANCIAL STATEMENTS

Company agreed to reimburse B.

Riley Principal Capital II, LLC an amount of $ 75,000

for legal fees related to the Purchase and Registration

Rights Agreements, with $ 25,000

paid upfront and $ 50,000

withheld by B.

Riley Principal Capital II, LLC from 50 %

of the purchase price of shares acquired in initial and subsequent purchases under the agreement until the full amount is covered.

is not fully withheld by December 31, 2024, or

upon agreement termination, the Company must pay the remaining balance in cash.

Additionally, the Company will reimburse up to $ 5,000

per fiscal quarter for B.

Riley Principal Capital II, LLC’s legal

fees related to due diligence and related matters.

Company issued 55,826

shares of Common Stock through December 31, 2024, aggregating

to net proceeds of $ 260,927

under the Common Stock Purchase Agreement.

Stardust Power Inc.

Riley Principal Capital II, LLC an amount of $ 75,000 for legal fees related to the Prior B.

Riley Agreements, with $ 25,000 paid upfront and $ 50,000 withheld by B.

Riley Principal Capital II, LLC from 50 % of the purchase price

of shares acquired in initial and subsequent purchases under the agreement until the full amount is covered.

If the $ 50,000 is not fully

withheld by December 31, 2025, or upon agreement termination, the Company must pay the remaining balance in cash.

Additionally, the Company

will reimburse up to $ 5,000 per fiscal quarter for B.

Riley Principal Capital II, LLC’s legal fees related to due diligence and

related matters.

Company issued 638,048 shares of Common Stock through December 31, 2025, aggregating to net proceeds of $ 2,069,685 under the Prior B.

Riley Agreements.

December 11, 2025, the Company entered into a letter agreement with B.

Riley Principal Capital II, pursuant to which the parties mutually

agreed to terminate the Prior B.

Riley Agreements.

As part of the termination, the Company agreed to satisfy the make-whole payment as

per the terms of the Prior B.

Riley Agreements of $ 471,942 ,

in three equal portions:

(i) through the issuance of restricted common stock priced at $ 4.40

per share and subject to resale registration, (ii) in cash

upon the Company’s next equity or convertible financing, and (iii) in connection with a future equity line, at-the-market program,

or similar financing that the Company is currently working on with the Investor or its affiliate, or otherwise in cash if unpaid by September

On December 15, 2025, the Company issued 35,753

shares of common stock (“ Settlement Shares ”)

Riley Principal Capital II to satisfy one-third of the make-whole payment as per the terms of the Agreement.

As of December 31,

2025, the fair value of the Settlement Shares was $ 109,405

which was less than one-third of the make whole obligation

of $ 157,315 .

Accordingly, the Company recorded an accrual of $ 47,910

representing the differential between the fair value of the

Settlement Shares as of December 31, 2025, and one-third of the make-whole obligation.

As of December 31, 2025, the total make-whole

obligation balance amounted to $ 362,538

and is included in accrued expenses and other current liabilities

in the accompanying consolidated balance sheets.

The change in the fair value of the make-whole obligation is recorded as a component

of finance charges in the accompanying consolidated statements of operations for the year ended December 31, 2025.

Subsequent to year end, on February 12, 2026, the Company entered into the B.

Agreements with B.

Riley Principal Capital II, the selling stockholder.

Upon the terms and subject to the satisfaction of the

conditions set forth in the B.

Riley Purchase Agreement, the Company will have the right, in its sole discretion, to sell up to

of Common Stock to B.

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

Riley Purchase

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

Riley Purchase Agreement.

Sales of Common Stock pursuant to the B.

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

The Company is under no obligation to sell

any securities to B.

Riley Principal Capital II under the Purchase Agreement.

As of the date of this filing, the Company has issued 29,067 shares of Common Stock aggregating to net proceeds of

The Company is currently evaluating the appropriate accounting treatment for the B.

Riley Agreements.

Offering and Warrant Inducement

January 27, 2025, the Company consummated a public offering of 479,200

shares of Common Stock and accompanying warrants to purchase

up to 479,200

shares of Common Stock at a public offering price of $ 12.00

per share and warrant, generating aggregate gross proceeds

of $ 5,750,400

before offering expenses of $ 1,159,331 .

The common stock purchase warrants, exercisable at $ 13.00

per share and expiring five years from issuance, were issued

under an effective registration statement on Form S-1 (File No.

333-284298) filed by the Company with the SEC under the Securities Act

of 1933, as amended (the “ Securities Act ”) that became effective on January 23, 2025.

The Company evaluated the common

stock purchase warrants issued under this public offering to determine whether they should be accounted for considering the guidance

in ASC 815-40, “Derivatives and Hedging - Contracts on an Entity’s Own Equity” (“ ASC 815-40 ”) and

concluded that the warrants are freestanding and are indexed to the Company’s own stock and are classified as equity.

March 16, 2025, the Company entered into the Inducement Letter with the Exercising Holder providing for the immediate cash exercise of outstanding warrants to purchase 479,200 shares of the Company’s Common

Stock at a reduced exercise price of $ 6.20 per share.

In order to further incentivize the early exercise of these outstanding warrants,

the Company also agreed to issue Inducement Warrants to purchase up to

958,400 shares of Common Stock at an exercise price of $ 7.00 per share, subject to shareholder approval and Nasdaq rules.

the Inducement Letter, the warrant holders exercised the outstanding warrants on March 18, 2025, and the Company received gross proceeds

of $ 2,971,040 before cash offering expenses of $ 172,841 .

In connection with the Inducement Letter, the Company entered into a financial advisory services agreement with the placement

agent, pursuant to which the Company agreed to pay a cash fee of 4 % of the cash proceeds raised in the offering, in addition to reimbursement

for certain expenses.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

Company evaluated the common stock purchase warrants issued under this inducement offer to determine whether they should be accounted

for considering the guidance in ASC 815-40, “Derivatives and Hedging - Contracts on an Entity’s Own Equity” (“ ASC

815-40 ”) and concluded that the warrants are freestanding and are indexed to the Company’s own stock and are classified

The Company recognized the incremental fair value due to effect of the modification of approximately $ 2,108,480

as an equity issuance cost and charged the same against proceeds.

The incremental fair value of the warrants resulting from the modification (comprising of decrease in exercise price from $ 13.00

per share and the issue of additional 9,584,000

warrants) was measured as the excess of the fair value of the

modified warrants over the fair value of the original warrants immediately before modification.

The Company estimated the fair value

of the warrants immediately before the modification and the fair value of the New Inducement Warrants after the modification using the

Black-Scholes valuation model with an expected term of 5.00

years, expected volatility of 75 %,

dividend yield of 0 %,

and risk-free interest rate of 4.11 %.

On October 30 2025, the Company entered into the Exchange Agreement with the Exercising Holder.

Pursuant to the Exchange Agreement, the Exercising Holder agreed to irrevocably exchange the Warrant Shares, for newly issued shares of Common

Stock at an exchange ratio of 1.31 Warrant Shares for 1 share of Common Stock , resulting in the issuance to the Exercising Holder of 730,689 shares

of Common Stock at closing with no other payment or any other additional consideration from the investor.

At the Closing, the Existing

Warrants were surrendered for cancellation, deemed automatically cancelled and retired in full, and all rights, liabilities and obligations

thereunder were discharged in full.

In connection with the Exchange Agreement, the Company incurred a fee of $ 75,000 that was incremental and directly

attributable to the execution of the warrant exchange transaction which resulted in the issuance of common stock.

This fee was settled

in cash and recorded as a reduction to APIC during the year ended December 31, 2025.

June 18, 2025, the Company consummated a public offering of 2,150,000 shares of Common Stock at a public offering price of $ 2.00 per

share, generating aggregate gross proceeds of approximately $ 4,300,000 before underwriting discounts and other offering expenses.

offering was conducted pursuant to a firm commitment underwriting agreement entered into with the underwriters, on June 17, 2025.

offering was made under an effective registration statement on Form S-1 (File No.

333-287939), which was declared effective by the SEC

on June 16, 2025.

In connection with the offering, the Company granted the underwriter a 45-day option to purchase up to an additional

322,500 shares of Common Stock to cover over-allotments, if any.

On June 25, 2025, the underwriter partially exercised the over-allotment

option, purchasing an additional 110,000 shares at the same public offering price, resulting in additional gross proceeds of approximately

After giving effect to the partial exercise of the over-allotment option, the aggregate gross proceeds from the offering increased

to approximately $ 4,520,000 , before deducting underwriting discounts and estimated offering expenses of $ 574,325 .

Licensing Agreement

February 7, 2025 the Company executed the License Agreement with KMX.

Under the terms of the License Agreement, KMX agreed to

irrevocably license to the Company the use of KMX’s VMD Technology and associated KMX VMD Units for use in the Company’s

refining and upstream operations.

Among other obligations set forth in the License Agreement, the Company shall be required to

exclusively purchase all KMX VMD Units from the Licensor during the term of the License Agreement on the terms and conditions set

forth therein.

The License Agreement grants the Company the exclusive right to sub license, use, market, sell and operate

KMX’s VMD Technology across the United States, Canada and select international markets.

As a consideration for this license,

the Company agreed to pay KMX a royalty comprised of 50,000

shares of Company Common Stock.

The securities are being offered and sold by the Company pursuant to an exemption from the

registration requirements of the Securities Act provided by Section 4(a)(2) and/or Regulation D promulgated thereunder, as a

transaction not involving a public offering.

of the License Agreement Effective Date, the license did not meet the recognition criteria for an intangible asset under U.S.

as it did not provide probable future economic benefits independent of the KMX VMD Units, which are expected to be acquired only

upon the commencement of operations at the Company’s planned facility.

Accordingly, the Company initially recognized a

liability of $ 343,000

as other long-term liabilities, with a corresponding debit recorded as other long-term assets on the consolidated balance sheet as

of December 31, 2025.

On April 24, 2025, the Company issued the 50,000

shares of Common Stock to KMX in accordance with the terms of the License Agreement.

As a result, the liability has been settled and

the corresponding amounts were credited to equity and APIC as of December 31, 2025.

Placement Agreement

December 31, 2024, the Company entered into binding term sheets with certain investors (“ 2024 Investors ”) pursuant

to which the Company has agreed to sell, and the 2024 Investors have agreed to purchase, Company securities for an aggregate amount of

(the “ Private Placement ”).

The 2024 Investors

have agreed to purchase, and the Company has agreed to issue and sell, up to $ 550,000

in shares of Common Stock at a price equal to 95% of the closing

bid price of the Common Stock on the last trading day prior to the closing date for the Private Placement.

In addition, each 2024 Investor

will receive warrants representing the right, exercisable within five years of the closing date, to purchase up to 50% of the shares

of Common Stock purchased by such 2024 Investor in the Private Placement, with 10 warrants exercisable for one share of Common Stock

at an exercise price of $ 115.00 .

The Company received proceeds of $ 425,000

in December 2024 and additional proceeds of $ 125,000

in January 2025 from certain 2024 Investors.

The Company had

accounted for this as Advance from PIPE investor for shares and warrants to be issued based on purchase agreement to be entered on the

consolidated balance sheet as of December 31, 2024.

On April 24, 2025, the Company issued 12,850

shares of Common Stock and 64,251

Warrants to the investors.

Vendor shares issuance, pending settlement

On October 30, 2025, the Company approved issuance

shares of common stock to a vendor for services to be rendered over a period of 12 months.

The shares fully vested upon issuance and will

be expensed as services are received.

The Company recognized consulting expense of $ 75,562

for the year ended December 31, 2025, and a prepaid expense of $ 226,688

as of December 31, 2025.

The corresponding amounts were recorded as an increase to additional paid-in capital.

The shares had not been

issued as of December 31, 2025.

and Subsidiaries

TO CONSOLIDATED FINANCIAL STATEMENTS

7 – SHORT-TERM LOAN

funding borrowing

August 5, 2025, the Company entered into a financing agreement of $ 407,500 for the purchase of an insurance policy with AFCO Insurance

Premium Finance.

The Company made a downpayment of $ 70,256 , which was applied to the loan amount at the time of the loan agreement.

debt is payable in monthly instalments of $ 35,125 per month for 10 months.

Payments include a stated interest rate of 7.5 % and are secured

against a lien on the insurance policy.

The carrying amount of $ 205,403 and nil is included as Short-term Loan Liability on the accompanying consolidated balance sheets as on December 31, 2025, and December 31, 2024, respectively.

The Company recognized interest expense

of $ 9,795 on the accompanying consolidated statements of operations for the year ended December 31, 2025.

July 18, 2024, the Company entered into a financing agreement of $ 510,000

for the purchase of an insurance policy with

AFCO Insurance Premium Finance.

The Company made a downpayment of $ 44,162 ,

for the purchase of an insurance policy with AFCO Insurance Premium Finance.

The Company had made a downpayment of $ 44,162 ,

which was applied to the loan amount at the time of the loan agreement.

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

The carrying amount of $ 258,552

is included as Short-term Loan Liability on the accompanying consolidated balance sheet as on December 31, 2024.

The Company recognized

interest expense of $ 14,876

on the accompanying consolidated statement of operations for the year ended December 31, 2024.

November 19, 2023, the Company entered into a financing agreement of $ 80,800

for the purchase of an insurance policy with

First Insurance Funding.

The debt is payable in monthly installments of $ 8,389 per month for 10 months.

Payments include a stated interest

rate of 8.25 %

and are secured against lien on the insuran ce

The carrying amount of $ Nil and $ 72,967 is included as short-term loan liability on the accompanying consolidated balance

sheet as on December 31, 2024, and December 31, 2023, respectively.

The Company recognized interest expense of $ 2,369 and $ 717 on the

accompanying consolidated statements of operations for the year ended December 31, 2024, and for the period from March 16, 2023 (inception)

through December 31, 2023.

Other short-term loans

In December 2024, the Company entered into a

binding Term Sheet (“Term Sheet”) with Endurance Antarctica Partners II, LLC (“Endurance”), a related party,

providing for a loan (the “Loan”) in the aggregate principal amount of $ 1,750,000 ,

debt was payable in monthly instalments of $ 44,162

per month for 11 months.

Payments included a stated interest rate of 8.46 %

and were secured against a lien on the insurance policy.

The debt was fully repaid in June 2025.

The carrying amount of nil

and $ 258,552

was included as Short-term Loan Liability on the accompanying consolidated balance sheets as of December 31, 2025, and December 31,

2024, respectively.

The Company recognized interest expense of $ 5,067

on the accompanying consolidated statements of operations for the years ended December 31, 2025, and December 31, 2024,

respectively.

November 19, 2023, the Company entered into a financing agreement of $ 80,800 for the purchase of an insurance policy with First Insurance

The debt was payable in monthly installments of $ 8,389 per month for 10 months.

Payments included a stated interest rate of 8.25 %

and were secured against lien on the insurance policy.

The debt was fully repaid on September 1, 2024, there was no balance outstanding

as of December 31, 2025, and December 31, 2024, respectively.

The Company recognized interest expense of nil and $ 2,369 on the accompanying consolidated statements of operations for the years ended December 31, 2025 and December 31, 2024, respectively.

short-term loans

December 2024, the Company entered into a binding Term Sheet (the “ Endurance Term Sheet ”) with Endurance

Antarctica Partners II, LLC (“ Endurance ”), a related party, providing for a loan (the “ Endurance

Loan ”) in the aggregate principal amount of $ 1,750,000 ,

bearing interest at a rate of 15 %

per year, and maturing in March

2025 (the “Maturity Date”).

The Term Sheet contained customary representations and warranties and customary

events of default.

Pursuant to the Term Sheet, 5,500,000 shares

2025 (the “ Endurance Maturity

The Endurance Term Sheet contained customary representations and warranties and customary events of default.

Pursuant to the Endurance Term Sheet, 550,000 shares

of Company’s Common Stock, owned by Roshan Pujari, Chief Executive Officer of the Company, were pledged as collateral.

addition, the Company has agreed to issue to Endurance $ 3,500,000 in

Common Stock as an Equity Kicker, with the price of each share being determined based on terms per the earlier to occur of (i)

addition, the Company agreed to issue to Endurance $ 3,500,000 in

Common Stock as an Equity Kicker, as defined in the Endurance term sheet with the price of each share being determined based on

terms per the earlier to occur of (i)

the consummation of a private placement offering of Company securities (in which case such issuance shall be on no less favorable

terms than the terms of such private placement) and (ii) the Maturity/ Repayment Date, provided that the minimum number of shares of

Common Stock shall be no less than 500,000 shares.

The Company recorded the

short-term loan as a liability and evaluated embedded features in accordance with the accounting guidance and determined that

bifurcation is not required for any embedded feature.

analyzing the economic characteristics of the Equity Kicker terms, the unconditional obligation to transfer variable number of

shares where the monetary value of the obligation is a fixed monetary amount known at inception is akin to a traditional debt

arrangement with a principal of $ 1,750,000 , which will be settled in cash along with a premium of $ 3,500,000 in the form of variable

number of shares.

The Equity Kicker $ 3,500,000 was triggered by the private placement that occurred on December 31, 2024.

occurrence, the Company has recorded the accretion impact of this premium of $ 3,500,000 as finance charges in the consolidated

statements of operations for the year ended December 31, 2024, and has reported the obligation (which will be settled through

issuance of variable number of shares) as short-term loan.

In addition, Endurance will receive warrants representing the right, exercisable

within five years of the closing date, of up to 50% of Common Stock issued as Equity Kicker, with each whole warrant exercisable for

one share of Common Stock at an exercise price of $11.50 in accordance with the Private Placement terms.

to year end, the Company has fully repaid the principal amount and accrued interest.

The Company is yet to issue the equity shares

and warrants to Endurance as of the date of the issuance of the consolidated financial statements.

In December 2024, the Company entered into

binding Term Sheets (“Term Sheets”) with several lenders including DRE Chicago LLC, a related party (collectively, the

“Lenders”), providing for loans (the “Loans”) in the aggregate principal amount of $ 1,800,000 ,

bearing interest at a rate of 15 %

per year, and maturing in March

2025 (the “Maturity Date”).

The proceeds of the Loans are expected to be used by the Company for general

corporate and working capital purposes.

The Term Sheets contained customary representations and warranties and customary events of

Pursuant to the Term Sheets, an aggregate of approximately 3,400,000

shares of Company’s Common Stock, owned by Roshan Pujari, Chief Executive Officer of the Company, were pledged as collateral.

addition, the Company has agreed to issue to the Lenders an aggregate of $2,700,000 in Common Stock as an Equity Kicker, with the

price of each share being determined based on terms per the earlier to occur of (i) the consummation of a private placement offering

of Company securities (in which case such issuance shall be on no less favorable terms than the terms of such private placement) and

(ii) the Maturity/ Repayment Date, provided that the minimum number of shares of Common Stock issued to the Lenders shall be no less

than an aggregate of 360,000 shares.

The Company recorded the short-term loan as a liability and evaluated embedded features in

accordance with the accounting guidance and determined that bifurcation is not required for any embedded feature.

By analyzing the

economic characteristics of the Equity Kicker terms, the unconditional obligation to transfer variable number of shares where the

monetary value of the obligation is a fixed monetary amount known at inception is akin to a traditional debt arrangement with a

principal of $ 1,800,000 ,

which will be settled in cash along with a premium of $ 2,700,000 in

terms than the terms of such private placement) and (ii) the Endurance Maturity/ Repayment Date, provided that the minimum number of

shares of Common Stock shall be no less than 50,000 shares.

Company recorded the short-term loan as a liability and evaluated embedded features in accordance with the accounting guidance and

determined that bifurcation is not required for any embedded feature.

By analyzing the economic characteristics of the Equity Kicker

terms, the unconditional obligation to transfer variable number of shares where the monetary value of the obligation is a fixed

monetary amount known at inception is akin to a traditional debt arrangement with a principal of $ 1,750,000 ,

which were be settled in cash along with a premium of $ 3,500,000 in

the form of variable number of shares.

4 unchanged sentences

finance charges in the consolidated statements of operations for the year ended December 31, 2024, and has reported the obligation

(which will be settled through issuance of variable number of shares) as short-term loan.

In addition, the Lenders will receive

warrants representing the right, exercisable within five years of the closing date, of up to 50% of Common Stock issued as Equity

Kicker, with each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 in accordance with the

Private Placement terms.

Subsequent to year end, the Company has fully repaid the principal amount and accrued interest.

Company is yet to issue the equity shares and warrants to the Lenders as of the date of the issuance of the consolidated financial

Stardust Power Inc.

(which were settled through issuance of variable number of shares) as short-term loan.

In addition, Endurance

received warrants representing the right, exercisable within five years of the closing date, of up to 50% of Common Stock issued as

Equity Kicker, with each 10 warrants exercisable for one share of Common Stock at an exercise price of $115.00 in accordance with

such private placement terms.

year ended December 31, 2025, the Company repaid the principal amount of $ 1,750,000 along

with accrued interest of $ 70,000 and

issued 97,765 shares

of Common Stock and 488,826 warrants

to Endurance.

December 2024, the Company entered into binding Term Sheets (“ Investor Term Sheets ”) with several lenders including

DRE Chicago LLC, a related party (collectively, the “ Investors ”), providing for loans (the “ Investor Loans ”)

in the aggregate principal amount of $ 1,800,000 ,

bearing interest at a rate of 15 %

per year, and maturing in March

2025 (the “ Investor Maturity Date ”).

The proceeds of the Investor Loans are expected to be used by the Company for general corporate and working capital purposes.

Term Sheets contained customary representations and warranties and customary events of default.

Pursuant to the Investor Term Sheets,

an aggregate of approximately 340,000

shares of Company’s Common Stock, owned by Roshan Pujari,

Chief Executive Officer of the Company, were pledged as collateral.

addition, the Company agreed to issue to the Investors an aggregate of $2,700,000 in Common Stock as an Equity Kicker, as defined in

the Investor Term Sheet with the price of each share being determined based on terms per the earlier to occur of (i) the consummation

of a private placement offering of Company securities (in which case such issuance shall be on no less favorable terms than the terms

of such private placement) and (ii) the Investor Maturity/ Repayment Date, provided that the minimum number of shares of Common Stock

issued to the Investors shall be no less than an aggregate of 36,000 shares.

The Company recorded the short-term loan as a liability and

evaluated embedded features in accordance with the accounting guidance and determined that bifurcation is not required for any embedded

By analyzing the economic characteristics of the Equity Kicker terms, the unconditional obligation to transfer variable number

of shares where the monetary value of the obligation is a fixed monetary amount known at inception is akin to a traditional debt arrangement

with a principal of $1,800,000, which were settled in cash along with a premium of $2,700,000 in the form of variable number of shares.

The Equity Kicker $2,700,000 was triggered by the private placement that occurred on December 31, 2024.

Upon such occurrence, the Company

has recorded the accretion impact of this premium of $2,700,000 as finance charges in the consolidated statements of operations for the

year ended December 31, 2024, and has reported the obligation (which were settled through issuance of variable number of shares) as

short-term loan.

In addition, the Lenders received warrants representing the right, exercisable within five years of the closing

date, of up to 50% of Common Stock issued as Equity Kicker, with each 10 warrants exercisable for one share of Common Stock at an exercise

price of $115.00 in accordance with such private placement terms.

the year ended December 31, 2025, the Company repaid the principal amount of $ 1,800,000

along with accrued interest of $ 67,146

and issued 75,418

shares of Common Stock and 377,092

warrants to the Investors.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

Company recognized interest expense of $ 33,208 towards other short-term loans on the accompanying consolidated statements of operations for

the year ended December 31, 2024.

TO CONSOLIDATED FINANCIAL STATEMENTS

Company recognized interest expense of $ 103,938

towards other short-term loans on the accompanying consolidated statements of operations for the years ended December 31, 2025, and December 31,2024, respectively.

following table summarizes the Company’s outstanding short-term loan arrangements:

6 unchanged sentences

8 – STOCK BASED COMPENSATION

the Business Combination has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged

entity reflect the continuation of Legacy Stardust Power, Inc.

the Business Combination has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged entity

reflect the continuation of Legacy Stardust Power, Inc.

consolidated financial statements.

Legacy Stardust Power’s.

equity has been retroactively adjusted to the earliest period presented to reflect the legal capital of the legal acquirer, GPAC II.

As a result, the number of shares was also retrospectively adjusted for periods ended prior to the Business Combination.

been retroactively adjusted to the earliest period presented to reflect the legal capital of the legal acquirer, GPAC II.

the number of shares was also retrospectively adjusted for periods ended prior to the Business Combination.

Issued at Inception

1 unchanged sentence

Common Stock of Legacy Stardust Power aggregating to 253,123 shares.

Out of the total, certain restricted stock vested immediately

and remaining unvested restricted stock aggregating to 1,191,980 shares vests over 24 months subject to service conditions and accelerated

Out of the total, certain restricted stock vested immediately and

remaining unvested restricted stock aggregating to 119,198 shares vests over 24 months subject to service conditions and accelerated

vesting upon certain events.

2 unchanged sentences

all shareholders purchased the shares at par value and the shares had no incremental value beyond the par value as at that date, during

the periods from March 16, 2023 (inception) through December 31, 2023, and year ended December 31, 2024, the stock-based compensation

expense impact is insignificant.

As at December 31, 2024, 62,706 outstanding shares had not vested and the weighted average remaining

contractual period of the unvested restricted stock is 0.25 years.

Any shares subject to repurchase by the Company are not deemed, for

accounting purposes, to be outstanding until those shares vest.

The amount to be recorded as liabilities associated with shares issued

with repurchase rights were immaterial as at December 31, 2024 and December 31, 2023.

Stardust Power Inc.

the years ended December 31, 2024, and December 31, 2025, the stock-based compensation expense impact was insignificant.

As at December

31, 2025, all the shares had been fully vested.

Any shares subject to repurchase by the Company are not deemed, for accounting purposes,

to be outstanding until those shares vest.

The amount to be recorded as liabilities associated with shares issued with repurchase rights

were immaterial as at December 31, 2025, and December 31, 2024.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

stock activity for the year ended December 31, 2025, and balances as at the end of December 31, 2025, were as follows:

SCHEDULE OF RESTRICTED STOCK ACTIVITY

Number of shares outstanding

Weighted Average Grant-Date Fair Value

Weighted average remaining contractual life (Years)

Unvested as of December 31, 2024

2 unchanged sentences

Equity Incentive Plan

March 16, 2023, the Legacy Stardust Power stockholders approved the 2023 Equity Incentive Plan and 2,301,120 shares of the

Company’s Common Stock were reserved for issuance thereunder.

During the year ended December 31, 2024, the Board adopted a resolution

to increase the number of shares of Common Stock authorized for issuance under the 2023 Equity Incentive Plan by 1,150,560 shares of

Common Stock.

During the period from March 16, 2023 (inception) through December 31, 2023, there were no grants under the 2023 Equity

Incentive Plan.

March 16, 2023, the Legacy Stardust Power stockholders approved the 2023 Equity Incentive Plan and 230,112 shares of the Company’s

Common Stock were reserved for issuance thereunder.

During the year ended December 31, 2024, the Board adopted a resolution to increase

the number of shares of Common Stock authorized for issuance under the 2023 Equity Incentive Plan by 115,056 shares of Common Stock.

During the year ended December 31, 2025, there were no grants under the 2023 Equity Incentive Plan.

October and November 2023, Legacy Stardust Power granted options for 227,810 shares of stock options under the 2023 Equity Incentive

15 unchanged sentences

shares that were granted to an employee under the 2023 Equity Incentive Plan at the original exercise price of $ 0.065 .

the year ended December 31, 2025, the Company repurchased 24,449 unvested shares that were granted to an employee under the 2023 Equity

Incentive Plan at the original exercise price of $ 0.065 .

early exercised shares liability amounting to $ 1,735 and $ 4,628 is outstanding as at December 31, 2025, and December 31, 2024, respectively,

and is presented under ‘Early exercised shares option liability’ on the consolidated balance sheet.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

option activity for the year ended December 31, 2025, and balances as at the end of December 31, 2025, were as follows:

1 unchanged sentence

Stock Options

Number of options

Weighted Average Grant-Date Fair Value

Weighted average remaining contractual life (Years)

Aggregate Intrinsic Value

Intrinsic Value

Unvested as of December 31, 2024

Unvested as of December 31, 2025

total compensation expense for stock options recognized in the General and administrative expenses of the Company’s

consolidated statements of operations was $ 177,942

for the year ended December 31, 2024, and the period from March 16, 2023 (inception) through December 31, 2023, respectively.

total compensation expense for stock options recognized in the General and administrative expenses of the Company’s consolidated

statements of operations was $ 101,252

and $ 177,942

for the year ended December 31, 2025, and December 31, 2024,

respectively.

at December 31, 2025, total unvested compensation cost for stock options granted to employees not yet recognized was $ 142,940 .

30 unchanged sentences

expectations about future exercise patterns and post-vesting employment termination behavior.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

April and June 2024, Legacy Stardust Power granted 202,498

2 unchanged sentences

These 2023 Plan RSUs are subject to a service-based vesting requirement, and a liquidity

plus service-based vesting requirement, which is defined as completion of a go public transaction or change in control.

plus service-based vesting requirement, which is defined as completion of a go public transaction or a change in control.

any shares to vest, both the service-based vesting requirement and the liquidity plus service-based vesting requirement must be satisfied

1 unchanged sentence

The liquidity conditions were met on July 8, 2024, upon consummation of the Business Combination, and therefore

compensation expenses related to these awards began to be recognized in the year ended December 31, 2024, using a graded vesting

method over the requisite service period.

Given the absence of a public trading market prior to the closing of the Business Combination, the Legacy Stardust

Power board of directors considered numerous objective and subjective factors to determine the fair value of its common stock at each

compensation expenses related to these awards began to be recognized in the year ended December 31, 2024, using a graded vesting method

over the requisite service period.

the absence of a public trading market prior to the closing of the Business Combination, the Legacy Stardust Power board of

directors considered numerous objective and subjective factors to determine the fair value of its common stock at each grant date.

These factors included, but were not limited to:

(i) independent contemporaneous third-party valuations of common stock;

the prices for the Company’s convertible notes sold to outside investors;

(iii) the rights and preferences of convertible preferred

stock relative to common stock;

prices for the Company’s 2024 convertible notes sold to outside investors;

(iii) the rights and preferences of convertible

preferred stock relative to common stock;

(iv) the lack of marketability of its common stock;

(v) developments in the business;

and (vi) the likelihood

of achieving a liquidity event, such as an IPO, given prevailing market conditions.

Subsequent to the closing of the Business Combination,

the fair value of common stock is based on the closing price of the Company’s common stock, as reported on The Nasdaq Global Select

Market on the date of grant.

(vi) the likelihood of achieving a liquidity event, such as an IPO, given prevailing market conditions.

Subsequent to the closing of

the Business Combination, the fair value of common stock is based on the closing price of the Company’s common stock, as

reported on Nasdaq on the date of grant.

activity for the year ended December 31, 2025, and balances as at the end of December 31, 2025, were as follows:

2 unchanged sentences

Unvested as at December 31, 2025

total compensation expense for RSUs recognized in the General and administrative expenses of the Company’s consolidated

statements of operations was $ 6,789,594

for the year ended December 31, 2024, and the period from March 16, 2023 (inception) through December 31, 2023,

respectively.

total compensation expense for RSUs recognized in the General and administrative expenses of the Company’s consolidated statements

of operations was $ 3,788,720 and $ 6,789,594 for the year ended December 31, 2025, and December 31, 2024, respectively.

total fair value of RSU’s vested during the year ended December 31, 2025, was $ 3,960,491 .

3 unchanged sentences

over a weighted average period of approximately 1.55 years.

In October 2024, one of the employees

transitioned to a consultant role, under a Consulting Agreement.

A Service Provider Letter dated November 27, 2024, confirmed his

continued status under the Equity Incentive Plan.

On December 31, 2024, his consulting agreement was terminated.

Following the

termination on December 31, 2024, as part of his severance benefits, 172,584

October 2024, one of the employees transitioned to a consultant role, under a Consulting Agreement.

A Service Provider Letter dated

November 27, 2024, confirmed his continued status under the Equity Incentive Plan.

On December 31, 2024, his consulting agreement

was terminated.

Following the termination on December 31, 2024, as part of his severance benefits, 17,258

RSUs that were scheduled to vest on March 15, 2025, which otherwise would have been forfeited upon separation, were accelerated with

vesting as on December 31, 2024.

The Company determined that the acceleration of the unvested units constituted a Type III modification in accordance

with ASC 718, since the expectation of the award vesting changed from improbable to probable, which resulted in a new measurement of compensation

For the year ended December 31, 2024, the acceleration resulted in the recognition of $ 617,851 of stock-based compensation expense

using the reassessed fair value on the modification date and a reversal of $ 1,190,220 in stock-based compensation expense for previously

recognized expense using the original grant date fair value.

Company determined that the acceleration of the unvested units constituted a Type III modification in accordance with ASC 718, since

the expectation of the award vesting changed from improbable to probable, which resulted in a new measurement of compensation cost.

the year ended December 31, 2024, the acceleration resulted in the recognition of $ 617,851 of stock-based compensation expense using

the reassessed fair value on the modification date and a reversal of $ 1,190,220 in stock-based compensation expense for previously recognized

expense using the original grant date fair value.

and Subsidiaries

TO CONSOLIDATED FINANCIAL STATEMENTS

Equity Incentive Plan

6 unchanged sentences

for issuance to employees or consultants of the Company (or any of the Company’s parents or subsidiaries), or directors of the

During the year ended December 31, 2024, the Company granted (a) 1,524,296 RSUs to independent directors, officers, employees and consultants which are subject

to a service based vesting requirement, (b) 74,000 RSUs fully vested as of the date of grant to consultants and (c) 506,596 PSUs to employees

with a service and market condition.

These PSUs cliff vest at the end of a three-year term subject to share price based market condition

(i.e., the volume weighted average price of the 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 the PSUs are otherwise forfeited).

The compensation expense for

these RSUs and PSUs were recognized on a straight-line basis over the term of the award.

fair value of common stock is based on the closing price of the Company’s common stock, as reported on The Nasdaq Global Select

Market on the date of grant.

Stardust Power Inc.

During the year ended December 31, 2025, the Company

granted employees (a) 48,871 RSUs which are subject to a service based vesting requirement, (b) 105,927 RSUs fully vested as of the

date of grant to employees and (c) 8,918 RSUs fully vested as of the date of grant to consultants.

the year ended December 31, 2024, the Company granted (a) 152,429 RSUs to independent directors, officers, employees and consultants

which are subject to a service based vesting requirement, (b) 7,400 RSUs fully vested as of the date of grant to consultants and (c)

50,658 PSUs to employees with a service and market condition.

PSUs cliff vest at the end of a three-year term subject to share price based market condition (i.e., the volume weighted average price

of the Common Stock is greater than or equal to $ 120.00 per share for a period of 20 trading days in any 30 trading day period or there

is a change of control, or the PSUs are otherwise forfeited).

The compensation expense for these RSUs and PSUs were recognized on a straight-line

basis over the term of the award.

fair value of common stock is based on the closing price of the Company’s common stock, as reported on the Nasdaq

on the date of grant.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

activity for the year ended December 31, 2025, and balances as at the end of December 31, 2025, were as follows:

3 unchanged sentences

Unvested as at December 31, 2025

total compensation expense for RSUs recognized in the General and administrative expenses of the Company’s consolidated

statements of operations was $ 2,450,003

for the year ended December 31, 2024, and the period from March 16, 2023 (inception) through December 31, 2023, respectively.

total compensation expense for RSUs recognized in the General and administrative expenses of the Company’s consolidated statements

of operations was $ 2,609,646 and $ 2,450,003 for the year ended December 31, 2025, and December 31, 2024, respectively.

total fair value of RSU’s vested during the year ended December 31, 2025, was $ 3,559,416 .

As at December 31, 2025, total unvested

compensation cost for RSUs granted to employees and non-employee directors not yet recognized was 6,323,682 .

compensation cost for RSUs granted to employees not yet recognized was 4,041,015 .

The Company expects to recognize

1 unchanged sentence

at December 31, 2025, total unvested compensation cost for RSUs granted to the consultants not yet recognized was $ 589,063 .

to recognize this compensation over a period of approximately 3.71 years.

We expect to recognize this compensation over a period of approximately 2.71

estimated grant date fair value of the PSUs was determined using a Monte Carlo simulation valuation model.

7 unchanged sentences

activity for the year ended December 31, 2025, and balances as at the end of December 31, 2025, were as follows:

OF PERFORMANCE SHARES UNITS ACTIVITY

SCHEDULE OF PERFORMANCE SHARES UNITS ACTIVITY

Number of shares

1 unchanged sentence

Unvested as at December 31, 2025

total compensation expense for PSUs recognized in the General and administrative expenses of the Company’s consolidated

statements of operations was $ 332,971

for the year ended December 31, 2024, and the period from March 16, 2023 (inception) through December 31, 2023, respectively.

total compensation expense for PSUs recognized in the General and administrative expenses of the Company’s consolidated statements

of operations was $ 1,135,785 and $ 332,971 for the years ended December 31, 2025, and December 31, 2024, respectively.

at December 31, 2025, total unvested compensation cost for PSUs granted to employees not yet recognized was $ 1,941,852 .

expects to recognize this compensation over a weighted average period of approximately 1.71 years.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

9 – ACCOUNTING FOR WARRANT LIABILITY

Company established the initial fair value of the Private Placement and Public Warrants on July 8, 2024, the date of consummation of

the Business Combination, and revalued the warrants on December 31, 2024.

Each Warrant entitles the holder to purchase one share of Common

Stock at $ 11.50 per share.

established the initial fair value of the Private and Public Warrants on July 8, 2024, the date of consummation of the Business Combination,

and revalued the warrants on December 31, 2025.

Each 10 Warrants entitle the holder to purchase one share of Common Stock at an exercise

price of $ 115.00 per share.

For additional terms refer to the Company’s Registration Statement on Form S-4/A filed with the SEC

on May 8, 2024.

At December 31, 2024 and December 31, 2023, there were 10,430,800 and Nil warrants, outstanding respectively, including

4,864,133 Public Warrants and 5,566,667 Private Placement Warrants outstanding at December 31, 2024 and Nil Public and Private Placement

Warrants outstanding at December 31, 2023.

During the year ended December 31, 2024, 135,796 Public Warrants were exercised at a price

of $ 11.50 , generating proceeds of $ 1,561,655 .

Warrant entitles the holder to purchase one share of Common Stock at $ 11.50 per share.

Once the Public Warrants become exercisable, the

Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’

prior written notice of redemption, only in the event that the last sale price of the Common Stock equals or exceeds $18.00 per share

for any 20 trading days within the 30-trading day period ending on the third trading day before the Company sends the notice of redemption

to the Public Warrant holders, and that certain other conditions are met.

Once the Public Warrants become exercisable, the Company may

also redeem the outstanding Public Warrants in whole and not in part at a price of $0.10 per warrant upon a minimum of 30 days’

prior written notice of redemption, only in the event that the closing price of the common stock equals or exceeds $10.00 per share on

the trading day prior to the date on which the Company sends the notice of redemption, and that certain other conditions are met.

the closing price of the common stock is less than $18.00 per share (as adjusted) for any 20 trading days within a 30-trading day period

ending three trading days before the Company sends the notice of redemption to the warrant holders, the Private Placement Warrants must

also concurrently be called for redemption on the same terms as the outstanding Public Warrants.

As at December 31, 2025, and December 31, 2024, there were 10,430,800 warrants outstanding, including 4,864,133 Public

Warrants and 5,566,667 Private Warrants outstanding.

10 Warrants entitle the holder to purchase one share of Common Stock at an exercise price of $ 115.00 per share.

Once the Public Warrants

become exercisable, the Company may redeem the outstanding Public Warrants in whole and not in part at a price of $0.01 per warrant upon

a minimum of 30 days’ prior written notice of redemption, only in the event that the last sale price of the Common Stock equals

or exceeds $180.00 per share for any 20 trading days within the 30-trading day period ending on the third trading day before the Company

sends the notice of redemption to the Public Warrant holders, and that certain other conditions are met.

Once the Public Warrants become

exercisable, the Company may also redeem the outstanding Public Warrants in whole and not in part at a price of $0.10 per warrant upon

a minimum of 30 days’ prior written notice of redemption, only in the event that the closing price of the common stock equals or

exceeds $100.00 per share on the trading day prior to the date on which the Company sends the notice of redemption, and that certain

other conditions are met.

If the closing price of the common stock is less than $180.00 per share (as adjusted) for any 20 trading days

within a 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders, the

Private Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants.

Company, in no event later than twenty (20) Business Days after the closing of its initial Business Combination, shall use its commercially

5 unchanged sentences

with the provisions of this Agreement.

any such registration statement has not been declared effective by the sixtieth (60 th ) Business Day following the closing

of the Business Combination, holders of the warrants shall have the right, during the period beginning on the sixty-first (61 st )

Business Day after the closing of the Business Combination and ending upon such registration statement being declared effective by the

Commission, and during any other period when the Company shall fail to have maintained an effective registration statement covering the

issuance of the Ordinary Shares issuable upon exercise of the warrants, to exercise such warrants on a “cashless basis,”

by exchanging the warrants (in accordance with Section 3(a)(9) of the Securities Act or another exemption) for that number of Ordinary

Shares equal to the lesser of:

any such registration statement has not been declared effective by the sixtieth (60th) Business Day following the closing of the Business

Combination, holders of the warrants shall have the right, during the period beginning on the sixty-first (61st) Business Day after the

closing of the Business Combination and ending upon such registration statement being declared effective by the Commission, and during

any other period when the Company shall fail to have maintained an effective registration statement covering the issuance of the Ordinary

Shares issuable upon exercise of the warrants, to exercise such warrants on a “cashless basis,” by exchanging the warrants

(in accordance with Section 3(a)(9) of the Securities Act or another exemption) for that number of Ordinary Shares equal to the lesser

the quotient obtained by dividing (x) the product of the number of Ordinary Shares underlying the warrants, multiplied by the excess

1 unchanged sentence

3.61 per warrant (“a settlement cap” for accounting purposes).

Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants.

However, the Private Placement

Warrants are not redeemable by the Company as long as they are held by the Sponsor or its permitted transferees.

If the Private Placement

Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by

the Company in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.

Stardust Power Inc.

Private Warrants have terms and provisions that are identical to those of the Public Warrants.

However, the Private Warrants are not

redeemable by the Company as long as they are held by the Sponsor or its permitted transferees.

If the Private Warrants are held by holders

other than the Sponsor or its permitted transferees, the Private Warrants will be redeemable by the Company in all redemption scenarios

and exercisable by the holders on the same basis as the Public Warrants.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

Company’s warrants are not indexed to the Company’s Common Stock in the manner contemplated by ASC Section 815-40-15 because

1 unchanged sentence

Further, there is a settlement

cap for Public Warrants, and Private Placement Warrants upon transfer from Sponsor or permitted transferees to other holders, if the

holder elects to exercise warrants on a cashless basis if the Company fails to maintain an effective registration statement covering

the Common Stock issuable upon warrant exercises throughout the term of the warrants.

Maintenance of an effective registration statement

is not an input to the fair value option model for a fixed-for-fixed option or forward.

As such, the Company’s warrants are accounted

for as derivative warrant liabilities which are required to be valued at fair value at each reporting period.

cap for Public Warrants, and Private Warrants upon transfer from Sponsor or permitted transferees to other holders, if the holder elects

to exercise warrants on a cashless basis if the Company fails to maintain an effective registration statement covering the Common Stock

issuable upon warrant exercises throughout the term of the warrants.

Maintenance of an effective registration statement is not an input

to the fair value option model for a fixed-for-fixed option or forward.

As such, the Company’s warrants are accounted for as derivative

warrant liabilities which are required to be valued at fair value at each reporting period.

following tables present information about the Company’s warrant liabilities that are measured at fair value on a recurring basis

at December 31, 2024 and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

OF WARRANT LIABILITIES THAT ARE MEASURED AT FAIR VALUE ON A RECURRING BASIS

At December 31,

Quoted price in active markets

Significant other observable input

Significant other unobservable input

at December 31, 2025, and December 31 2024, and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine

such fair value:

SCHEDULE OF WARRANT LIABILITIES THAT ARE MEASURED AT FAIR VALUE ON A RECURRING BASIS

active markets

unobservable input

Warrant liabilities

2 unchanged sentences

Warrant liability

December 31, 2024 the Company valued its Public Warrants by reference to the publicly traded price of the Public Warrants.

valued its Private Placement Warrants based on the closing price of the Public Warrants since they are similar instruments.

active markets

unobservable input

Warrant liabilities

Public warrants

Private placement warrants

Warrant liability

December 31, 2025, and December 31, 2024, the Company valued its Public Warrants by reference to the publicly traded price of the Public

The Company valued its Private Placement Warrants based on the closing price of the Public Warrants since they are similar

warrant liabilities are not subject to qualified hedge accounting.

1 unchanged sentence

the end of the reporting period.

There were no transfers during the year ended December 31, 2024.

There were no transfers during the year ended December 31, 2025, and December 31, 2024.

10 – INVESTMENT IN EQUITY SECURITIES

October 2023, Legacy Stardust Power subscribed to and purchased 13,949,579 ordinary shares ( 1.26 % of the total equity) of QXR, an Australian

limited liability company whose ordinary shares are listed on the Australian Securities Exchange (“ASX”), for $ 200,000 .

October 2023, Legacy Stardust Power subscribed to and purchased 13,949,579

ordinary shares ( 1.26 %

of the total equity) of QX Resources Limited (“ QXR ”), an Australian limited liability company whose ordinary shares

are listed on the Australian Securities Exchange (“ ASX ”), for $ 200,000 .

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

2 unchanged sentences

to earn a 75% interest from IGL (“ the Earn-in Venture ”).

The Company 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.

The Company will conduct feasibility studies to assess the lithium brine at its own cost and if successful,

will have the option to execute a commercial off-take agreement with QXR for the supply of brine from the Project.

No formal off-take

agreement has been executed as at December 31, 2024.

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

during the year ended December 31, 2024.

All costs associated with the feasibility studies would be expensed as incurred.

The Company 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.

will conduct feasibility studies to assess the lithium brine at its own cost and if successful, will have the option to execute a commercial

off-take agreement with QXR for the supply of brine from the Project.

No formal off-take agreement has been executed as at December 31,

Further, no material expenses have been incurred towards the feasibility studies during the year ended December 31, 2025.

associated with the feasibility studies would be expensed as incurred.

Company neither has a controlling financial interest nor does it exercise significant influence over QXR.

5 unchanged sentences

value of $ 37,374 and $ 34,707 as at December 31, 2025 and December 31, 2024, respectively.

The Company recognized a loss of $ 183,849

for the year ended December 31, 2024, and a gain of $ 18,556 for the period from March 16, 2023 (inception) to December 31, 2023, due

to change in fair value of securities in the consolidated statements of operations.

Further, this investment in securities has been disclosed

outside of current assets on the consolidated balance sheet in accordance with ASC 210-10-45-4 because the investment has been made for

the purpose of affiliation and continuing business reasons as described above.

Stardust Power Inc.

The Company recognized a gain of $ 2,665 for

the year ended December 31, 2025, and a loss of $ 183,849 for the year ended December 31, 2024, due to change in fair value of securities

in the consolidated statements of operations.

Further, this investment in securities has been disclosed outside of current assets on

the consolidated balance sheet in accordance with ASC 210-10-45-4 because the investment has been made for the purpose of affiliation

and continuing business reasons as described above.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

December 2024 Stardust Power subscribed to and purchased 10,000,000

ordinary shares (approximately 6 %

of the total equity) of IRIS Metals Limited (IRIS Metals), an Australian limited company whose ordinary shares are listed on the Australian

securities exchange (“ASX”) for $ 1,600,000 .

of the total equity) of IRIS Metals Limited (“ IRIS Metals ”), an Australian limited company whose ordinary shares are

listed on the Australian securities exchange (“ ASX ”) for $ 1,600,000 .

investment in the ordinary shares of IRIS Metals allows the Company to explore strategic partnership with, or investment in, IRIS Metals,

4 unchanged sentences

have been incurred towards due diligence during the year ended December 31, 2025.

cost associated would be expensed as incurred.

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

influence over IRIS Metals.

Accordingly, the investment in IRIS Metals’ ordinary shares does not result in either the consolidation

or application of equity method of accounting for the Company.

Additionally, the Company has the option to acquire a second tranche of

shares on similar terms as the initial investment,

plus 20,000,000

free attaching warrants to acquire ordinary shares

of IRIS Metals at an exercise price of $ 0.40

This second tranche investment is

subject to approval by the Company and IRIS Metals shareholders and other conditions precedent.

Metals’ ordinary shares are listed on the ASX with a readily determined fair value and change in the fair value is recognized

Metals’ ordinary shares are listed on the ASX with a readily determined fair value and changes in the fair value are recognized

in the consolidated statements of operations.

Accordingly, the investment in these securities has been recorded at cost at initial recognition

and at fair value of $ 1,461,715 as at December 31, 2024.The company recognized a loss of $ 138,285 for the year ended December 31, 2024,

due to change in fair value of securities in the consolidated statements of operations.

Further, this investment in securities has been

disclosed outside of current assets on the consolidated balance sheet in accordance with ASC 210-10-45-4 because the investment has been

made for the purpose of affiliation and continuing business reasons as described above.

Accordingly, As of December 31, 2025, the Company no longer held any investment in IRIS

Metals, compared to fair value of $ 1,461,715 as of December 31, 2024.

The Company recognized a loss of $ 711,655 and $ 138,285 for the

years ended December 31, 2025 and December 31, 2024, respectively, due to the change in fair value of securities, as reported in the

audited consolidated statements of operations.

During the year ended December 31, 2025, management determined that a strategic investment

in IRIS Metals was no longer viable.

As a result, the Company sold all its investment in IRIS Metals for total proceeds of $ 570,255 .

The Company recognized a loss on sales of investments of $ 179,805 for the year ended December 31, 2025.

The carrying amount of the shares

sold was $ 750,060 .

As of December 31, 2025, the Company does not hold any investment in IRIS Metals.

11 – SIMPLE AGREEMENT FOR FUTURE EQUITY (SAFE NOTES)

21 unchanged sentences

Group Direct LLC (“ AIGD ”).

The agreement replaced the above contingent commitment feature of the SAFE notes, granting the

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

April 24, 2024, the Company amended and restated the August 2023 SAFE note and the November 2023 SAFE.

On May 1, 2024, the Company amended

and restated the February 2024 SAFE note.

The agreement replaced the above contingent commitment feature of the SAFE notes, granting

the Company an option to drawdown up to an additional $ 15,000,000

on terms similar to the SAFE notes prior to the First Effective

On April 24, 2024, the Company amended and restated the August 2023 SAFE note and the November 2023 SAFE.

On May 1, 2024, the Company

amended and restated the February 2024 SAFE note.

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

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

estimated fair value of the SAFE notes considered the timing of issuance and whether there were changes in the various scenarios since

Pursuant to the consummation of the Business Combination, the SAFE notes converted into 636,916 Common Stock shares of the

Company and therefore no further fair valuation was required as at December 31, 2024.

As at December 31, 2023, the fair value of the

SAFE notes was $ 5,212,200 , and is 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

is not SAFE notes and/or pari preferred equity.

Pursuant to the consummation of the Business Combination, the SAFE notes converted into 63,692 Common Stock shares of the Company

and therefore no further fair valuation was required as at December 31, 2025, and at December 31, 2024.

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 is not SAFE notes and/or pari preferred equity.

and Subsidiaries

TO CONSOLIDATED FINANCIAL STATEMENTS

12 – CONVERTIBLE NOTES AND WARRANTS

Convertible Notes

April 24, 2024, Legacy Stardust Power entered into a convertible equity agreement (“convertible notes”) for $ 2,000,000 with

Further, the Company entered into separate convertible equity agreements with other individuals for a total of $ 100,000 in April

2024, based on similar terms to the AIGD convertible equity agreement.

The convertible notes were classified as a liability based on

evaluating characteristics of the instrument and were presented at fair value as a non-current liability in the Company’s consolidated

balance sheets as at June 30, 2024.

The estimated fair value of the convertible notes considered the timing of issuance and whether there

were changes in the various scenarios since issuance.

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

Dividend and no participation rights.

The liquidation preference of the convertible 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 is not convertible and/or pari preferred equity.

to the consummation of the Business Combination and in accordance with the terms of the convertible equity agreements, the convertible

notes converted into 257,216 shares of the Company’s Common Stock and therefore no further fair valuation was required as at December

April 24, 2024, Legacy Stardust Power entered into a convertible equity agreement (the “ 2024 Convertible Notes ”) for

Further, the Company entered into separate convertible

equity agreements with other individuals for a total of $ 100,000

in April 2024, based on similar terms to the AIGD convertible

equity agreement.

The 2024 Convertible Notes were classified as a liability based on evaluating characteristics of the instrument and

were presented at fair value as a non-current liability in the Company’s consolidated balance sheets as at June 30, 2024.

The estimated

fair value of the 2024 Convertible Notes considered the timing of issuance and whether there were changes in the various scenarios since

The 2024 Convertible Notes had no interest rate or maturity date, no description of Dividend and no participation rights.

liquidation preference of the 2024 Convertible 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 is not convertible and/or pari

preferred equity.

to the consummation of the Business Combination and in accordance with the terms of the convertible equity agreements, the 2024

Convertible Notes converted into 25,722

shares of the Company’s Common Stock and therefore no further fair valuation was required as at December 31, 2025, and

December 31, 2024.

Lind 2025 Convertible Notes

On December 23, 2025, the Company entered into a

Security Purchase Agreement (“ SPA ”)

with Lind Global Asset Management XIII LLC (“ Lind ”) providing for up to $ 15,000,000

in senior secured convertible debt financing.

At closing, the Company received gross proceeds of approximately $ 4,000,000

in exchange for issuing to Lind a Senior Secured Convertible Promissory Note with a principal amount of $ 4,800,000 (the “ 2025 Convertible

Note ”) and a Common Stock Purchase Warrant to purchase

approximately 411,245 shares of the Company’s common stock (the “ 2025 Lind Warrant ”).

The Company received net cash proceeds of $ 3,792,500 , after payment of a $ 100,000 commitment fee and $ 107,500 of

The 2025 Convertible Note does not bear a stated

rate of interest.

The principal is repayable in twenty (20) consecutive monthly instalments of $ 240,000

each, commencing 120 days after the issuance date.

outstanding principal balance of 2025 Convertible Note shall be due and payable on December 23, 2027 (the “ Maturity Date ”).

Each monthly instalment (each, a “ Monthly Payment ”) may, at the Company’s election, be satisfied in (i) cash

(together with an additional cash payment of 4% of the amount paid in cash), (ii) shares of common stock (“ Repayment Shares ”),

or (iii) a combination of cash and Repayment Shares.

The number of Repayment Shares is determined by dividing the portion of principal

being paid in shares by the Repayment Share Price, defined as 90 %

of the average of five (5) consecutive daily VWAP selected by Lind during the 20 trading days preceding the issuance of the Repayment

2025 Convertible Note is convertible at Lind’s option, from time to time, into shares of the Company’s common stock at a

fixed conversion price of $ 5.837 per share, subject to certain anti-dilution and down-round adjustments, provided that no adjustment

shall result in the conversion price that is less than $ 0.653 (the “ floor price ”).

The floor price is further subject

to periodic adjustment (the “ adjusted floor price ”), which is determined on every six months from the initial issuance

date as the lower of (i) the then-current floor price and (ii) 20% of the lower of (a) the closing price of the Company’s common

stock on the trading day immediately preceding the adjustment date and (b) the average closing price over a specified recent trading

If the adjusted floor price is lower than the then-current floor price, the floor price is automatically reduced to such adjusted

of the note is subject to a 4.99% beneficial ownership limitation (which may be increased to 9.99% under certain conditions).

the total number of shares issuable upon conversion is subject to limitations under applicable stock exchange rules (including the 19.99%

cap) unless shareholder approval is obtained.

If shareholder approval is not obtained within one year, any remaining outstanding balance

of the note may be required to be settled in cash at the option of Lind in accordance with the terms of the note.

the event that any amount payable by the Company under the 2025 Convertible Note is not paid when due, such amount shall accrue interest

at a rate of 10 % per annum, compounded annually, calculated on the basis of a 360-day year, from the due date until the date of payment.

Accrued and unpaid amounts, including interest on overdue interest, shall become payable on demand.

2025 Convertible Note may be transferred or sold by Lind, subject to compliance with applicable laws and regulations.

Additionally, Lind

may pledge, hypothecate, or otherwise grant the Note as security for any obligations.

2025 Convertible Note may be prepaid in whole upon 10 days’ prior written notice.

In the event of a prepayment notice, Lind may

elect to convert up to one-third (1/3) of the then-outstanding principal at the lower of (i) the Conversion Price or (ii) the Repayment

addition, upon the occurrence of a change in control, Lind has the right to require the Company to prepay the note at an amount equal

to the outstanding principal plus five percent ( 5 % ) of the Outstanding Principal Amount plus any other amounts owed under this Note.

Such amount becomes payable immediately prior to the consummation of the change in control event.

The 2025 Convertible Note provides that if the Company’s

common stock ceases to be listed on The Nasdaq Stock Market (or another national securities exchange), Lind (or its assignee) may deliver

a demand for payment to the Company.

Upon such demand, the Company is required, within 10 business days, to pay all outstanding principal

under the Lind notes in cash, or, at Lind’s election, Lind may convert all or a portion of the outstanding principal at a conversion

price equal to the lower of (i) the then-current Conversion Price and (ii) 80% of the average of the three (3) lowest daily VWAPs during

the 20 trading days preceding delivery of the related conversion notice.

If the Company is unable to issue all of the shares

required upon conversion of the 2025 Convertible Note because of insufficient authorized shares or due to legal, regulatory or exchange

restrictions, the Company will issue the maximum number of shares it is legally permitted to issue.

For any portion for which shares cannot

be issued, Lind may, at its option, (i) require cash prepayment in an amount equal to the number of unissued shares multiplied by

the lesser of the Conversion Price and the Repayment Share Price, (ii) void the applicable conversion notice and retain the note (with

related amounts continuing to accrue), or (iii) defer issuance until it becomes legally permissible, with the principal relating to such

portion remaining outstanding.

and Subsidiaries

TO CONSOLIDATED FINANCIAL STATEMENTS

The 2025 Convertible Note contains customary events

of default, including, among others:

failure to pay principal, premium, fees or other amounts when due;

failure to comply with covenants

or other obligations under the Lind Securities Purchase Agreement or related transaction documents;

failure or refusal to honor conversion requests or timely deliver

conversion shares (including failure to remove restrictive legends or to provide required transfer agent instructions);

failure to maintain

sufficient authorized and reserved shares for full conversion of the note;

certain change-of-control transactions not otherwise permitted;

cross-defaults or accelerations of other indebtedness in excess of $500,000;

voluntary or involuntary bankruptcy or insolvency events

(subject to specified cure periods, where applicable);

unsatisfied final judgments in excess of $500,000;

delisting or trading suspension

of the Company’s common stock, loss of DTC/FAST eligibility or going-private transactions;

challenges to the enforceability of the

Lind agreements;

the Company’s market capitalization falling below $15 million for ten consecutive trading days;

and the occurrence

of a material adverse effect.

Upon the occurrence and during the continuance of

an event of default, Lind may declare immediately due and payable an amount equal to 110% of the then-outstanding principal balance

of the 2025 Convertible Note plus any other amounts then outstanding under the note and related transaction documents.

In addition, following

an event of default Lind may, at its option, convert all or a portion of the outstanding principal into common stock at a price

equal to the lower of (i) the then-current Conversion Price and (ii) 80% of the average of the three (3) lowest daily VWAPs during the

20 trading days immediately preceding delivery of the applicable conversion notice.

For certain bankruptcy or insolvency-related events

of default, such amounts becomes immediately due and payable without further notice or demand.

If the Company incurs indebtedness, including subordinated debt or debt convertible into equity, that is redeemable

by the Company for an aggregated proceed of more than $ 2.5 million (in one or more transactions), the Company is required to use the proceeds

from such issuance to repay amounts outstanding under the note, unless otherwise waived by Lind.

Based upon the Company’s analysis, it was determined

that the 2025 Convertible Notes contain embedded features requiring recognition as derivatives and bifurcation.

However, the Company

determined the fair value of these embedded derivatives was immaterial as of December 31, 2025, and therefore measured the 2025 Convertible

Note at amortized cost and recorded as a liability on the consolidated balance sheet.

Because the 2025 Convertible Note and related warrant

were issued in a single financing transaction, the Company allocated the net proceeds to the 2025 Convertible Note and the warrants based

on their relative fair values.

A portion of the total debt issuance costs of $ 207,500

was allocated to the warrants based on their relative fair value, resulting in an allocation of $ 34,610

to the warrants and $ 172,890

to the 2025 Convertible Note.

In total, approximately $ 34,610

was recorded in additional paid-in capital (“ APIC ”) related to the warrants, and a debt discount and debt issuance

costs of approximately $ 1,640,062

was recorded as a reduction of the carrying amount of the 2025 Convertible Note, representing the difference between the $ 4,800,000

principal amount and the amount allocated to the debt component at issuance.

of December 31, 2025, the principal amount outstanding under the 2025 Convertible Note was $ 4,800,000 , and unamortized debt discount

and issuance costs, including amount attributed to warrants issued, totaled $ 1,606,994 , resulting in a net carrying amount of $ 3,193,006 at an effective interest rate of 43.2 % .

December 31, 2025, the estimate fair value of the instrument approximates carrying value given the instrument was issued in December

2025 and has a short time period until maturity.

the year ended December 31, 2025, the Company recognized $ 33,068

of interest expense related to the 2025 Convertible Note, representing amortization of debt discount and issuance cost.

Such interest expense is included within interest expense in the Company’s consolidated

statement of operations for the year ended December 31, 2025.

The future contractual payment of 2025 convertible

note as of December 31, 2025, are as follows:

SCHEDULE OF FUTURE CONTRACTUAL PAYMENT

As of December 31, 2025

Common Stock Warrant:

December 23, 2025, in connection with the 2025 Convertible Note, the Company also issued the 2025 Lind Warrant.

The 2025 Lind Warrant

entitles Lind to purchase up to 411,245 shares of the Company’s common stock at an exercise price of $ 5.837 per share, subject

to customary adjustments.

These warrants become exercisable six months from the date of issuance and remains outstanding for a period

of 60 months thereafter, unless earlier terminated in accordance with its terms.

They may be exercised for cash or, in certain limited

circumstances, on a net share (cashless) basis.

Net share settlement is permitted only when a registration statement covering the resale

of the underlying shares is not available or in connection with certain fundamental transactions, in which case Lind receives a reduced

number of shares based on the intrinsic value of the warrants.

warrants include provisions that apply upon the occurrence of fundamental transactions, such as mergers, consolidations, sale of substantially

all assets, tender offers, or other change-in-control events.

In such circumstances, Lind is entitled to receive the same type and amount

of consideration that would have been received had the warrants been exercised immediately prior to the transaction.

In addition, the

exercise price and the number of shares issuable upon exercise are subject to adjustment to preserve the economic value of the warrants.

Lind may also have the right to require the Company (or the successor entity) to repurchase the warrants for cash equal to its Black-Scholes

value in connection with certain fundamental transactions.

warrants contain customary anti-dilution provisions, including adjustments for stock splits, stock dividends, combinations, reclassifications,

and issuances of common stock at a price below the then-current exercise price (subject to specified exceptions).

Lind is also entitled

to participate in certain distributions to common stockholders on an as-if-converted basis.

The Company is required to reserve a sufficient

number of authorized shares to satisfy its obligations upon exercise of the warrants.

warrants are subject to beneficial ownership limitations that restrict Lind from exercising the warrants to the extent that such exercise

would result in Lind exceeding a specified ownership threshold.

The warrants are transferable, subject to compliance with applicable

securities laws, and includes certain registration rights for the resale of the underlying shares as set forth in the related purchase

The warrants do not confer any voting, dividend, or other stockholder rights unless and until it is exercised into shares

of the Company’s common stock.

The Company reviewed the warrants in connection

with the securities purchase agreements under ASC 815 and concluded that the warrants are not in scope of ASC 480 and are not

subject to the derivative guidance under ASC 815.

Accordingly, the warrants were equity classified.

The fair value of the warrants

at the issuance date of $ 667,172

was determined using a Black-Scholes option pricing model, which includes the use of Level 3 inputs.

The resulting fair value of the

warrants was recorded in APIC, net of issuance costs, and is not subject to subsequent remeasurement.

The Company estimates its

stock price volatility using the historical volatility of publicly traded peer companies.

The term is equal to the contractual term

of the warrants.

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve for the time period equal

to the term of the warrants.

The expected dividend yield is zero based on the fact that the Company has never paid cash dividends on

common stock and does not expect to pay any cash dividends in the foreseeable future.

Assumptions used in calculating the fair value

of the warrants at the issuance date include the following:

OF FAIR VALUE ASSUMPTION

Fair value of Common Stock as of December 23, 2025

Exercise Price

Risk-free interest rate

Contractual terms (years)

Dividend Yield

13 – FAIR VALUE MEASUREMENTS

following tables summarize the Company’s assets and liabilities that are measured at fair value in the consolidated financial statements:

OF ASSETS AND LIABILITIES ARE MEASURED AT FAIR VALUE

SCHEDULE OF ASSETS AND LIABILITIES ARE MEASURED AT FAIR VALUE

Fair Value Measurements as at December 31, 2024

2 unchanged sentences

Total financial assets

and Subsidiaries

TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements as at December 31, 2025

3 unchanged sentences

Fair Value Measurements as at December 31, 2024

SAFE notes (b)

Sponsor earnout shares (c)

Sponsor earnout shares (b)

Total financial liabilities

Fair Value Measurements as at December 31, 2025

Sponsor earnout shares (c)

Sponsor earnout shares (b)

Total financial liabilities

2 unchanged sentences

with ASC 321, Investments-Equity Securities, based on quoted prices in active markets.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

The valuation of the Level

3 measurement considered the probabilities of the occurrence of the scenarios as discussed in Note 2 the audited consolidated financial

statements of Legacy Stardust Power and notes thereto for the period March 16, 2023 (inception) to December 31, 2023, included in

the Company’s Registration Statement on Form S-4/A filed with the SEC on May 8, 2024.

Level 3 earnout liability, the Company assesses the fair value of expected earnout liability at each reporting period using the Monte

7 unchanged sentences

determine the average present value of earnout.

Change in the fair value of earnout liability is reflected in our consolidated statements

of operations.

The make-whole obligation liability related to the

Purchase Agreement is measured at fair value categorized within Level 1 of the fair value hierarchy.

following table provides a reconciliation of activity and changes in fair value for the Company’s SAFE notes, convertible notes

and Sponsor earnout liability:

OF RECONCILIATION OF ACTIVITY AND CHANGES IN FAIR VALUE

SAFE notes at fair value

Convertible notes at fair value

Change in the fair value of earnout liability is reflected in our consolidated

statements of operations.

make-whole obligation liability related to the Purchase Agreement is measured at fair value categorized within Level 1 of the fair value

following table provides a reconciliation of activity and changes in fair value for the Company’s SAFE notes, 2024 convertible

notes and Sponsor earnout liability:

SCHEDULE OF RECONCILIATION OF ACTIVITY AND CHANGES IN FAIR VALUE

SAFE notes at

Convertible notes

at fair value

Sponsor Earnout

liability at fair value

Balance as at March 16, 2023 (inception)

Issuance of notes

Change in fair value

Balance as at December 31, 2023

2 unchanged sentences

Change in fair value

( 4,076,200 )

Issuance of common stock upon conversion

( 6,367,200 )

( 2,571,400 )

Balance as at December 31, 2024

valuation of the Level 3 measurement for SAFE notes considered the probabilities of the occurrence of the scenarios as discussed in Note

2 of the audited consolidated financial statements and notes thereto for the period March 16, 2023 (inception) to December 31, 2023, included

in the Company’s Registration Statement on Form S-4/A filed with the SEC on May 8, 2024.

The Company valued the SAFE notes based

on the occurrence of the preferred financing or a SPAC transaction.

As of the date of initial measurement and December 31, 2023, the

management has assigned zero probability for a change in control event or a dissolution event.

Pursuant to the consummation of the Business

Combination and in accordance with the terms of the convertible equity and SAFE note agreements, the SAFE notes and convertible notes

converted into 636,916 and 257,216 shares of the Company’s Common Stock, respectively.

Stardust Power Inc.

Change in fair value

Balance as at December 31, 2025

valuation of the Level 3 measurement for SAFE notes considered the probabilities of the occurrence of the scenarios as discussed in

Note 2 of the consolidated financial statements and notes thereto for the period March 16, 2023 (inception) to December 31,

2023, included in the Company’s Registration Statement on Form S-4/A filed with the SEC on May 8, 2024.

The Company valued the

SAFE notes based on the occurrence of the preferred financing or a SPAC transaction.

As of the date of initial measurement and

December 31, 2023, the management has assigned zero probability for a change in control event or a dissolution event.

the consummation of the Business Combination and in accordance with the terms of the convertible equity and SAFE note agreements,

the SAFE notes and 2024 convertible notes converted into 63,692

shares of the Company’s Common Stock, respectively.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

14 – PROMISSORY NOTES

March 2023, Legacy Stardust Power entered into unsecured notes payable with three related parties as described in Note 16.

payable provided the Company the ability to draw up to $ 1,000,000 , in aggregate:

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

December 31, 2025.

These loan facilities accrue interest, compounding semi-annually, at the long-term semi-annual Applicable Federal Rate,

as established by the Internal Revenue Service, which effectively was 3.71 %.

at December 31, 2024, the Company had $ 840,000 available to draw.

TO CONSOLIDATED FINANCIAL STATEMENTS

14 – PROMISSORY NOTES AND WRITE-OFFS

March 13, 2024, Legacy Stardust Power and IGX, entered into an exclusive letter of intent (the “ IGX LOI ”) to potentially

acquire interests in certain mining claims (the “ IGX Claims ”).

The Company paid a non-refundable payment of $ 30,000

in connection with obtaining a binding exclusivity right.

March 15, 2024, Legacy Stardust Power and Usha Resources Ltd.

(“ Usha Resources ”) entered into a non-binding Letter

of Intent (the “ Jackpot LOI ”), except for certain binding terms such as those relating to the exclusivity period until

September 30, 2025, as extended, to acquire an interest in Usha Resources’ lithium brine project, situated in the United States.

Usha Resources is an established lithium developer with multiple projects in development.

The Jackpot Lake Lithium Brine Project is a

flagship asset of Usha Resources and is a lithium brine asset located in the United States, comprised of 8,714 acres of property.

project is currently engaged in its maiden drill program.

The Jackpot LOI provides Stardust Power with the exclusive option to agree

to acquire up to 90% of the interests held by Usha Resources in the Jackpot Lake project, based on an indicative earn-in schedule.

part of a definitive agreement, Stardust Power would be required to invest into the development of the Jackpot Lake project.

has made a non-refundable payment of $ 25,000

upon execution of the Jackpot LOI in connection with securing

exclusivity and a further $ 50,000

payment (the “ Second Payment ”) was made

by the Company on May 14, 2024;

provided that the Second Payment shall be non-refundable except if Usha Resources breaches the terms

of the Jackpot LOI at which point Usha Resources shall refund the Second Payment together with all out-of-pocket expenses (including

the fees and expenses of legal counsel, accountants and other advisors hereof) incurred by the Company.

As of December 31, 2025, the

Company determined that the likelihood of entering into definitive agreements with Usha Resources Ltd.

had diminished significantly.

As a result, the Company wrote off the outstanding deposit balance of $ 50,000

related to the non-refundable payments made under the Jackpot

LOI with Usha Resources.

The Company recognized a loss of $ 50,000

in the Other Income/Expense section of the consolidated statements

of operations for year ended December 31, 2025.

August 16, 2024, Legacy Stardust Power entered into a promissory note arrangement with IGL (the “ IG Lithium Note ”)

in the principal amount of $ 316,000

to allow the Company to potentially enter into related agreements

and partnerships with IGL.

The proceeds of the promissory note were intended to fund costs associated with mineral claims and related

land maintenance activities held by IGL, including applicable filing fees and associated administrative costs.

During year ended December

31, 2025, the Company wrote off the outstanding balance of the IG Lithium Note, including accrued interest, in the aggregate amount of

as the note was deemed unrecoverable and the likelihood of entering into definitive agreements with IGL had diminished significantly.

As a result, the Company recognized a loss of $ 332,363 ,

which is included in the Other Income (Expense) section of the consolidated statements of operations for year ended December 31, 2025 .

On August 19, 2024, Legacy Stardust Power entered

into a promissory note arrangement with IGX (the “ IGX Note ”) for $ 176,000

to allow the Company to potentially be able to enter into related agreements and partnerships with IGX.

The payment is made solely for

the payment of all 2024 Bureau of Land Management fees and county land maintenance fees, notice of intent and associated filing fees

for the claims owned by IGX.

During the year ended December 31, 2025, the Company wrote off the promissory note balance including interest

in the amount of $ 182,481

as the note was deemed unrecoverable from IGX and the likelihood of entering into definitive agreements with IGX had diminished significantly.

As a result, the Company recognized a loss of $ 182,481

in the Other Income/Expense section of the consolidated statements of operations for the year ended December 31, 2025.

15 – SEGMENT REPORTING

4 unchanged sentences

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 assessed.

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

The measure of segment

assets is reported on the consolidated balance sheets as total consolidated assets.

All of the Company’s long-lived assets are

located in the United Sates.

addition to the significant expense categories included within net loss presented on the Company’s consolidated statements

of operations, see below for disaggregated amounts that comprise general and administrative expenses.

SCHEDULE OF SEGMENT REPORTING

CONSOLIDATED STATEMENTS OF OPERATIONS

March 16, 2023

Professional and consulting fees

Legal and book-keeping services

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 assessed.

The Company’s CODM is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes

of allocating resources and evaluating financial performance.

The Company has a single, common management team and our cash flows are

reported and reviewed with no distinct cash flows.

The measure of segment assets is reported on the consolidated balance sheets as total

consolidated assets.

All of the Company’s long-lived assets are located in the United Sates.

addition to the significant expense categories included within net loss presented on the Company’s consolidated statements of operations,

see below for disaggregated amounts that comprise general and administrative expenses.

SCHEDULE OF SEGMENT REPORTING CONSOLIDATED STATEMENTS OF OPERATIONS

Personnel and related taxes

Marketing and advertisement

Total general and administrative

Stardust Power Inc.

Professional and consulting fees

Total general and administrative expenses

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

16 – RELATED PARTY TRANSACTIONS

Stardust Power entered into a service agreement with VIKASA Capital Partners LLC (“VCP”) 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 , of which $ 980,000 has been incurred

as of December 31, 2023.

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

1, 2023, and also separately entered into an agreement with VIKASA Capital LLC.

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.

September 18, 2024, the Company entered into a consulting agreement with DRE Chicago LLC, whose principal is Paramita Das.

was onboarded as a Chief Strategy Officer and Senior Advisor to CEO of the Company.

Additionally, in December 2024, the Company

entered into a binding term sheet with DRE Chicago LLC, providing for loan in the principal amount of $ 250,000 ,

September 18, 2024, the Company entered into a consulting agreement with DRE Chicago, whose principal is Paramita Das.

Das was onboarded

as a Chief Strategy Officer and Senior Advisor to CEO of the Company.

Additionally, in December 2024, the Company entered into a binding

term sheet with DRE Chicago, providing for a loan in the principal amount of $ 250,000 ,

bearing interest at a rate of 15 %

1 unchanged sentence

(the “ Maturity Date ”).

Pursuant to the Term Sheets, an aggregate of approximately 470,000 shares

of Company’s Common Stock, owned by Roshan Pujari, Chief Executive Officer of the Company, were pledged as collateral.

addition, the Company has agreed to issue to DRE Chicago an aggregate of $ 375,000 in

Common Stock as an Equity Kicker.

In addition, DRE Chicago will receive warrants representing the right, exercisable within five

years of the closing date, of up to 50% of Common Stock issued as Equity Kicker, with each whole warrant exercisable for one share

of Common Stock at an exercise price of $ 11.50

Pursuant to the Term Sheets, an aggregate of approximately

shares of Common Stock, owned by Roshan Pujari, Chief Executive

Officer of the Company, were pledged as collateral.

In addition, the Company has agreed to issue to DRE Chicago an aggregate of $ 375,000

in Common Stock as an Equity Kicker.

In addition, DRE Chicago

will receive warrants representing the right, exercisable within five years of the closing date, of up to 50% of Common Stock issued

as Equity Kicker, with 10 warrants exercisable for one share of Common Stock at an exercise price of $ 115.00

in accordance with the private placement terms.

The Company is yet to issue the equity shares and warrants as of the date of the

issuance of the consolidated financial statements.

December 2024, the Company entered into a binding term sheet (“Term Sheet”) with Endurance Antarctica Partners II, LLC

(“Endurance”) an affiliate of a director at the time and a shareholder, providing for a loan (the “Loan”) in

the aggregate principal amount of $ 1,750,000 ,

year ended December 31, 2025, the Company has repaid the principal amount of $ 250,000

along with the accrued interest of $ 9,166

and issued 10,474

shares of Common Stock and 52,374

warrants to DRE Chicago.

Das terminated her employment

with the Company in November 2025 and is no longer considered a related party as of December 31, 2025.

December 2024, the Company entered into the Endurance Term Sheet with Endurance an affiliate of a director at the time and a

shareholder, providing for the Endurance Loan in the aggregate principal amount of $ 1,750,000 ,

bearing interest at a rate of 15 %

per year, and maturing in March

2025 (the “Maturity Date”).

Pursuant to the Term Sheet, 5,500,000 shares

of Company’s Common Stock, owned by Roshan Pujari, Chief Executive Officer of the Company, were pledged as collateral.

addition, the Company has agreed to issue to Endurance $ 3,500,000 in

Common Stock as an Equity Kicker.

In addition, Endurance will receive warrants representing the right, exercisable within five years

of the closing date, of up to 50% of Common Stock issued as Equity Kicker, with each whole warrant exercisable for one share of

Common Stock at an exercise price of $ 11.50

per year, and maturing on the Endurance Maturity Date.

Pursuant to the Endurance Term Sheet, 550,000

shares of Common Stock, owned by Roshan Pujari, Chief Executive Officer of the Company, were pledged as collateral.

In addition, the

Company has agreed to issue to Endurance $ 3,500,000

in Common Stock as an Equity Kicker.

In addition, Endurance will receive warrants representing the right, exercisable within five

years of the closing date of up to 50% of Common Stock issued as Equity Kicker, with 10 warrants exercisable for one share of Common

Stock at an exercise price of $ 115.00

in accordance with the Private Placement terms.

The Company is yet to issue the equity shares and warrants as of the date of the

issuance of the consolidated financial statements.

The Company incurred

the following expenses with related parties, which were all affiliates of the Company:

OF EXPENSES WITH RELATED PARTIES

Year Ended December 31,2024

March 16, 2023

(inception) through

December 31, 2023

During the year ended December 31, 2025, the Company repaid the principal amount of

along with the accrued interest of $ 70,000

and issued 97,765

shares of Common Stock and 488,826

warrants to Endurance.

March 2023, the Company entered into unsecured notes payable with three related parties.

These notes payable provided the Company the

ability to draw up to $ 1,000,000 ,

in aggregate:

until December 31, 2023, and $ 840,000

until December 31, 2025.

These loan facilities accrue interest,

compounding semi-annually, at the long-term semi-annual Applicable Federal Rate, as established by the Internal Revenue Service, which

effectively was 4.71 %

as of December 31, 2025.

In June 2025, the Company drew $ 250,000

from Energy Transition Investors LLC, and repaid the amount

in full during the same month.

The Company has accrued interest of $ 422

during the year ended December 31, 2025, on the drawn amount.

Company incurred the following expenses with related parties, which were all affiliates of the Company:

SCHEDULE OF EXPENSES WITH RELATED PARTIES

Expenses under contract due to:

9 unchanged sentences

Finance charges

VIKASA Capital Partners LLC

Consulting expense

7636 Holdings LLC

Consulting expense

VIKASA Capital LLC

Consulting expense

Energy Transition Investors LLC

VIKASA Clean Energy I LP*

Roshan Pujari*

Total expenses

1 unchanged sentence

DRE Chicago LLC

VIKASA Capital LLC

VIKASA Capital Partners LLC

Total other expenses paid on the Company’s behalf

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

of December 31, 2023, $ 1,383,316

of expenses including interest were paid.

During the period from March 16, 2023 (inception) through December 31, 2023, the Company

provided shares to shareholders in exchange for a subscription of $ 90 .

The Company received the $ 90

on June 14, 2023.

As at December 31, 2023, no

amounts were due to related parties of the Company.

of December 31, 2024, $ 149,735

of expenses were paid.

As at December 31, 2024, $ 3,895,938

was due to related parties of the Company.

Company and Legacy Stardust Power entered into notes payable agreements of $ 5,875,000 in 2024 and $ 1,000,000 in 2023, respectively with

related parties, all of whom were affiliates.

OF RELATED PARTIES

TO CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2025, $ 58,229 of

expenses were paid and $ 422 was

due to related parties of the Company.

As of December 31, 2024, $ 149,735 of

expenses were paid and, $ 3,895,938 was

due to related parties of the Company.

Company entered into notes payable agreements of with related parties, all of whom were affiliates.

SCHEDULE OF RELATED PARTIES

December 31, 2025

Period from March 16, 2023 (inception) through December

Energy Transition Investors LLC

Notes payable

VIKASA Clean Energy I LP *

Notes payable

Roshan Pujari*

Notes payable

Interest Accrued

DRE Chicago LLC

7 unchanged sentences

Notes obtained from related parties

* VIKASA Capital LLC

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

** Short-term loan includes Equity Kicker payable as per the terms of the loan agreement.

of December 31, 2024, $ 20,937 of interest on these notes was due to related parties.

During the period from March 16, 2023 (inception)

through December 31, 2023, the Company incurred and paid $ 7,111 of interest expense related to the notes payable.

As at December 31,

2024, the Company had $ 5,875,000 outstanding notes payable to related parties and as at December 31, 2023, the Company had repaid all

the above notes.

Subsequent to year end, the Company has fully repaid the principal amount of $ 2,000,000 and accrued interest of $ 20,937 to the related

Stardust Power Inc.

loan includes Equity Kicker payable as per the terms of the loan agreement.

March 2025, the Company repaid the loan principal amount of $ 250,000 and $ 1,750,000 and interest of $ 9,166 and $ 70,000 to DRE Chicago

LLC and Endurance Antarctica Partners II, LLC, respectively.

Further in April 2025, the Company issued 10,474 shares and 52,374 warrants

to DRE Chicago LLC, and 97,765 shares and 488,826 warrants to Endurance Antarctica Partners II, LLC against Equity Kicker payable as

per the terms of the loan agreement.

As at December 31, 2025, the Company had repaid all the above notes.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

17 - NET LOSS PER SHARE

8 unchanged sentences

OF BASIC AND DILUTED NET LOSS PER SHARE

December 31, 2024

March 16, 2023

(inception) through

December 31, 2023

$ ( 15,723,636

14 unchanged sentences

Private placement warrants

The Sponsor Earnout Shares

(as defined in the Business Combination Agreement) were not included for purposes of calculating the number of diluted shares outstanding

as of December 31, 2024, as the Sponsor earnout shares remain contingently forfeitable, as the conditions have not been met

Stardust Power Inc.

Short term loan warrants

Private placement warrants

2025 Convertible note shares

2025 Convertible note warrants

Sponsor Earnout Shares (as defined in the Business Combination Agreement) were not included for purposes of calculating the number

of diluted shares outstanding as of December 31, 2025, as the Sponsor earnout shares remain contingently forfeitable, as the conditions

have not been met

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

18 – INCOME TAXES

6 unchanged sentences

OF INCOME LOSS BEFORE PROVISION FOR INCOME TAX

December 31, 2024

March 16, 2023

(inception) through

December 31, 2023

United States

3 unchanged sentences

OF FEDERAL AND STATE INCOME TAX PROVISION (BENEFIT)

December 31, 2024

March 16, 2024

(inception) through

December 31, 2023

Total current tax expense

1 unchanged sentence

Total tax expense

* Immaterial amounts

Company had no income tax expense for the year ended December 31, 2024, and for the period from March 16, 2023 (inception) through December

Company had no income tax expense for the year ended December 31, 2025, and December 31, 2024.

income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

tax effects of significant items comprising the Company’s deferred taxes as of December 31 are as follows:

6 unchanged sentences

Net operating loss

Capital loss carryforward

Accruals and other

7 unchanged sentences

( 9,077,001 )

( 7,200,179 )

Net deferred taxes

740 requires that the tax benefit of net operating losses, temporary differences and credit carry forwards be recorded as an asset to

the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is

dependent on the Company’s ability to generate sufficient taxable income within the carry forward period.

Because of the Company’s

recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned

future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.

valuation allowance increased by $ 6,621,535 during the year ended December 31, 2024, and $ 578,644 during the period from March 16, 2023

(inception) through December 31, 2023.

ASC 740 requires that the tax benefit of net operating

losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization

is more likely than not.

Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable

income within the carryforward period.

Because of the Company’s recent history of operating losses, management believes that recognition

of the deferred tax assets is currently not likely to be realized and, accordingly, has provided a valuation allowance.

valuation allowance increased by $ 1,876,822 during the year ended December 31, 2025, and $ 6,611,889 during the period December 31, 2024.

operating losses and tax credit carryforwards as of the Financial Statement Date December 31, 2025, are as follows:

4 unchanged sentences

Net operating losses, state

Stardust Power Inc.

Capital loss carryforward

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

TO CONSOLIDATED FINANCIAL STATEMENTS

effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows:

1 unchanged sentence

December 31, 2025

March 16, 2023

(inception) through

December 31, 2024

5 unchanged sentences

Earn out shares value adjustment

Warrant liability value adjustment

Success based fees

Stock based compensation

IPO related finance charge

Sale of investments

Legal fees associated with stock issuance

effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows (in

December 31, 2025

March 16, 2023

(inception) through

December 31, 2024

8 unchanged sentences

Earn out shares value adjustment

Warrant liability value adjustment

Success based fees

Stock based compensation

IPO related finance charge

Stardust Power Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL

Sale of investments

Legal fees associated with stock issuance

19 – SUBSEQUENT EVENTS

January 28, 2025, the Company entered into a non-binding letter agreement with Sumitomo Corporation of Americas (“Sumitomo”),

a New York corporation, contemplating a long-term commercial offtake agreement, pursuant to which Sumitomo would agree to acquire 20,000

metric tons of lithium carbonate per year from the Company’s first line of production, with the potential to increase to 25,000

metric tons based on mutual agreement.

The initial contract term would span 10 years starting from the date of the first qualification

of the Company’s lithium carbonate for sale to any of Sumitomo’s customers, with an option for Sumitomo to renew for an additional

five years under mutually agreed terms, provided written notice is given to the Company at least twelve months prior to the end of the

initial term.

February 7, 2025, the Company executed an exclusive license agreement with KMX Technologies, Inc.

a Delaware corporation.

terms of the License Agreement, KMX agreed to irrevocably license to the Company the use of KMX’s vacuum membrane distillation

technology (the “VMD Technology”) and associated processes and systems (including units incorporating the VMD Technology

(the “KMX VMD Units”)) for the purpose of the Company’s use of the technology in its refining and upstream

Among other obligations set forth in the Agreement, the Company shall be required to exclusively purchase all KMX VMD

Units from the Licensor during the term of the Agreement on the terms and conditions set forth therein.

The License Agreement grants

the Company the exclusive right to sub license, use, market, sell and operate KMX’s VMD Technology across the United States,

Canada and select international markets.

The Company agreed to pay KMX a royalty comprised of 500,000

shares of Company Common Stock.

The securities are being offered and sold by the Company pursuant to an exemption from the

registration requirements of the Securities Act of 1933, as amended (the “Act”) provided by Section 4(a)(2) and/or

Regulation D promulgated thereunder, as a transaction not involving a public offering.

March 18, 2025, the Company received notice from the Nasdaq that the Company was not in compliance with the Minimum Market Value of Publicly

held shares requirement of $ 15,000,000 as set forth in Nasdaq Listing Rule 5450(b)(2)(C).

On March 19, 2025, the Company received a subsequent

notice from the Nasdaq that the Company was not in compliance with the minimum bid price of $ 1.00 per share as set forth in Nasdaq Listing

Rule 5450(a)(1).

These letters have no immediate effect on the listing of the Common Stock or Public Warrants on The Nasdaq Global Market.

The Company has 180 calendar days from receipt of the notices, or until September 15, 2025, in which to regain compliance.

Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued and there

2 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data