Stardust Power Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements for the three months ended March 31, 2026, and the related notes thereto contained elsewhere in this Quarterly Report. Company Overview and History On July 8, 2024, Stardust Power Operating Inc. (f/k/a Stardust Power Inc. prior to the consummation of the Business Combination, or “ Legacy Stardust Power ”) consummated the business combination contemplated by the Business Combination Agreement, dated as of November 21, 2023 (as amended, the “ Business Combination Agreement ”), by and among Global Partner Acquisition Corp. II, a Cayman Islands exempted company (“ GPAC II ”), Strike Merger Sub I, Inc., a Delaware corporation and direct wholly owned subsidiary of GPAC II (“ First Merger Sub ”), Strike Merger Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of GPAC II (“ Second Merger Sub ”), and Legacy Stardust Power (the “ Business Combination ”). Pursuant to the Business Combination Agreement, First Merger Sub merged into Legacy Stardust Power, with Legacy Stardust Power being the surviving corporation. 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. Unless the context otherwise requires, any reference in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us,” “our,” or “Stardust Power” refers to Stardust Power Inc. and its consolidated subsidiaries. We are a U.S.-based development stage battery grade lithium manufacturer designed to foster clean energy independence for the United States. We are in the process of creating capacity to manufacture battery grade lithium products, for a wide variety of applications, including energy storage systems, e-mobility, grid infrastructure, and data centers, by developing a large-scale lithium refinery in the United States. We seek to become a sustainable, cost effective supplier of battery grade lithium carbonate, by our innovative approach in the development of a large central refinery optimized for multiple inputs of lithium chloride in Oklahoma. We intend to source lithium chloride feedstock from various suppliers and may make investments upstream to secure additional feedstock. We seek to sell our products to electric vehicle (“ EV ”) manufacturers as our primary market, with potential applications in other areas such as battery manufacturers, the U.S. military, and original equipment manufacturers (“ OEMs ”). Some of the key driving factors are the demand for battery grade lithium products, fueled largely by the demand for energy storage solutions, production of electric vehicles and automotive OEMs, and battery manufacturers seeking domestic supply options, leading to demand for minerals used in battery cells, such as lithium, governmental incentives for American manufacturing and evolving geopolitical climate that is creating a national security priority for the U.S. market. In February 2023, we received an illustrative incentive analysis for up to $257 million in performance-based incentives from the State of Oklahoma and potential federal incentives, which also included potential eligibility for further federal grants. The state incentives were based on initial job creation, equipment procurement, training and recruitment incentives, property tax exemptions, sales tax exemptions, and capital expenditure projections submitted to the Oklahoma Department of Commerce in the first quarter of 2023 and could be subject to changes as we progress in setting up our planned lithium refinery in Muskogee, Oklahoma (the “ Facility ”) and commercial production of battery grade lithium in the future. These incentives may change based on the actual financial metrics of the Company in the future, which may be lower or higher. 27 We believe that we are well positioned to address these opportunities by emerging as a leading, fully integrated domestic lithium supplier, and contribute to restoring American energy independence, thereby bridging the gap in the domestic supply of battery grade lithium products. Recent Developments Recent Financing Activity On December 23, 2025, we 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, we 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 “ Common Stock Purchase Warrant ”). On February 12, 2026, we entered into a Common Stock Purchase Agreement (the “ B. Riley Purchase Agreement ”) and a Registration Rights Agreement (the “ B. Riley Registration Rights Agreement ”, and together with the B. Riley Purchase Agreement, the “ B. Riley Agreements ”) with B. Riley Principal Capital II, LLC (“ B. Riley Principal Capital II ”). Pursuant to the B. Riley Agreements, we have the right, in our sole discretion, to sell to B. Riley Principal Capital II, from time to time during the 36-month investment period, up to $10,000,000 of newly issued shares of our Common Stock (the “ Total Commitment ”), subject to an exchange cap and other conditions and limitations set forth in the agreement. Subsequent to the quarter end, we entered into a Letter of Intent (the “ LOI ”) with a single institutional investor to support project level financing for our Facility. Under the terms of the LOI, the institutional investor has indicated its intent to invest up to $150 million at the project level, with flexibility across equity, debt, and hybrid financing structures. The agreement is non-binding and outlines a framework for a potential investment, including the ability to support the financing through syndication and direct capital participation. We and the investor have also agreed to proceed through customary due diligence and negotiation of definitive agreements. Subsequent to the quarter end, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”). Pursuant to the terms of the Sales Agreement, we may sell from time to time through the Agent, shares of our Common Stock, par value $0.0001 per share, having an aggregate offering price of up to $5,000,000 (the “Shares”). We intend to use this facility to raise capital as needed. Notice from Nasdaq On April 24, 2026, we were notified by the listing qualifications staff of Nasdaq that we did not satisfy the minimum $35 million market value of the listed securities requirement for 30 consecutive business days, as required under Nasdaq Listing Rule 5550(b)(2) for the Nasdaq Capital Market (the “ MVLS Requirement ”). Nasdaq also noted that we do not meet the requirements under Listing Rules 5550(b)(1) and 5550(b)(3). In accordance with Nasdaq rules, we have a period of 180 calendar days (or until October 21, 2026) to regain compliance with the MVLS Requirement. To the extent we seek to regain compliance through the MVLS Requirement, our market value of listed securities must close at $35 million or more for a minimum of 10 consecutive business days during the 180-day compliance period. The notification received has no immediate effect on the listing of our securities on The Nasdaq Capital Market. Recent Supply Agreements On March 13, 2026, we entered into a non-binding letter agreement with a strategic counterparty for the supply of 15,000 metric tons per annum of lithium carbonate equivalent 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 us, with the option for us to renew for an additional six-year term. Air Permit During quarter ended March 31, 2026, we received our air quality construction permit from the Oklahoma Department of Environmental Quality (“ ODEQ ”) for our lithium refinery in Muskogee, Oklahoma. This key milestone represents the final significant permit required for construction and commissioning, positioning us to advance one of the largest planned lithium refineries in the United States. 28 Reverse Stock Split On September 3, 2025, we filed a certificate of amendment to the our Certificate of Incorporation with the Secretary of State of the State of Delaware to effectuate a 1-for-10 reverse stock split (the “ Reverse Stock Split ”) of the outstanding shares of our common stock, par value $0.0001 (“ Common Stock ”). Our stockholders previously approved the Reverse Stock Split at the Company’s annual meeting of stockholders held on June 9, 2025 and granted our board of directors (the “ Board ”) the authority to determine the exact split ratio and when to proceed with the Reverse Stock Split. The Reverse Stock Split became effective on September 8, 2025, and our Common Stock began trading on the Nasdaq on a Reverse Stock Split-adjusted basis on September 8, 2025 at market open. 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. As a result of the Reverse Stock Split, shares of Common Stock, outstanding warrants, stock options, and restricted stock units were proportionately decreased (and the respective per share value and exercise prices, if applicable, were proportionately increased) (see Part I, Item 1, Note 2, Basis of Presentation and summary of significant accounting policies in the notes to unaudited condensed consolidated financial statements in this Quarterly Report). Key Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including competition from other lithium brine and other brine producers, changes to existing federal and state level incentive framework, changes in regulations, and other factors discussed under the section titled “Risk Factors” in our Annual Report on Form 10-K and in this Quarterly Report. We believe the factors described below are key to our success. Commencing Commercial Operations We are a development stage company, and we have purchased a site in Southside Industrial Park, Muskogee, Oklahoma to build the Facility (the “ Site ”). We have completed a number of required site assessments and technical studies, including the critical issue analysis, Phase I ESA, geotechnical study, front-end loading (“ FEL ”) -1 study and FEL-3 study. Additional studies may be required as the project progresses. The project required evaluation for certain federal, state, and local permits. State permitting focuses on air emissions, wastewater, and stormwater permits. Federal permitting focuses on possible cultural, biological, and natural resources and threatened/endangered species impacts. The key permitting agency for the project at the state level is the ODEQ. We have received from the ODEQ the general permit for stormwater discharges from Construction Activities, approval of its stormwater pollution prevention plan and air quality construction permit (“ Air Permit ”). Under current design plans, we do not expect to require a waste water permit for the Facility since no waste water is expected to be discharged. We are developing a large central refinery in a phased approach. The first phase is the construction of a production line with up to 25,000 metric tons per annum. The second phase is to add a second production line with up to 25,000 tons per annum, to create a total capacity of up to 50,000 tons per annum. A technological innovation of our planned refinery is the ability for the Facility to refine different sources of lithium chloride inputs derived from lithium brines. The Facility is being designed to accept lithium chloride, of a certain approved chemical composition. It is our intention that the Facility should be able to dilute and pre-treat feedstock as necessary, so that various lithium feedstock can be blended, in order to produce a consistent feedstock. Our strategy is to differentiate ourselves by screening for a broader set of contaminants, in comparison to other lithium refineries. Partnership Ecosystem Our success will depend on whether we can execute and expand our ecosystem of commercial arrangements with additional suppliers of brine and executing agreements with them at favorable terms. The availability of brine for the purpose of extracting lithium is still in a nascent stage and we would require access to multiple sources as we start commercial production and grow our business. Our management team frequently evaluates current and future sources of supplies for reliability and geographic locations for logistics and cost efficiency. We would also have to maintain technology arrangements with existing strategic affiliations on whose patented and proprietary processes we depend on, as well as forge new technology affiliations as exploration, extraction and purification processes evolve, to obtain raw materials required to manufacture high-quality lithium suitable for consumption by the EV industry, and other potential usages. These affiliations should enable us to refine and sell battery grade lithium at competitive prices, which in turn helps secure the growth and profitability of our business operations in the long term. Adequate Capital Raise The success of our refinery’s activities relating to producing battery grade lithium from brine and our ability to obtain relevant permits in a timely manner require significant capital investment and financing to fund the initial investment in all aspects of setting up the operations, and may subsequently be impacted by our operating losses, competition from substitute products and services from larger companies, protection of proprietary technology of our strategic partners, and dependence on key individuals. Our unaudited condensed consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have not earned any revenue and have been operating at a loss since inception. We have an accumulated deficit and stockholders’ deficit. We believe that the cash on hand and additional investments available through issuance of new Common Stock will be inadequate to satisfy our working capital and capital expenditure requirements for at least the next twelve months. These conditions raise substantial doubt about our ability to continue as a going concern for one year from the issuance of these unaudited condensed consolidated financial statements. As a development stage company, we need to raise additional capital to realize our business objectives. Our long-term success and ability to continue as a going concern are dependent upon our ability to successfully raise additional capital or financing, or successfully enter into strategic partnerships. Until commercial production is achieved from our planned operations, we will continue to incur operating and investing net cash outflows associated with, among other things, maintaining and acquiring exploration properties and undertaking ongoing exploration activities. 29 Limited Operating History We have a limited operating history and there is limited historical financial information upon which to base an evaluation of our performance. Our business and financial condition must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operation. Key Business Metrics, Non-GAAP Measures Since we have yet to start the construction of our Facility and associated commercial production, we do not have financial information on key business metrics. However, based on our experience and industry knowledge, we expect the following would be key business metrics: ● Raw Material Cost/ton : This includes the input cost of lithium chloride for the plant. As this may be obtained from various sources, the weighted average cost will be calculated to arrive at the raw material cost per ton and reflects our ability to procure high-quality raw materials at an appropriate price. The weighted average method also helps in calculating the gross margin on a per-ton basis. The technology implemented and the efficiency of the operations are also reflected in the gross margin per ton. ● Selling Price/ton : This multiple is driven by the demand and supply of the lithium price as well as the efficient operations of the plant. The computation of the selling price may be based on the output sold per long-term contract, which is expected to have a floor and a cap, as well as the spot price on the date of placing a purchase order by the customer, with us and the customer sharing the difference between the floor and spot price. ● Capex/ton : This reflects the Capex incurred on a per-ton basis. It includes both direct and indirect costs. It also has contingency costs built in for any impact on Capex, to account for unforeseen events. The key is to optimize plant efficiency in long-term operations with the appropriate technology and set-up. ● Opex/ton : This includes the ongoing expenses incurred from the day-to-day running of the operations. It helps in measuring how much profit a company makes on a dollar of sales after paying for variable costs of production, such as wages and raw materials, but before paying interest or tax. The lower multiple reflects the efficient functioning of the management. ● Capacity Utilization : This measures how much output a plant is producing, compared to its maximum potential output, which is dependent on two key factors: (a) design capacity, which impacts the operational efficiency of the plant, and (b) the plant’s downtime for its maintenance. Timely maintenance is also the key to running any efficient operations. Further, since we are yet to generate revenue, non-GAAP measures such as EBITDA and EBITDA margins, cannot be captured currently, but will be stated once we have commenced commercial production and selling of battery grade lithium to our intended customers. 30 Business and Macroeconomic Conditions Our business and financial condition has been, and we believe will continue to be, impacted by adverse and uncertain macroeconomic conditions and events, including higher inflation, higher interest rates, supply chain and logistics challenges, banking crises, fluctuations or volatility in capital markets, foreign exchange rate volatility, government shutdowns, changes in monetary policy, changes in trade policies, including tariffs and other trade restrictions or the threat of such actions, and rising geopolitical instability, including the conflicts in the Middle East and Ukraine, and the related volatility in the price of oil and other commodity prices. Components of Results of Operations Revenue We have not generated any revenue to date. We expect to generate a significant portion of our future revenue from the sale of battery grade lithium carbonate primarily to the energy storage system and EV markets. We expect to enter into long-term contracts (typically 10 years), driven by industry dynamics, with a pricing structure at cap and ceiling, and sharing of variable price between customers and us. Cost of Goods Sold We have not sourced any raw material to date. We expect to source brine from lithium producing suppliers including the oil and gas industry as a byproduct of their exploration and extraction processes. We are in the process of negotiating with multiple suppliers for brine feedstock, including producers from the oil and gas industry. The length, tenure and pricing of these contracts will depend largely on the type of supply and are expected to vary from supplier to supplier. Expenses General and administrative General and administrative expense consists of costs to maintain our daily operations and administer the business that are not directly attributable to generating revenue or cost of goods or raw material. These consist primarily of consulting services (including advisory services and administrative related services from contractors, consultants), professional services such as accounting advisory, statutory auditor fees, technical consultants, and business consulting, as well as personnel related expenses (including stock based compensation), legal and book-keeping services, insurance expenses (including director and officer’s insurance), investor relations activities and marketing expenses. We expect our general and administrative expenses will increase in absolute dollars over time as we continue to invest in setting up our Facility, hire additional employees, and subsequently invest in the growth of our business and incur costs associated with being a publicly traded company with respect to compliance with the regulations of the SEC and Nasdaq. Other Income (Expenses) Interest income Interest income is comprised of interest earned on promissory notes. During the year ended December 31, 2024, we issued promissory notes of $176,000 and $316,000 to IGX Minerals LLC and IG Lithium LLC, respectively. These notes carried an interest rate of 6% with maturity dates of February 28, 2025, and July 1, 2025, respectively. Interest expense Interest expense is comprised of interest payable on the Insurance Funding loans, short-term loans, interest charged by vendors on overdue invoices and amortization expense related to the expense incurred and discount recorded in connection with the issuance of the 2025 Convertible Note in December 2025. We entered into a financing agreement of $407,500 and $510,000 for the purchase of a director and officer’s insurance policy with AFCO Insurance Premium Finance in 2025 and 2024, respectively. We made a downpayment of $70,256 and $44,162 for the loan taken in 2025 and 2024, respectively, which was applied to the loan amount at the time of the loan agreement. The debt is payable in monthly instalments of $35,125 and $44,162 per month for 10 and 11 months and has a stated interest rate of 7.5% and 8.46% for the loans taken in 2025 and 2024, respectively. The loans are secured against a lien on the insurance policy. We issued Term Sheets to several lenders, providing for loans in the aggregate principal amount of $3,550,000, bearing interest at a rate of 15% per year, and maturing in March 2025. This debt was fully paid off as of December 31, 2025. 31 Finance charges Finance charges are comprised of costs incurred to enter into the B. Riley Purchase Agreement, issuing shares and the change in fair value of our make-whole provision related to the B. Riley Purchase Agreement. Change in fair value of sponsor earnout shares Change in fair value of sponsor earnout shares relates to movements in fair value of earnout shares issued to the to Global Partner Sponsor II, LLC (“ Sponsor ”) at the closing of the Business Combination, which have been classified as liability instruments in the condensed consolidated financial statements, that need to be recorded in the unaudited condensed consolidated statement of operations for each reporting period, based on third party valuations carried out at period end. Change in fair value of warrant liability Change in fair value of warrant liability relates to movements in fair value of Public Warrants and Private Warrants (as defined in Note 6 of the Notes to Condensed Consolidated Financial Statements) which have been classified as liability instruments in the condensed consolidated financial statements, that need to be recorded in the unaudited condensed consolidated statement of operations for each reporting period, based on fair value at period end. Change in fair value of investment in equity securities Change in fair value of investment in equity securities relates to movements in fair value of investment in equity securities of strategic investments such as the investment in QX Resources Limited (“ QXR ”) and IRIS Metals Limited (“ Iris Metals ”), that need to be recorded in the unaudited condensed consolidated statements of operations for each reporting period, based on readily available quoted prices for such investment. Gain on extinguishment of liability Gain on extinguishment of liability represents the gain recognized on the extinguishment of vendor payable balance. Provision for income taxes We are constituted as a Delaware corporation and are subject to U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax law. 32 Results of Operations The following table sets forth our unaudited condensed statements of operations information for the periods indicated: Three Months Ended March 31, 2026 March 31, 2025 Change $ Change % Revenue $ - $ - $ - - General and administrative expenses 3,984,901 5,748,648 (1,763,747 ) (31 )% Operating loss (3,984,901 ) (5,748,648 ) 1,763,747 (31 )% Other income (expenses) Interest income - 7,279 (7,279 ) (100 )% Interest expense (365,606 ) (107,841 ) (257,765 ) 239 % Finance charge (227,187 ) (198,422 ) (28,765 ) 14 % Change in fair value of earnout shares - 528,000 (528,000 ) (100 ) % Change in fair value of warrant liability (667,571 ) 1,699,177 (2,366,748 ) (139 )% Change in fair value of investment in equity securities 5,601 10,755 (5,154 ) (48 )% Gain on extinguishment of liability 4,972 - 4972 100 % Total other income (expenses) (1,249,791 ) 1,938,948 (3,188,739 ) (164 )% Net loss $ (5,234,692 ) $ (3,809,700 ) $ (1,424,992 ) 37 % Revenues We have not earned any revenue since inception. Cost of Goods Sold We did not manufacture any products and hence did not incur any direct costs related to production or carrying inventory, since inception. 33 General and Administrative Expenses General and administrative expenses are primarily attributable to employee-related compensation expenses representing base salary, benefits and stock-based compensation expense, fees for professional consulting fees, mainly comprising marketing advisory services, insurance costs, and other consulting and legal services. The details of these expenses are as follows: Three months ended March 31, 2026 March 31, 2025 Change $ Change % Payroll and related taxes $ 2,768,736 $ 3,556,648 $ (787,912 ) (22 )% Professional and consulting fees 471,623 1,222,673 (751,050 ) (61 )% Legal fees 188,802 212,935 (24,133 ) (11 )% Insurance 121,269 145,038 (23,769 ) (16 )% Other 434,471 611,354 (176,883 ) (29 )% Total $ 3,984,901 $ 5,748,648 $ (1,763,747 ) (31 )% For the three months ended March 31, 2026, general and administrative expenses decreased compared to the three months ended March 31, 2025, primarily due to a decrease in employee related costs primarily driven by lower stock based compensation expense, a decrease in professional and consulting fees driven by decrease in stock based compensation expense for consultants and technical consultants and a decrease in accounting advisory, statutory auditor fees, and business consulting fees, as well as a decrease in legal and insurance fees. In addition, the decrease in other expenses during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to expenses incurred for the ground-breaking event in the prior year period, partially offset by an increase in other administrative expenses associated with our expanded operations. Other Income (Expenses) Interest income For the three months ended March 31, 2026, we did not recognize any interest income, compared to $7,279 for the same period in 2025. The decrease of $7,279 is attributable to interest income earned in the prior year period on promissory notes issued in August 2024. These promissory notes, including accrued interest, were written off in fiscal year 2025 as the notes were deemed unrecoverable. 34 Interest expense For the three months ended March 31, 2026, interest expenses increased by $257,765 compared to three months ended March 31, 2025 primarily due to interest accretion related to convertible notes issued in December 2025, interest charged by vendors on outstanding overdue invoices, partially offset by decreases in interest expense incurred on the financing agreement for our purchase of directors’ and officers’ and other insurance policies and interest expense on other short-term loans with various lenders. Finance charges The increase in finance charges of $28,765 for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was due to the cost incurred to enter into the B. Riley Purchase Agreement and increase in cost of the issuance of shares under the B. Riley Purchase Agreement, partially offset by a change in fair value of our make-whole provision related to the Common Stock Purchase Agreement entered into on October 7, 2024 with B. Riley Principal Capital II. Change in fair value of sponsor earnout shares The decrease in income from the change in fair value of earnout shares by $528,000 for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was related to movements in fair value of earnout shares issued to the Sponsor, primarily driven by a decrease in quoted market price, which have been classified as liability instruments in the condensed consolidated financial statements. The fair value adjustment is recorded in the unaudited condensed consolidated statement of operations for each reporting period, based on third party valuations carried out at period end. 35 Change in fair value of warrant liability The decrease in income from change in fair value of warrant liability by $2,366,748 for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was related to movements in fair value of Public and Private Warrants, which have been classified as liability instruments in the condensed consolidated financial statements, primarily driven by a decrease in quoted market price, that need to be recorded in the unaudited condensed consolidated statements of operations for each reporting period, based on fair value at period end. Change in fair value of investment in equity securities For the three months ended March 31, 2026, the fair value of investment in equity securities decreased by $5,154, compared to three months ended March 31, 2025, primarily due to fluctuations in the fair value of investments in QXR and IRIS Metals, based on readily available quoted market prices for these investments. Gain on extinguishment of liability For the three months ended March 31, 2026, we recognized gain on extinguishment of liability of $4,972 which represents the credit received against a vendor payable balance, with no comparable gain for the same period in 2025. Tax expenses For the three months ended March 31, 2026 and 2025, the tax expense was nil, due to net losses incurred during these periods. We do not carry any deferred tax assets on the unaudited condensed consolidated balance sheet as at March 31, 2026 and the audited condensed consolidated balance sheet as at December 31, 2025, primarily due to net operating loss carry forwards resulting from historically incurred net operating losses and full valuations allowance of those losses, as our ability to realize future tax benefits related to these assets is largely dependent upon operational profitability, which is uncertain. As a result of this uncertainty, we have established a full valuation allowance, and have not recognized a net provision or benefit for income taxes in the periods reported. Net loss For the three months ended March 31, 2026 and March 31, 2025, we incurred a net loss of $5,234,692 and $3,809,700, respectively. Since we have yet to start commercial production of battery grade lithium, our operating expenses are expected to increase as we continue to recruit more personnel to perform general operational tasks and set up the Facility and execute supply agreements. Liquidity and Capital Resources Overview We have devoted substantial efforts and financial resources to raising capital and organizing and staffing the Company, and as a result, have incurred significant operating losses. As of March 31, 2026 and December 31, 2025, we had an accumulated deficit of $73,577,276 and $ 68,342,584 respectively. We have not earned any revenue and have been operating at a loss since inception. We have an accumulated deficit and stockholders’ deficit. Liquidity Requirements Our primary requirements for liquidity and capital are investment in new facilities, new technologies, working capital and general corporate needs. Specifically, in this regard, the total refinery cost, which includes all direct and indirect costs and contingencies needed to build phase 1 of the refinery, (25,000 metric tons per annum of battery grade lithium carbonate), has been estimated at approximately $500 million following completion of FEL-3 study. We intend to finance our project cost through a mix of debt, equity and potential government grants. We expect our operational expenditures to increase for the foreseeable future in connection with ongoing and future activities. Specifically, expenditures will increase as we: ● Secure and build facilities; ● invest in research and development activities to advance the development of our technologies; and ● incur additional expenses associated with operating as, a public company. Our current and ongoing liquidity requirements will depend on many factors, including: our launch cadence, the timing and extent of spending to support additional development efforts, the introduction of new and enhanced offerings, the expected market adoption of our offerings, and the timing and extent of additional capital expenditures to build and invest in the development of our Facility. In addition, we may, in the future, enter into arrangements to acquire or invest in complementary businesses, business offerings and technologies. However, we do not have agreements or commitments to enter into any such acquisitions or investments at this time. 36 Sources of Liquidity and Going Concern We have funded our operations with proceeds from sales of Legacy Stardust Power Common Stock, promissory notes, simple agreements for future equity notes (“ SAFE notes ”), debt financing, equity financing and convertible equity agreements. To continue as a going concern, we anticipate funding our near-term operations through the sale of equity securities, promissory notes, debt financing or from other capital sources. If adequate funds are not available, we may be required to curtail, delay, or eliminate some or all of our planned activities, or raise additional financing to continue to fund operations, and may not be able to continue as a going concern. Our unaudited condensed consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We are a development stage entity with no revenues, and have incurred net loss since inception of $73,577,276 and stockholders’ deficit of $7,867,665 as at March 31, 2026. We expect to continue to incur significant costs in pursuit of its operating and investment plans. These costs exceed our existing cash balance and net working capital. As discussed above: ● On December 23, 2025, we entered into the Lind Securities Purchase Agreement with Lind providing for up to $15,000,000 in senior secured convertible debt financing. Simultaneously, we 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 and a Common Stock Purchase Warrant, for the purchase of approximately 411,245 shares. After deducting a commitment fee of $100,000 and other transaction-related costs, we received net cash proceeds of approximately $3,792,500. ● On February 12, 2026, we entered into the B. Riley Purchase Agreement and the B. Riley Registration Rights Agreement. Upon the terms and subject to the satisfaction of the conditions set forth in the B. Riley Purchase Agreement, we will have the right, in our 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 our option. We are 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, we have issued 465,120 shares of Common Stock aggregating to net proceeds of $1,220,015. ● Subsequent to the quarter end, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”). Pursuant to the terms of the Sales Agreement, we may sell from time to time through the Agent, shares of our Common Stock, par value $0.0001 per share, having an aggregate offering price of up to $5,000,000 (the “Shares”). We intend to use this facility to raise capital as needed. We believe that the cash on hand, and additional investments available through issuance of new Common Stock, will be inadequate to satisfy our working capital and capital expenditure requirements for at least the next twelve months. Our ability to continue as a going concern is dependent upon management’s plan to raise additional capital from the issuance of equity or receive additional borrowings to fund our operating and investing activities over the next year. The accompanying unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary if we are unable to continue as a going concern. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing. Failure to secure adequate financing could have a material adverse effect on our business, operations and financial performance. Insurance funding borrowing On August 5, 2025, we entered into a financing agreement of $407,500 for the purchase of an insurance policy with AFCO Insurance Premium Finance. The debt is payable in monthly instalments through June 2026 and bears an interest rate of 7.5%. The carrying amount of $103,848 and $205,403 is included as Short-term Loan on the accompanying unaudited condensed consolidated balance sheet as on March 31, 2026, and audited consolidated balance sheet as on December 31, 2025, respectively. 37 Short-term loans In December 2024, we 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 “ Endurance Maturity Date ”). We agreed to issue to Endurance $3,500,000 in Common Stock as an Equity Kicker. In addition, Endurance received warrants of up to 50% of Common Stock issued as an 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. As of December 31, 2025, we have fully repaid the principal amount of $1,750,000 along with the accrued interest of $70,000 and issued 97,765 shares of Common Stock and 488,826 warrants to Endurance. In December 2024, we entered into binding Term Sheets (the “ Investor Term Sheets ”) with several lenders including DRE Chicago, LLC, a related party (“DRE Chicago” and collectively with the other lenders, 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 ”). We agreed to issue to the Investors an aggregate of $2,700,000 in Common Stock as an Equity Kicker In addition, the Investors received warrants of up to 50% of Common Stock issued as an 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. As of December 31, 2025, we have fully repaid the principal amount of $1,800,000 along with the accrued interest of $67,146 and issued 75,418 shares of Common Stock and 377,092 warrants to the Investors. 38 Cash Flow Summary The following table summarizes our cash flows for the periods presented: Three months ended March 31, 2026 Three months ended March 31, 2025 Change Net cash used in operating activities $ (2,065,302 ) $ (2,875,187 ) $ 809,885 Net cash used in investing activities (174,836 ) (960,332 ) 785,496 Net cash (used in) provided by financing activities (4,449 ) 4,511,080 (4,515,529 ) Net change in cash $ (2,244,587 ) $ 675,561 $ (2,920,148 ) Cash Flows Used in Operating Activities For the three months ended March 31, 2026, net cash used in operating activities was $2,065,302, consisting of a $5,234,692 net loss, adjusted for an aggregate of $ 2,655,796 in non-cash charges for stock based compensation, change in fair value of investments, amortization of the 2025 convertible note issuance costs, warrant liability, Common Stock issued for make-whole obligation, non-cash marketing expense for proposed stock issuance to vendor and depreciation and a $513,594 net change in operating assets and liabilities, primarily driven by an increase of $497,373 in accounts payable and other current liabilities which represent the various costs that are expected to be incurred as we set up operations during this period, and a decrease of $16,221 in prepaid expenses and other assets. For the three months ended March 31, 2025, net cash used in operating activities was $2,875,187, consisting of a $3,809,700 net loss, adjusted for an aggregate of $915,041 in non-cash charges for stock based compensation, change in fair value of investments, warrant liability, Sponsor earnout shares, the Common Stock make-whole obligation, and depreciation and a $19,472 net change in operating assets and liabilities, primarily driven by a decrease of $69,462 in accounts payable and other current liabilities which represent the various costs that are expected to be incurred as we set up operations during this period, partially offset by an increase of $88,934 in prepaid expenses and other assets. Cash Flows Used in Investing Activities For the three months ended March 31, 2026, and March 31, 2025, net cash used in investing activities was $174,836 and $960,332, respectively, primarily representing capital project costs related to construction of the refinery. Cash Flows from Financing Activities For the three months ended March 31, 2026, net cash used in financing activities was $4,449 and related primarily to Common Stock issuance proceeds of $97,106 offset by repayment of insurance funding borrowing of $101,555. For the three months ended March 31, 2025, net cash provided by financing activities was $4,511,080, and related primarily due to gross proceeds from the consummation of a public offering in January 2025 of $5,750,400, warrant Inducement gross proceeds of $2,971,040 in March 2025, an advance from PIPE investors of $125,000, and Common Stock issuance proceeds of $16,414, partially offset by the repayment of short-term loans of $3,677,914, payment of transaction costs associated with public offering and warrant inducement of $648,860, and deferred transaction costs payment of $25,000. Operating and Capital Expenditure Requirements We have not earned any revenue and have been operating at a loss since inception. We have an accumulated deficit and stockholders’ deficit. These conditions raise substantial doubt about our ability to continue to finance operations over the next twelve months and is dependent upon management’s plan to raise additional capital from issuance of equity or receive additional borrowings to fund our operating and investing activities over the next one year. Our intended capital requirements depend on many factors including the capital expenditure required to set up our Facility, and undertake all activities necessary to start commercial production, prices of capital equipment, and preliminary costs. In the future, it will depend on our expansion of acquiring new assets/sites to have access and potential ownership of raw material. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing. If additional financing is required from outside sources, over and above what we are intending to raise currently, we may not be able to raise it on acceptable terms or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition would be materially and adversely affected, and we may not be able to continue our intended operations as a going concern. Commitments and Contractual Obligations See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details regarding other contractual obligations and commitments as at March 31, 2026. While we have not entered into any other binding commitments, other strategic partnerships are being evaluated which could lead to future contractual obligations. Summary of Critical Accounting Estimates We believe that the following accounting policies and estimates involve a high degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our unaudited condensed consolidated financial condition and results of our operations. See Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report for a description of our other significant accounting policies. The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in those unaudited condensed consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. 39 Income Taxes Income taxes are recorded in accordance with Accounting Standard Codification (“ ASC ”) 740, “ Income Taxes ” (“ ASC 740 ”), which provides for deferred taxes using an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We account for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. We recognize any interest and penalties accrued related to unrecognized tax benefits as income tax expense. Recent Accounting Pronouncements See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details regarding recent accounting pronouncements. Segment Reporting We report segment information in the same way management internally organizes the business in assessing performance and making decisions regarding allocation of resources in accordance with ASC Topic 280, “ Segment Reporting .” We have a single reportable operating segment which operates as a single business platform. In reaching this conclusion, management considered the definition of the Chief Operating Decision Maker (“ CODM ”), how the business is defined by the CODM, the nature of the information provided to the CODM, how the CODM uses such information to make operating decisions, and how resources and performance are accessed. Our CODM is the Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. We have a single, common management team and our cash flows are reported and reviewed on a total-company basis. 40 Related Party Transactions On September 18, 2024, we entered into a consulting agreement in the amount of $500,000 with DRE Chicago, whose principal is Paramita Das. Ms. Das was previously our Chief Strategy Officer and Senior Advisor to our CEO. Additionally, as discussed above, in December 2024, we entered into a binding term sheet with DRE Chicago and other Investors, providing for loan in the principal amount of $250,000 to DRE Chicago, bearing interest at a rate of 15% per year, and maturing in March 2025 (the “ Maturity Date ”). In addition, we agreed to issue to DRE Chicago an aggregate of $375,000 in Common Stock as an Equity Kicker. In addition, DRE Chicago received warrants representing the right, exercisable within five years of the closing date, to receive up to 50% of Common Stock issued as an Equity Kicker, with each 10 warrants exercisable for one share of Common Stock at an exercise price of $115.00 in accordance with the private placement terms. As of December 31, 2025, we have repaid the principal amount of $250,000 along with accrued interest of $9,166 and issued 10,474 shares of Common Stock and 52,374 warrants to DRE Chicago. Ms. Das terminated her employment with us in November 2025 and is no longer considered a related party as of March 31, 2026. As discussed above, in December 2024, we entered into the Endurance Term Sheet with Endurance to provide for the Endurance Loan. In addition, we agreed to issue to Endurance $3,500,000 in Common Stock as an Equity Kicker. In addition, Endurance received warrants representing the right, exercisable within five years of the closing date, to receive up to 50% of Common Stock issued as an Equity Kicker, with each 10 warrants exercisable for one share of Common Stock at an exercise price of $115.00 in accordance with the private placement terms. As of December 31, 2025, we have 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. Private Warrants The Sponsor purchased from GPAC II an aggregate of 5,566,667 warrants at a price of $1.50 per warrant in a private placement that occurred simultaneously with the completion of our initial public offering (the “ Private Warrants ”). At closing of the Business Combination, we acquired the net liabilities for GPAC II including the Private Warrants. Each 10 Private Warrant entitles the holder to purchase one share of Common Stock at $115.0 per share. At March 31, 2026, there were 5,566,667 Private Warrants outstanding. As at March 31, 2026, the fair value of Private Warrants amounted to $912,377. We valued our Private Warrants based on the closing price of the Public Warrants since they are similar instruments. 41 Sponsor Earnout Shares As part of the closing of the Business Combination, we issued 100,000 shares to the Sponsor. These shares are subject to vesting (or forfeiture) based on achieving certain trading price thresholds following the closing (“ Sponsor Earnout Shares ”). Fifty percent of the Sponsor Earnout Shares will vest when the VWAP of the 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. Upon the occurrence of a change in control, any remaining unvested Sponsor Earnout Shares become vested. Unvested Sponsor Earnout Shares will be forfeited if vesting does not occur prior to the eighth anniversary of the Closing Date. We assess 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 March 31, 2026, the fair value of Sponsor Earnout Shares amounted to $4,700. Subsequent Events See Note 15 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details regarding subsequent events.