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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-03-19 · 1042 added, 424 removed, 2 unchanged (100% of the section changed)

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

The following discussion and analysis of the Company’s financial

condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere

in this report.

Cautionary Note Regarding Forward-Looking Statements

All statements other than

statements of historical fact included in this section and elsewhere in this Annual Report regarding the Company’s financial position,

business strategy and the plans and objectives of management for future operations, are forward-looking statements.

When used in this

Annual Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend”

and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements.

Such forward-looking

statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s

Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors

detailed in our filings with the SEC.

We are a blank check company

incorporated on November 3, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition,

share purchase, reorganization or similar business combination with one or more businesses or entities.

We intend to effectuate our initial

business combination using cash from the proceeds of the initial public offering and the sale of the private placement warrants, our shares,

debt or a combination of cash, equity and debt.

The issuance of additional shares in a business combination:

may significantly dilute the equity interest of existing investors, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;

may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;

could cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us;

may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants;

and may not result in adjustment to the exercise price of our Warrants (as defined below).

Similarly, if we issue debt or otherwise incur significant debt, it

could result in:

default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;

the acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;

our inability to pay dividends on our Class A ordinary shares;

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes;

and other disadvantages compared to our competitors who have less debt.

As indicated in the accompanying

financial statements, as of December 31, 2023 and 2022, we had approximately $22,000 and $101,000, respectively, of cash and negative

working capital of approximately $7,836,000 and $3,767,000, respectively.

Further, we expect to incur significant costs in the pursuit

of our initial business combination and if we cannot complete a business combination by July 14, 2024, we could be forced to wind up our

operations and liquidate unless we receive an extension approval from our shareholders.

We cannot assure you that our plans to complete

our initial business combination will be successful.

Extension of Combination Period

On January 11, 2023, we held

the 2023 Extension Meeting to consider the proposal to amend the Company’s amended and restated memorandum and articles of association

to extend the date by which the Company must complete its initial business combination from January 14, 2023 to a date no later than January

14, 2024 (the “2023 Extension Amendment Proposal”).

Our shareholders approved the 2023 Extension Amendment Proposal at the

2023 Extension Meeting and on January 13, 2023, we filed the 2023 Articles Amendment with the Registrar of Companies of the Cayman Islands.

In connection with the approval

of the 2023 Extension Amendment Proposal, the Sponsor agreed to (i) contribute to us as a loan, within ten (10) business days of the date

of the 2023 Extension Meeting, with $450,000 deposited into the Trust Account and (ii) contribute to us as a loan up to $1,350,000 in

nine equal installments to be deposited into the Trust Account for each of nine one-month extensions following the 2023 Articles Extension

On January 13, 2023, we issued

an unsecured promissory note (as amended, the “January 13, 2023 Promissory Note”) to the Sponsor and the Sponsor funded the

initial principal amount of $450,000.

The January 13, 2023 Promissory Note does not bear interest and was initially due and payable upon

closing of our initial business combination.

On February 13, 2024, GPAC and the Sponsor entered into an amendment to the January 13, 2023

Promissory Note to (1) extend the maturity date to the earlier of (i) July 14, 2024, (ii) the consummation of a business combination of

GPAC and (iii) the liquidation of GPAC and (2) increase the principal sum from $3,000,000 to $4,000,000.

In the event that we do not consummate

a business combination, the January 13, 2023 Promissory Note will be repaid only from amounts remaining outside of the Trust Account,

The proceeds of the January 13, 2023 Promissory Note will be deposited in the Trust Account.

Up to $1,500,000 of the total principal

amount of the January 13, 2023 Promissory Note may be converted, in whole or in part, at the option of the lender into warrants of us

at a price of $1.50 per warrant, which warrants will be identical to the private placement warrants issued to the Sponsor at the time

of our initial public offering.

As of December 31, 2023, an aggregate of approximately $2,409,383 has been drawn down on the January 13,

2023 Promissory Note and deposited into the Trust Account to cover the extension through January 14, 2024 and to pay for working capital.

In connection with the vote

to approve the 2023 Extension Amendment Proposal, the holders of 26,068,281 Class A ordinary shares, par value $0.0001 per share, properly

exercised their right to redeem their shares for cash at a redemption price of approximately $10.167 per share, for an aggregate redemption

amount of approximately $265,050,166.

After the satisfaction of such redemptions, the balance in our Trust Account was approximately $40,425,892.

Business Combination Agreement

November 21, 2023, the Company, entered into the Business Combination Agreement (as it may be amended, supplemented or otherwise modified

from time to time, the “Business Combination Agreement”), with First Merger Sub, Second Merger Sub, and Stardust Power Inc.,

a Delaware corporation (“Stardust Power”).

Business Combination Agreement provides for, among other things, the following Transactions:

(i) the Domestication;

(ii) following the

Domestication, First Merger Sub will merge with and into Stardust Power, with Stardust Power as the surviving company in the merger;

(iii) immediately following the First Merger, and as part of the same overall transaction as the First Merger, Stardust Power will merge

with and into Second Merger Sub, with Second Merger Sub being the surviving company of the Second Merger, and as a result of which the

Surviving Company will become a wholly-owned subsidiary of the Company.

At Closing, the Company will change its name to “Stardust

Power Inc.” and will continue trading on the Nasdaq Capital Market under the new symbols “SDST” and “SDSTW,”

respectively, following Closing.

At Closing, in connection with the Transactions, the Company and certain Stardust Power Stockholders

will enter into a Shareholder Agreement, a Registration Rights Agreement and a Lock-Up Agreement, each in form and in substance to be

agreed, to be effective upon the Closing.

Company and Stardust Power expect to incur significant, non-recurring costs in connection with consummating the Business Combination and

operating as a public company following the business combination.

Stardust Power may also incur additional costs to retain key employees.

All expenses incurred in connection with the Business Combination Agreement and the transactions contemplated thereby, including all legal,

accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees,

expenses and costs, provided that if the Closing occurs, the Company will bear and pay at or promptly after Closing all of the Company

and Stardust Power’s transaction expenses.

aggregate transaction expenses as a result of the business combination are expected to be approximately $10.0 million.

Such transaction

expenses do not include the deferred underwriting commissions incurred in connection with the Company’s initial public offering

because UBS Securities LLC and RBC Capital Markets, LLC, the underwriters for the Company’s initial public offering, have each agreed

to waive the deferred underwriting commission.

The per-share amount we will distribute to shareholders who properly exercise their redemption

rights will not be reduced by the transaction expenses and after such redemptions, the per-share value of shares held by non-redeeming

shareholders will reflect our obligation to pay the transaction expenses.

business combination is expected to close in the first half of 2024, prior to July 14, 2024, following the receipt of the required approval

by the Company’s shareholders and the fulfillment or waiver of other customary closing conditions.

Business Combination Agreement and the transactions contemplated thereby to occur at or immediately prior to the Closing are discussed

in further detail in Note 2 to the Company’s December 31, 2023 financial statements, which were approved by the boards of directors

of each of the Company and Stardust Power, are incorporated by reference herein.

Recent Developments

Extension of Combination Period

On January 9, 2024, we held

the 2024 Extension Meeting:

(i) to amend (the “2024 Articles Amendment”), by way of special resolution, the Company’s

amended and restated memorandum and articles of association to extend the date by which the Company has to consummate a business combination

from January 14, 2024 to July 14, 2024 for a total of an additional six months after January 14, 2024, unless the closing of a business

combination shall have occurred prior thereto;

(ii) to eliminate, by way of special resolution, from the Company’s amended and restated

memorandum and articles of association the limitation that the Company may not redeem Class A ordinary shares to the extent that such

redemption would result in the Company having net tangible assets of less than $5,000,001 in order to allow the Company to redeem Public

Shares irrespective of whether such redemption would exceed the Redemption Limitation;

and (iii) to provide, by way of special resolution,

that Public Shares may be issued to the Sponsor by way of conversion of Class B ordinary shares into Public Shares, despite the restriction

on issuance of additional Public Shares.

The shareholders of the Company approved the Proposals at the 2024 Extension Meeting and on January

11, 2024, the Company filed the 2024 Articles Amendment with the Registrar of Companies of the Cayman Islands.

In connection with 2024

Extension Meeting, the holders of 2,137,134 Class A ordinary shares properly exercised their right to redeem their shares for an aggregate

price of approximately $11.05 per share, for an aggregate redemption amount of approximately $23,615,331.

Following the redemptions, 1,794,585

Class A ordinary shares remain outstanding.

In connection with the 2024

Extension Meeting, the Sponsor entered into the Non-Redemption Agreements with several unaffiliated third parties, pursuant

to which such third parties agreed not to redeem (or to validly rescind any redemption requests on) an aggregate of 1,503,254 Class A

ordinary shares in connection with the 2024 Extension Amendment Proposal.

In exchange for the foregoing commitments not to redeem such

Class A ordinary shares, the Sponsor agreed to transfer or cause to be issued for no consideration an aggregate of 127,777 shares

of the Company and simultaneous forfeiture of 127,777 shares of the Company in connection with the Company’s completion of its initial

business combination.

On February 13, 2024, the

Company and the Sponsor entered into an amendment to the January 13, 2023 Promissory Note to (1) extend the maturity date of the January

13, 2023 Promissory Note to the earlier of (i) July 14, 2024, (ii) the consummation of a business combination of the Company and (iii)

the liquidation of the Company and (2) increase the principal sum of the January 13, 2023 Promissory Note from $3,000,000 to $4,000,000.

On February 13, 2024, the

Company and the Sponsor entered into an amendment to the August 1, 2022 Promissory Note, as amended on January 13, 2023, to extend the

maturity date of the August 1, 2022 Promissory Note to the earlier of (i) July 14, 2024, (ii) the consummation of a business combination

of the Company and (iii) the liquidation of the Company.

Nasdaq Delisting Notices

On January 16, 2024, we received

a notice from the staff of the Listing Qualifications Department of Nasdaq indicating that, unless we timely request a hearing before

the Panel, our securities (shares, warrants, and rights) would be subject to suspension and delisting from The Nasdaq Capital Market at

the opening of business on January 25, 2024, due to our non-compliance with Nasdaq IM-5101-2, which requires that a SPAC must complete

one or more business combinations within 36 months of the effectiveness of its initial public offering registration statement.

registration statement for its initial public offering became effective on January 14, 2021, it was required by this rule to complete

its initial business combination by no later than January 14, 2024.

On January 23, 2024, we timely submitted the Hearing Request to appeal

Nasdaq’s determination to the Panel to request sufficient time to complete a business combination, pursuant to the procedures set

forth in the Nasdaq Listing Rule 5800 Series.

The Hearing Request will stay the suspension of our securities and the termination of registration

of the securities with Nasdaq as required by the rules of the SEC pending the Panel’s decision and, therefore, Nasdaq’s notice

has no immediate effect on the listing of our securities on Nasdaq.

The Panel’s hearing is scheduled to be held on April 2, 2024.

On January 29, 2024, we received

a notice from the Nasdaq stating that we failed to hold an annual meeting of shareholders within 12 months after its fiscal year ended

December 31, 2022, as required by Nasdaq Listing Rule 5620(a).

This matter serves as an additional basis for delisting our securities

from Nasdaq and the Panel will consider this additional matter in its decision regarding our continued listing on the Nasdaq Capital Market.

GPAC presented its views with respect to this additional deficiency to the Panel in writing on February 5, 2024.

There can be no assurance

that the Panel will grant our request for continued listing or that we will evidence compliance within any extension period that may be

granted by the Panel.

Results of Operations

For the period from November

3, 2020 (date of inception) to December 31, 2023, our activities consisted of formation and preparation for the initial public offering

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

As such, we had no operations or significant operating expenses until after the completion of the initial public offering

on January 2021.

Our normal operating costs

since January 14, 2021 include costs associated with our search for an initial business combination (see below), costs associated with

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

for such Sponsor provided administrative services aggregate approximately $300,000 for each of the years ended December 31, 2023 and 2022.

Costs associated with our governance and public reporting have increased since the initial public offering and were approximately $751,000

and $512,000, respectively, for the years ended December 31, 2023 and 2022 including costs associated with the 2023 Extension Meeting,

and the 2024 Extension Meeting.

Work associated with reviewing potential business combinations and professional and regulatory costs associated

with that was approximately $4,146,000 and $1,167,000 in the years ended December 31, 2023 and 2022, respectively.

During the year ended December

31, 2023, the Company negotiated settlement and release agreements with various creditors in exchange for certain payments made and resulting

in the reversal of accruals totaling approximately $2,961,000 which is included as a credit to operating expenses in the accompanying

Condensed Statements of Operations.

Other income (expense) includes

interest income, the write off contingent warrants associated with shares redeemed and the change in the fair value of the public warrants

and private placement warrants at each reporting date.

Interest income was approximately $2,278,000 and $4,600,000, respectively, for

the years ended December 31, 2023 and 2022.

The Company is required to measure the fair value of the public warrants and private placement

warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company’s operating

results for each current period.

The change in fair value of warrants was an other income item of an aggregate of approximately $0 and

$12,453,000, respectively in the years ended December 31, 2023 and 2022, respectively.

Other income (expense) for the years ended December

31, 2023 and 2022 also includes charges to other expense aggregating approximately $130,000 and $0, respectively, for write-off contingent

warrants associated with shares redeemed.

There were no income tax expenses

for the years ended December 31, 2023 and 2022 because we are a Cayman Islands exempted company and are not subject to income tax in the

United States or in the Cayman Islands.

We did not withdraw any interest from the Trust Account in the years ended December 31, 2023 and

2022 other than the amounts withdrawn to pay for significant redemptions of our redeemable Class A ordinary shares, which is described

in “—Overview,” “—Recent Developments” and below.

Liquidity and Capital Resources

On January 14, 2021, we consummated

the initial public offering of an aggregate of 30,000,000 units at a price of $10.00 per unit generating gross proceeds of approximately

$300,000,000 before underwriting discounts and expenses.

Simultaneously with the consummation of the initial public offering, we consummated

the private placement of 5,566,667 private placement warrants, each exercisable to purchase one share of our Class A ordinary shares at

$11.50 per share, to the Sponsor, at a price of $1.50 per private placement warrant, generating gross proceeds, before expenses, of approximately

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

At December 31, 2023 and 2022, the proceeds

in the Trust Account were invested in a money market fund that invests solely U.S.

government treasury bills.

The net proceeds from the

initial public offering and private placement were approximately $301,471,000, net of the non-deferred portion of the underwriting commissions

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

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

$300,000,000 of the proceeds of the initial public offering

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

to pay taxes, if any).

At December 31, 2023 and 2022, we had approximately $21,828 and $101,000, respectively, of cash available outside

of the Trust Account to fund our activities until we consummate an initial business combination.

On January 11, 2023, certain

shareholders elected to redeem 26,068,281 Class A ordinary shares at $10.167 per share, approximately $265,050,000, from the Trust Account

following the 2023 Extension Meeting.

Subsequent to December 31,

2023, on January 9, 2024, in connection with the 2024 Extension Meeting, holders of 2,137,134

Class A ordinary shares exercised their right to redeem their shares for cash at a redemption price of approximately $11.05 per

share, for an aggregate redemption amount of approximately $23,615,331.

Following the redemptions, 1,794,585 Class A ordinary shares remain

Further, in connection with the 2024 Extension Meeting, the Company entered into Non-Redemption Agreements with holders of

1,503,254 Class A ordinary shares in exchange for the transfer of 127,777 shares.

Until the consummation of

the initial public offering, the Company’s only sources of liquidity were an initial purchase of our Class B ordinary shares for

$25,000 by the Sponsor, and the availability of loans to us of up to $300,000 by our Sponsor under an unsecured promissory note (the “Promissory

Note”), a total of $199,000 was loaned by the Sponsor against the issuance of the Promissory Note.

The Promissory Note was non-interest

bearing and was paid in full on January 14, 2021 in connection with the closing of the initial public offering, accordingly, no amounts

are available or were outstanding under the Promissory Note at December 31, 2023 and 2022.

Mandatory Liquidation and Going Concern

At December 31, 2023 and 2022,

the Company had approximately $22,000 and $101,000, respectively, in cash and approximately $7,836,000 and $3,767,000, respectively, in

negative working capital.

The Company has incurred significant costs and expects to continue to incur additional costs in pursuit of its

business combination.

Further, if the Company cannot complete an initial business combination by the Termination Date, it could be forced

to wind up its operations and liquidate.

These conditions raise substantial doubt about the Company’s ability to continue as a going

concern for a period of time within one year after the date that the financial statements are issued.

In connection with its financial

position and intention to complete a business combination, the Company has secured financing from its Sponsor.

The Company’s plan

to deal with these uncertainties is to use the financing from the Sponsor to complete a business combination prior to the Termination

There is no assurance for the Company that (1) the financing from the Sponsor will be adequate and (2) plans to consummate a business

combination will be successful or successful by the Termination Date.

The financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

On August 1, 2022, the Company

issued a promissory note (the “August 1, 2022 Promissory Note”) in the principal amount of up to $2,000,000 to its Sponsor.

The August 1, 2022 Promissory Note was issued in connection with advances the Sponsor may make to the Company for expenses reasonably

related to its business and the consummation of the business combination.

The August 1, 2022 Promissory Note bears no interest and was

due and payable upon the earlier to occur of (i) January 14, 2023, and (ii) the consummation of an initial business combination.

13, 2023, the Company and the Sponsor agreed to extend the date of maturity of the August 1, 2022 Promissory Note to the earlier of (i)

January 14, 2024, (ii) the consummation of a business combination of the Company and (iii) the liquidation of the Company.

13, 2024, the Company and the Sponsor agreed to further extend the date of maturity of the August 1, 2022 Promissory Note to the earlier

of (i) July 14, 2024, (ii) the consummation of a business combination of the Company and (iii) the liquidation of the Company.

As of December

31, 2023 and December 31, 2022, the outstanding principal balance under the August 1, 2022 Promissory Note was approximately $755,000

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

financial statements for the year ended December 31, 2024, and the related notes thereto contained elsewhere in this Annual Report

on Form 10-K.

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

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

and its consolidated subsidiaries at or after the

consummation of the Business Combination.

Terms otherwise not defined herein, have the meaning

given to such terms in the Proxy Statement/Prospectus in the section titled “Certain Defined Terms” beginning on page iii

thereof, and such definitions are incorporated herein by reference.

Note Regarding Forward-Looking Statements

of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information

with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.

of many factors, including those factors described or referenced in this Annual Report under the heading “Risk Factors,”

our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the

following discussion and analysis.

You should carefully read the section titled “Risk Factors” in this Annual Report to gain

an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

also see the section titled “Cautionary Statement Regarding Forward-Looking Statements” in this Annual Report.

Overview and History

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

On March 16, 2023, Legacy Stardust Power

was organized as a corporation in the State of Delaware with operations commencing on March 16, 2023.

The ownership interests of Stardust

Power LLC were subsequently transferred to Stardust Power Inc.

On July 8, 2024, former Stardust Power Inc.

was renamed Stardust Power

Operating Inc.

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

The Company is in the process of creating capacity to manufacture battery grade lithium products, primarily for the EV market, by developing a large-scale lithium refinery in the United States.

Stardust Power seeks to become a sustainable,

cost-effective supplier of battery grade lithium products, by its innovative approach in the development of a large central refinery

optimized for multiple inputs of lithium brine inputs in Oklahoma.

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

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

military, and OEMs.

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

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

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

security priority for the U.S.

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

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

state incentives were based on initial job creation, equipment procurement, training and recruitment incentives, property tax exemptions,

sales tax exemptions, and capital expenditure projections submitted to the Oklahoma Department of Commerce in the first quarter of 2023

and could be subject to changes as the Company would progress in setting up the Facility and commercial production of battery grade lithium

in the future.

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

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

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

lithium products.

and Sale Agreement for Site

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

Southside Industrial Park, Muskogee, Oklahoma for a total of $1,662,030.

On December 16, 2024, the agreement was finalized and the

title to the land was transferred in the Company’s name.

November 21, 2023, Legacy Stardust Power entered into the Business Combination Agreement GPAC II, First Merger Sub and Second Merger

July 8, 2024, Legacy Stardust Power completed the Business Combination contemplated by the Business Combination Agreement.

GPAC II deregistered

as a Cayman Islands exempted company and domesticated in the State of Delaware as a Delaware corporation.

As per the Business Combination

Agreement, First Merger Sub merged into Legacy Stardust Power, with Legacy Stardust Power being the surviving corporation (the effective

time of such merger being the “First Effective Time”).

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.

per the Business Combination Agreement:

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

prior to the First Effective Time converted into the right to receive the number of shares of combined company (“Newco”)

common stock (“Newco Stock”) equal to the merger consideration divided by the number of shares of the Company fully diluted

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

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

to the First Effective Time converted into a number of shares of Newco Stock equal to the number of shares of Legacy Stardust Power

Common Stock subject to such Stardust Power Restricted Stock multiplied by the per share consideration (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.

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

previously submitted, the Company issued 127,777 ordinary shares of Stardust Power at a price per share of approximately $10.00 per

share at closing of the Business Combination.

Additionally,

the Combined Company issued one million shares of Newco Stock to the Sponsor as additional merger consideration that vest in the

event that prior to the eighth anniversary of the closing of the Business Combination.

Fifty percent of the Sponsor Earnout Shares

will vest when the volume-weighted average price (“VWAP”) of the Common Stock price equals or exceeds $12.00 per share

for a period of 20 trading days in a 30 trading day period, and the remaining fifty percent of the Sponsor Earnout Shares will vest

when the VWAP of the Common Stock price equals or exceeds $14.00 per share for a period of 20 trading days in a 30 trading day period,

or are otherwise forfeited.

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

Additionally,

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

that vest in the event that prior to the eighth anniversary of the closing of the Business Combination, the volume-weighted average

price of GPAC II common stock is greater than or equal to $12.00 per share for a period of 20 trading days in any 30-trading-day

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

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

Power Common Stock.

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

Power Common Stock.

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

the PIPE Subscription Agreement in connection with the Business Combination.

Stock Purchase Agreements

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

Principal Capital II.

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

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

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

to time during the term of the Purchase Agreement.

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

sales, are solely at the option of the Company.

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.

Upon 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 as a consideration for this agreement.

The Company issued 55,826 shares of Common Stock through December

31, 2024, aggregating to net proceeds of $260,927 under the Purchase Agreement.

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

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 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.

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.

to the year end, the Company consummated a public offering of an aggregate of (i) 4,792,000 shares of Common Stock and (ii) Common

Stock purchase warrants to purchase up to 4,792,000 shares of Common Stock (the “Common Warrant Shares”).

Each share of

Common Stock was sold at a public offering price of $1.20 and associated Common Warrant to purchase one share of Common Warrant

Share was sold with an exercise price of $1.30.

The Company received aggregate gross proceeds of approximately $5.75 million, before

deducting placement agent fees and other offering expenses.

The Company intends to use the proceeds of this 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”).

On August 4, 2024, the Company entered into the Primero

Agreement 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,

is approximately $4.7 million, in the aggregate, subject to customary potential adjustments and is due for completion in the first half

Note and Convertible Equity Agreement Transactions

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

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

The funds were received from American Investor Group Direct LLC (“AIGD”),

an unrelated third party, through its entity which is currently being managed under the purview of an investment management agreement

between them and VCP (a related party) in consideration for which VCP is paid investment

management fees.

Additionally, the August 2023 SAFE note provides AIGD with certain rights of conversion upon an equity financing, or

cash repayment or other form of repayment upon a change in control or dissolution.

On November 18, 2023, Legacy Stardust Power amended

the August 2023 SAFE note (the “amended August 2023 SAFE”), which introduced a discount rate of 20% to (a) the lowest price

per share of preferred stock sold in the preferred stock purchase or (b) the listing price of the Combined Company Common Stock upon

consummation of a SPAC transaction or IPO.

On November 18, 2023, Legacy Stardust Power also entered into a second simple agreement for

future equity with AIGD for an aggregate amount of $3,000,000 (the “November 2023 SAFE note”) under the same terms and conditions

as the amended August 2023 SAFE note.

On February 23, 2024, Legacy Stardust Power entered into a third SAFE note with an individual for

an aggregate amount of $200,000 (the “February 2024 SAFE note”, and together with the August 2023 SAFE note and the November

2023 SAFE note, the “SAFE notes”).

The SAFE notes provided Legacy Stardust Power an option to call for additional preferred

stock up to $25,000,000 based on the contingent event of SAFE note conversion and notice issued by the Board, and achievement of certain

milestones, for up to 42 months following such conversion.

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

The agreement

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

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

On April 24, 2024, Legacy Stardust Power amended and

restated the August 2023 SAFE note and the November 2023 SAFE note.

On May 1, 2024, Legacy Stardust Power amended and restated the February

2024 SAFE note.

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

Immediately prior to

the First Effective Time, the cash received pursuant to the SAFE notes automatically converted into 138,393 shares of Stardust Power

Common Stock.

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

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

Immediately prior

to the First Effective Time, the cash received pursuant to the convertible equity agreements automatically converted into 55,889 shares

of Legacy Stardust Power Common Stock.

Notes with Related Parties

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

These notes payable provided Legacy Stardust Power

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

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

As of December 31, 2024, the Company has repaid all the notes payable.

in QX Resources and IRIS Metals Limited

October 2023, Legacy Stardust Power purchased 13,949,579 ordinary shares (1.26% of the total equity) of QXR, for $200,000.

This investment in

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

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

Lithium Brine Project in SaltFire Flat, California, for which QXR has a binding option to purchase agreement

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

Legacy Stardust Power is not

a direct party to the Earn-in Venture and accordingly has no direct or indirect economic or controlling interest either in the Project

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

No formal off-take agreement has been executed as

of December 31, 2024.

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

The Company neither has a controlling financial interest nor does it exercise significant influence over QXR.

the investment in QXR’s ordinary shares does not result in either the consolidation or application of equity method of accounting

for the Company.

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 $1.6 Million.

This investment in the ordinary shares if IRIS

Metals allows the Company to explore strategic partnership with, or investment in, IRIS Metals, including without limitation, a commercial

off take arrangement for battery grade lithium production, financing or other investments in IRIS Metals or its affiliates.

off take agreement has been executed as at December 31, 2024.

Further no material expenses have been incurred towards due diligence during

the year ended December 31, 2024.

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.

and licensing agreements

On January 28, 2025, the Company entered

into a non-binding letter agreement with Sumitomo, 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.

On February 7, 2025, the Company executed an

exclusive 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 processes and systems (including the KMX VMD Units) for the purpose of the

Company’s use of the technology in its refining and upstream operations.

Among other obligations set forth in the Agreement,

the Company shall be required to exclusively purchase all KMX VMD Units from KMX 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 Common Stock (the “Royalty Shares”).

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, bearing interest at a rate of 15% per year, and maturing in March 2025 (the “Maturity

The Term Sheet contained customary representations and warranties and customary events of default.

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.

In 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) 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.

In addition, Endurance

will receive warrants representing the right, exercisable within five years of the closing date, 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.

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 default.

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.

In 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.

In addition, the Lenders will receive warrants representing the right, exercisable within five

years of the closing date, 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.

The Company is yet to issue the equity shares and warrants to the Lenders as

of the date of the issuance of the consolidated financial statements.

Factors Affecting Our Performance

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

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

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

in our Prospectus and this Annual Report.

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

Commercial Operations

are a development stage company, and have purchased the site in Southside Industrial Park, Muskogee, Oklahoma.

The critical issue analysis,

phase I ESA, geotechnical study, and readiness assessment of the site in Southside Industrial Park,

Muskogee, Oklahoma has been conducted, and we may be required to conduct other relevant studies.

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

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

25,000 metric tpa.

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

capacity of up to 50,000 tpa.

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

brine inputs.

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

It is Stardust Power’s

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

be blended, in order to produce a consistent feedstock.

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

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

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

and executing agreements with them at favorable terms.

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

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

Our management

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

cost efficiency.

We would also have to maintain technology arrangements with existing strategic affiliations on whose patented and

proprietary processes we depend on, as well as forging 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

These affiliations will enable us to refine and sell battery grade lithium at competitive prices, which in turn helps secure

the growth and profitability of our business operations in the long term.

Capital Raise

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

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

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

from larger companies, protection of proprietary technology of our strategic partners, and dependence on key individuals.

Our consolidated financial statements have been presented on the basis that the Company is a going concern, which contemplates the realization

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

The Company has not earned any revenue and has been operating

at a loss since inception.

The Company has an accumulated deficit and stockholders’ deficit.

We believe that the cash on hand and

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

and capital expenditure requirements for at least the next twelve months.

These conditions raise substantial doubt about our ability

to continue as a going concern for one year from the issuance of these consolidated financial statements.

As a development

stage company, Stardust Power needs to raise additional capital to realize its business objectives.

Our long-term success and ability

to continue as a going concern is dependent upon our ability to successfully raise additional capital or financing, or successfully enter

into strategic partnerships.

Until commercial production is achieved from our planned operations, we will continue to incur operating

and investing net cash outflows associated with, among other things, maintaining and acquiring exploration properties and undertaking

ongoing exploration activities.

Operating History

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.

As Legacy Stardust Power was incorporated on March 16, 2023, the period from March 16, 2023 (inception) to December 31, 2023,

is not comparable to the year ended December 31, 2024.

Business Metrics, Non-GAAP Measure

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

business metrics.

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

Material Cost/ton :

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

As this may be obtained from various sources,

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

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

The weighted average method also helps in calculating the gross margin

on a per-ton basis.

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

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

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

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

the difference between the floor and spot price.

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

It includes both direct and indirect costs.

It also has contingency costs built

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

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

the appropriate technology and set-up.

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

It helps in measuring how much profit

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

interest or tax.

The lower multiple reflects the efficient functioning of the management.

Utilization :

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

on two key factors:

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

for its maintenance.

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

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

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

and Macroeconomic Conditions

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

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

or volatility in capital markets.

of Results of Operations

have not generated any revenue to date.

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

lithium primarily to the EV market.

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

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

of Goods Sold

have not sourced any raw material to date.

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

as a by-product of their exploration and extraction processes.

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

feedstock, including producers from the oil and gas industry.

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

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

and administrative

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

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

These consist primarily of consulting services (including

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

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

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

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

We expect our general and administrative expenses

will increase in absolute dollars over time as we continue to invest in initially setting up our Facility, and subsequently in the

growth of our business recruit more employees, and incur costs associated with being a publicly traded company with respect to

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

Income (Expenses)

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

During the year ended December 31, 2024, the

Company issued promissory notes of $176,000 and $316,000 to IGX Minerals LLC and IG Lithium LLC respectively.

These notes carry an interest

rate of 6% with maturity date of February 28, 2025, and July 1, 2025, respectively.

The Company is in active discussion in negotiating the terms for repayment of the promissory note issued to IGX and

is evaluating multiple options including a possible strategic investment.

expense is comprised of interest payable on the Insurance Funding loans and short-term loans.

Company entered into a financing agreement of $510,000 for the purchase of a D&O insurance policy with AFCO Insurance Premium

The Company made a downpayment of $44,162, which was applied to the loan amount at the time of the loan agreement.

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

Payments include a stated interest rate of 8.46% and are

secured against a lien on the insurance policy.

issued a Term Sheet to Endurance in the aggregate principal amount of $1,750,000, bearing interest at a rate of 15% per year, and maturing

in March 2025.

issued Term Sheets to several lenders, providing for loans in the aggregate principal amount of $1,800,000, bearing interest

at a rate of 15% per year, and maturing in March 2025.

Interest expense also included

interest on a Legacy Stardust Power financing agreement of $80,800 for the purchase of an insurance policy with First Insurance Funding.

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

The debt was fully paid off as

of December 31, 2024.

charges are comprised of cost of issuance of short-term loans and the accretion

impact related to the Common Stock to be issued to lenders per the Equity Kicker related to these loans.

This also includes cost incurred

to enter into the Purchase Agreement with B Riley Principal Capital II and the change in fair value of the Company’s make-whole

provision related to the Common Stock Purchase Agreement.

in fair value of investment in equity securities

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

such as the investment in QXR and IRIS Metals, that need to be recorded in the consolidated statements of operations for each reporting period, based

on readily available quoted prices for such investment.

in fair value of SAFE notes and convertible notes

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

in fair value of SAFE notes and convertible notes that have been classified as liability instruments in the consolidated financial statements,

which need to be recorded in the consolidated statements of operations for each reporting period, based on third party valuations carried

out at period end.

Upon consummation of the Business Combination on July 8, 2024, the SAFE notes and convertible notes were converted

into Common Stock.

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 Sponsor which have been classified as liability instruments in the consolidated financial

statements, that need to be recorded in the consolidated statements of operations for each reporting period, based on third party valuations

carried out at period end.

in fair value of warrant liability

in fair value of warrant liability relates to movements in fair value of

Public Warrants and Private Warrants which have been classified as liability instruments in the consolidated financial statements, that

need to be recorded in the consolidated statements of operations for each reporting period, based on fair value at period end.

for income taxes

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

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

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

of Operations

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

from March 16, 2023 (inception) through

and administrative expenses

$ (17,972,828 )

$ (2,675,698 )

$ (15,297,130 )

income (expenses)

note issuance costs

transaction costs

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

$ (5,781,035 )

$ (1,117,887 )

$ (4,663,148 )

$ (23,753,863 )

$ (3,793,585 )

$ (19,960,278 )

Stardust Power was incorporated on March 16, 2023, hence the period from

March 16, 2023 (inception) to December 31, 2023, is not comparable to the year ended December 31, 2024.

We have not earned any revenue since inception.

of Goods Sold

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

and Administrative Expenses

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

organization structure, advisory marketing advisory services and other consulting, legal services and advisory services with respect

to the Company’s organization, fees for strategic investments evaluation and employee related compensation expenses

representing base salary, benefits and stock-based compensation expense.

The details of these expenses are as follows:

and consulting fees

and book-keeping services

and related taxes

Marketing and advertisement

the year ended December 31, 2024, general and administrative expenses increased

compared to the period from March 16, 2023 (inception) through December 31, 2023, primarily due to higher employee related costs driven

by an increase in stock based compensation expense and number of employees, increase in legal and professional services such as legal

fees, professional and consulting fees including stock based compensation expense for consultants, accounting advisory, statutory auditor

fees, technical consultants and business consulting and an increase in business development and other administrative expenses in line

with growth in operations.

The increase was partially offset by decrease in marketing and advertisement services with respect to the Company’s

organization incurred in comparative period.

Income (Expenses)

note issuance costs

note issuance costs of $Nil for the year ended December 31, 2024, and $466,302 for the period from March 16, 2023 (inception) through December

31, 2023, respectively, primarily represent $435,000 of capital advisory services fees paid to related party for sourcing the SAFE note

commitment from the investor and $31,302 of legal costs incurred towards setting up and executing the SAFE note agreements.

transaction costs

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

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

other SPAC merger opportunities that the Company ultimately did not execute, including $100,000 of fees paid to a related party.

income of $10,838 for the year ended December 31, 2024, and $Nil for the period from March 16, 2023 (inception) through December 31, 2023,

respectively, relate to interest earned on promissory notes issued during the current year ended December 31, 2024.

the year ended December 31, 2024, interest expenses increased compared to the period from March 16, 2023 (inception) through

December 31, 2023, primarily due to interest expense incurred on the financing agreement for

the Company’s purchase of directors and officers and other insurance policies.

Additionally, the Company entered into finance

agreements for short-term loans with various lenders during the year ended December 31, 2024, resulting in an increase in interest

expense of $42,626.

increase in finance charges of $7,579,713 during the year ended December

31, 2024, compared to the period from March 16, 2023 (inception) through December 31, 2023, is due to cost of issuance of short-term loans

and the accretion impact related to the common stock to be issued to lenders per the Equity Kicker related to these loans.

This also includes

cost incurred to enter into the common stock purchase agreement with B Riley Principal Capital II and the change in fair value of the

Company’s make-whole provision related to the common stock purchase agreement.

The Company did not have any similar financing arrangement

in the prior comparative period.

in fair value of investment in equity securities

decrease in the fair value of investment in equity securities of $322,134 during the year ended December 31, 2024, is due to change

in the fair value of investment in QXR and IRIS Metals based on readily available quoted prices for such investment.

increase in the fair value of investment of $18,556 during the period from March 16, 2023 (inception) through December 31, 2023, is

due to change in the fair value of investment in QXR.

in fair value of SAFE notes

increase in fair value of SAFE notes of $955,000 and $212,200 during the year ended December 31, 2024, and the period from March 16,

2023 (inception) through December 31, 2023, respectively, is due to changes in estimates related to inputs used in the valuation of SAFE notes, which have been classified as liability instruments,

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

The SAFE notes, which had previously been

classified as liability instruments, were converted to equity following the consummation of the Business Combination with GPAC II on July

The Company had not issued any such SAFE notes post business combination consummation.

in fair value of convertible notes

increase in fair value of convertible notes of $471,400 during the year ended December 31, 2024, compared to the period from March 16, 2023 (inception) through December

31, 2023, is due to changes in estimates related to inputs used in the valuation of convertible notes, which have been classified as liability

instruments, based on third party valuations.

The convertible notes, which had previously been classified as liability instruments, were

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

The Company had not issued any

such convertible notes in the comparative period.

in fair value of sponsor earnout shares

decrease in fair value of sponsor earnout shares by $4,076,200 for year

ended December 31, 2024, compared to the period from March 16, 2023 (inception) through December 31, 2023, relates to movements in fair

value of earnout shares issued to the Sponsor, at the closing of the Business Combination, which have been classified as liability

instruments in the consolidated financial statements, that need to be recorded in the consolidated statements of operations for each reporting

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

The Company had not issued any such sponsor earnout shares in the comparative

in fair value of warrant liability

The increase in fair value of warrants of $511,342 for the year ended December

31, 2024, compared to the period from March 16, 2023 (inception) through December 31, 2023, relates to movements in fair value of Public

and Private Warrants which have been classified as liability instruments in the consolidated financial statements, that need to be recorded

in the consolidated statements of operations for each reporting period, based on fair value at period end.

The Company had not issued

any such warrants in the comparative period.

Other income of $21,970 for the year ended December 31, 2024, relates to insurance refund received.

the year ended December 31, 2024, and for the period from March 16, 2023

(inception) through December 31, 2023, the tax expense is $Nil, due to net losses incurred during these periods.

We do not carry any deferred

tax assets on the consolidated balance sheets as at December 31, 2024 and December 31, 2023, primarily due to net operating loss carry

forwards resulting from incurred net operating losses and full valuations allowance of those losses, as our ability to realize future

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

As a result of this uncertainty,

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

the year ended December 31, 2024, the Company incurred a net loss of $23,753,863 and for the period from March 16, 2023 (inception) through

December 31, 2023, the Company incurred a net loss of $3,793,585.

Since the Company is yet to start commercial production of battery

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

tasks and set up the Facility and executed supply agreements.

and Capital Resources

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

$52,618,948 and $3,793,585 respectively.

On January 3, 2023, the Company

issued a promissory note (the “January 3, 2023 Promissory Note”) in the principal amount of up to $250,000 to its Sponsor.

The January 3, 2023 Promissory Note was issued in connection with advances the Sponsor may make to the Company for expenses reasonably

related to its business and the consummation of a business combination.

The January 3, 2023 Promissory Note bears no interest and is due

and payable upon a business combination.

As of December 31, 2023, no amounts have been drawn down and there was no outstanding principal

balance under the January 3, 2023 Promissory Note.

At the election of the payee, $250,000 of the unpaid principal amount of the January

3, 2023 Promissory Note may be converted into our warrants at a price of $1.50 per warrant, each warrant exercisable for one Class A ordinary

share of the Company.

The warrants shall be identical to the private placement warrants issued to the Sponsor at the time of the Company’s

initial business combination.

On January 13, 2023, the Company

issued a promissory note (the “January 13, 2023 Promissory Note”) in the principal amount of up to $3,000,000 to its Sponsor.

The January 13, 2023 Promissory Note was issued in connection with advances the Sponsor may make to the Company for contributions to the

Trust Account in connection with the 2023 Extension Meeting and other expenses reasonably related to its business and the consummation

of a business combination.

The January 13, 2023 Promissory Note bears no interest and was initially due and payable upon a business combination.

At the election of the payee, all or a portion of the unpaid principal amount of the January 13, 2023 Promissory Note may be converted

into warrants, at a price of $1.50 per warrant, each warrant exercisable for one Class A ordinary share of the Company.

The warrants shall

be identical to the private placement warrants issued to the Sponsor at the time of the initial business combination.

On February 13,

2024, the Company and the Sponsor entered into an amendment to the January 13, 2023 Promissory Note to (1) extend the maturity date of

the January 13, 2023 Promissory Note to the earlier of (i) July 14, 2024, (ii) the consummation of a business combination of the Company

and (iii) the liquidation of the Company and (2) increase the principal sum of the January 13, 2023 Promissory Note from $3,000,000 to

During the year ended December

31, 2023, the Company made drawdowns aggregating approximately $2,726,000 under the January 13, 2023 Promissory Note in order to pay extension

payments and for working capital.

The Company records such notes at par value and believes that the fair value of the conversion feature

is not material based upon the trading price of the similarly termed public warrants.

At December 31, 2023 and 2022, the outstanding principal

balance under the January 13, 2023 Promissory Note was approximately $2,726,000 and $0, respectively.

We expect our principal liquidity

requirements during this period to include legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating

and documenting a successful business combination with Stardust Power;

legal and accounting fees related to regulatory reporting obligations;

payment for investment professionals’ services and support services;

Nasdaq continued listing fees;

and general working capital

that will be used for miscellaneous expenses and reserves.

Our estimates of expenses may differ materially from our actual expenses.

In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants or

other expenses with respect to our proposed business combination, although we do not have any current intention to do so.

Moreover, we may need to obtain

additional financing to complete our initial business combination, either because the transaction requires more cash than is available

from the proceeds held in our Trust Account, or because we become obligated to redeem a significant number of our public shares upon completion

of a business combination, in which case we may issue additional securities or incur debt in connection with such business combination.

If we have not consummated our initial business combination by the Termination Date because we do not have sufficient funds available

to us, we will be forced to cease operations and liquidate the Trust Account.

The Company has, as extended

at the 2024 Extension Meeting, until July 14, 2024 to complete an initial business combination.

If the Company does not complete an initial

business combination by the Termination Date, the Company will:

(i) cease all operations except for the purposes of winding up;

promptly as reasonably possible, but not more than ten business days thereafter, redeem the public Class A ordinary shares for a pro rata

portion of the Trust Account, including interest earned on funds held in the Trust Account and not previously released to pay income taxes,

but less up to $100,000 of such interest to pay dissolution expenses;

and (iii) as promptly as reasonably possible following such redemption,

dissolve and liquidate the balance of the Company’s net assets to its creditors and remaining shareholders, as part of its plan

of dissolution and liquidation.

The initial shareholders have waived their redemption rights with respect to their founder shares;

if the initial shareholders or any of the Company’s officers, directors or their affiliates acquire Class A ordinary shares in or

after the initial business combination, they will be entitled to a pro rata share of the Trust Account upon the Company’s redemption

or liquidation in the event the Company does not complete an initial business combination within the required time period.

In the event of such liquidation,

it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will

be less than the price per unit in the initial public offering.

Off-balance sheet financing arrangements

We have no obligations, assets

or liabilities which would be considered off-balance sheet arrangements.

We do not participate in transactions that create relationships

with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established

for the purpose of facilitating off-balance sheet arrangements.

We have not entered into any

off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities,

or entered into any agreements for non-financial assets.

Contractual obligations

At December 31, 2023 and 2022,

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

In connection with

the initial public offering, we entered into an Administrative Support Agreement with the Sponsor, pursuant to which the Company pays

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

We may enter into engagement

letters or agreements with various consultants, advisors, professionals and others in connection with an initial business combination.

The services under these engagement letters and agreements can be material in amount and in some instances can include contingent or success

Contingent or success fees

(but not deferred underwriting compensation) would be charged to operations in the quarter that an initial business combination is consummated.

In most instances (except with respect to our independent registered public accounting firm), these engagement letters and agreements

are expected to specifically provide that such counterparties waive their rights to seek repayment from the funds in the Trust Account.

The JOBS Act contains provisions

that, among other things, relax certain reporting requirements for qualifying public companies.

We will qualify as an “emerging

growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective

date for private (not publicly traded) companies.

We are electing to delay the adoption of new or revised accounting standards, and as

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

for non-emerging growth companies.

As a result, our financial statements may not be comparable to companies that comply with new or revised

accounting pronouncements as of public company effective dates.

Additionally, we are in the

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

Subject to certain

conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not

be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial

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

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

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

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

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

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

These exemptions will apply for a period of five years

following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever

Critical Accounting Estimates

The requirement under 229.303

(Item 303) management’s discussion and analysis of financial condition and results of operations is critical accounting estimates.

Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant

level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on the financial condition or results

of operations of the registrant.

Critical accounting estimates require the Company to provide qualitative and quantitative information

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

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

This information

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

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

the methods, assumptions and estimates underlying its calculation.

The preparation of financial

statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income

and expenses during the periods reported.

Actual results could materially

differ from those estimates.

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

Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by

Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Financial Statements and Supplementary Data

Reference is made to the pages numbered with an

“F”, beginning with page F-1, of this Annual Report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

We have an accumulated deficit and stockholders’

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

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

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

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

government grants.

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

Specifically, expenditures will increase as we:

and build facilities;

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

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

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

our launch cadence, the timing and extent of spending

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

the timing and extent of additional capital expenditures to invest in the development of our Facility.

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

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

of Liquidity and Going Concern

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

consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of

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

The Company is a development stage entity having no revenues,

has incurred net loss since inception of $ 52,618,948 and has stockholders’ deficit of $19,385,784 as at December 31, 2024.

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.

As discussed above:

October 2024, the Company entered into the Common Stock Purchase Agreement and the related

Registration Rights Agreement with 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.

December 2024, the Company issued Term Sheets with various lenders and received cash proceeds

of $3,550,000.

December 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 Company and each Investor have agreed

to enter into a securities purchase agreement (the “Purchase Agreement”) for

the Private Placement as soon as practicable.

to the year end, the Company consummated a public offering and received aggregate gross proceeds

from the Offering of approximately $5.75 million, before deducting placement agent fees and

other offering expenses.

Further, on March 16, 2025, pursuant to the Inducement Letter, the Company

received aggregate gross proceeds of $3.0 million from exercise of warrants, before deducting fees and other expenses.

believe that the cash on hand, and additional investments available through issuance of new Common Stock, will be inadequate to satisfy

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

The ability of the Company

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

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

These consolidated

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

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

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

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

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

Failure to secure adequate financing could have

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

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

The notes payable provided the Company the ability

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

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

These loan facilities accrue interest, compounding semi-annually, at the long-term semi-annual Federal rate, as established by the Internal

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

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

2023, and $840,000 was payable by December 31, 2025.

As of December 31, 2024, and December 31, 2023, the Company has repaid all of the

notes payable.

funding borrowing

November 19, 2023, Legacy Stardust Power borrowed $80,800 from First Insurance Funding to finance its insurance

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

Power, and the balance financed through First Insurance Funding.

The loan has an annual percentage rate of 8.25% and is payable in 10

installments through September 21, 2024.

As at December 31, 2024, the loan was fully repaid.

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, which was applied to the loan amount at the time of the loan

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

Payments include a stated interest

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

notes and convertible notes

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

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

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

Capital Advisors, LLC is paid investment management fees.

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

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

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

On November 18, 2023, Legacy Stardust Power

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

as the amended August 2023 SAFE note.

Each of the SAFE notes converted, immediately prior to the First Effective Time, into Legacy Stardust

Power Common Stock.

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

In accordance with the terms of

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

Effective Time on similar terms to the other SAFE notes.

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

liabilities in the Company’s consolidated balance sheet.

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

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

milestones, for up to 42 months following such conversion.

This feature was determined to be an embedded feature and is valued as part

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

Additionally, the SAFE notes provided the investor certain rights upon

an equity financing, change in control or dissolution as described in Note 6 of the consolidated financial statements

of the Company.

The estimated fair value of the SAFE notes considered the timing of issuance and whether there were changes in the various

scenarios since issuance.

As of December 31, 2023, the fair value of the SAFE notes was $5,212,200 and were classified as a non-current

The SAFE notes had no interest rate or maturity date, description of dividend and participation rights.

The liquidation preference

of the SAFE notes was junior to other outstanding indebtedness and creditor claims, on par with payments for other SAFE notes and/or

preferred equity, and senior to payments for other equity of the Company that were not SAFE notes and/or pari preferred equity.

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

The agreement

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

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

On April 24, 2024, Legacy Stardust Power amended

and restated the August 2023 SAFE note and the November 2023 SAFE note.

On May 1, 2024, Legacy Stardust Power amended and restated the

February 2024 SAFE note.

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

In accordance

with the terms of the convertible equity agreements, immediately prior to the First Effective Time, the cash received pursuant to the

SAFE note agreements automatically converted into 636,916 shares of Combined Company Common Stock.

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

Further, Legacy Stardust

Power entered into separate convertible equity agreements with other individuals for a total of $100,000 in April 2024, entered into

based on similar terms to the AIGD convertible equity agreement.

In accordance with the terms of the convertible equity agreements, immediately

prior to the First Effective Time, the cash received pursuant to the convertible equity agreements automatically converted into 257,216

shares of Combined Company Common Stock.

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, 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 of Company’s 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, 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.

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.

Subsequent 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 default.

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.

In 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.

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.

The Company is yet to issue the equity shares and warrants to the

Lenders as of the date of the issuance of the consolidated financial statements.

following table summarizes our cash flows for the periods presented:

March 16, 2023

December 31, 2023

cash used in operating activities

$ (9,719,714 )

$ (2,983,206 )

$ (6,736,508 )

cash used in investing activities

cash provided by financing activities

change in cash

$ (1,631,074 )

Flows Used in Operating Activities

the year December 31, 2024, net cash used in operating activities was $9,719,714, consisting of a $23,753,863 net loss,

adjusted for $15,515,723 non-cash charge for change in fair value of SAFE notes, convertible notes, investments, warrant

liability, earnout shares, stock based compensation, finance charges and depreciation and a $1,481,574 net change in operating

assets and liabilities, primarily driven by decrease of $1,433,575 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 an increase of $47,999 in prepaid expenses.

the period March 16, 2023 (inception) to December 31, 2023, net cash used in operating activities was $2,983,206, consisting of a $3,793,585 net loss, adjusted for $718,488 non-cash charge for change in fair value of SAFE notes, investments, charge

for SAFE note issuance costs, stock based compensation, and depreciation and $91,891 net change in operating assets and

liabilities, primarily driven by $518,388 in accounts payable and other current liabilities, due to related

parties and other current liabilities which primarily represent the various costs that are expected to be incurred as we set up

operations during this period partially offset by $426,497 prepaid expenses.

Flows Used in Investing Activities

the year ended December 31, 2024, net cash used in investing activities was $4,791,363, primarily representing $1,010,180 on account

of capital project costs related to construction of the refinery, $1,623,946 for land purchase, $1,600,000 on investment

in equity securities of IRIS Metals, $50,000 investments in other long-term

assets, $492,000 used in the promissory notes issued and $15,237 used for the purchase of computer and equipment.

For the period March

16, 2023 (inception) to December 31, 2023, net cash used in investing activities was $301,974, primarily representing $100,000 on account

of capital project costs related to acquisition of land, $200,000 in investment of equity security in QXR, and $1,974 used for the purchase

of computer and equipment.

Flows from Financing Activities

the year ended December 31, 2024, net cash provided by financing activities was $14,151,827 related primarily to proceeds from closing of the Business Combination including issuance

of PIPE shares of $11,639,088, cash received from issuance of convertible notes of $2,100,000, proceeds from short-term loans from several

investors of $2,060,000, proceeds from short-term loan from related parties of $2,000,000, exercise of warrants of $1,561,655, proceeds

from PIPE of $425,000, proceeds from issuance of common stock of $260,927 and SAFE notes of $200,000, partially offset by deferred

Business Combination transaction costs of $4,167,323, repayment of sponsor promissory notes of $1,562,834, and repayment of short-term

loans of $324,415.

For the period March 16, 2023

(inception) to December 31, 2023, net cash provided by financing activities was $4,557,004, related primarily to $5,000,000 proceeds from

SAFE notes issuance, $1,000,000 proceeds from issuance of notes payable to related parties, $72,967 proceeds from short-term loan and

$14,850 proceeds from early exercise of stock option awards, partially offset by payment of SAFE notes issuance cost to related parties

of $435,000, repayment of notes payable to related parties of $1,000,000 and payment of deferred transaction costs of $95,900.

Additionally,

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

and Capital Expenditure Requirements

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

The Company has an accumulated deficit and stockholders’

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

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

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

Our intended capital requirements depend on many factors

including the capital expenditures required to set up our Facility, and undertake all activities necessary to start commercial production,

prices of capital equipment, and preliminary 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.

additional financing is required from outside sources, over and above what we are intending to raise currently, we may not be able to

raise it on acceptable terms or at all.

If we are unable to raise additional capital when desired, our business, results of operations

and financial condition would be materially and adversely affected and may not be able to continue our intended operations as a going

and Contractual Obligations

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

for $4,724,690 to provide a FEL-3 report.

As at December 31, 2024,

the total performance pending to be performed and billed by Primero is $1,855,911.

See Note 4 to our consolidated financial

statements included elsewhere in this Annual Report for additional details regarding other contractual obligations and commitments.

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

lead to future contractual obligations.

of Critical Accounting Estimates

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

Accordingly, these

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

and results of our operations.

See Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form

10-K for a description of our other significant accounting policies.

The preparation of our consolidated financial statements in

conformity with U.S.

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

Transaction Costs

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

Miscellaneous Accounting A.

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.

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

proposed public offering which are presented within current assets in the consolidated balance sheet 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.

Company 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.

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 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

Share Liability, SAFE Notes, and Convertible Notes

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

Liabilities from Equity” and ASC 815-40, “Derivatives and Hedging,” whereby it is accounted for as a liability which

requires initial and subsequent measurements at fair value.

This liability is subject to re-measurement at each balance sheet date until

a triggering event, equity financing, change in control or dissolution occurs, and any change in fair value is recognized in the Company’s

consolidated statements of operations.

The fair value estimate includes significant inputs not observable in market,

which represents a Level 3 measurement within the fair value hierarchy.

The valuation uses probabilities considering pay-offs under various

scenarios as follows:

(i) an equity financing where the SAFE notes and convertible note will convert into certain preferred stock;

a change in control where the SAFE note and convertible note holders will have an option to receive a portion of the cash and other assets

equal to the purchase amount;

(iii) a dissolution event where the SAFE notes and convertible note holders will be entitled to the purchase

amount subject to liquidation priority and (iv) achievement of Combined Company Common Stock price targets, where the earnout share liability

will convert into certain number of shares of Common Stock.

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

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

These probabilities will ultimately be factored into the valuation of the instrument and will require third party valuation experts to

assist in the determination of this value.

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

statements materially and therefore constitute a critical estimate.

Value of Common Stock

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

American Institute of Certified Public Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as

Compensation, the fair value of our Common Stock is estimated based on valuation carried out by third party appraisers and approved by

our Board based on current available information and after exercising reasonable judgment.

This estimate requires significant judgment

and considers several factors, including:

third-party valuations of our Common Stock;

probabilities of future liquidation scenarios;

future cash flows provided by management;

public company information;

actual operating and financial performance;

business conditions and projections;

stage of development;

and global capital markets conditions;

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

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

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

In the most heavily weighted scenarios,

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

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

to our Common Stock.

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

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

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

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

the probability of and timing associated with potential future events.

Changes in any or all estimates and assumptions or the relationships

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

our Common Stock.

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

the Business Combination, it is no longer necessary to determine the fair value of our business as the Stardust Power Common Stock is

now publicly traded.

Accounting Pronouncements

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

recent accounting pronouncements.

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

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

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

In reaching this conclusion, management considered

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

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

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

Party Transactions

Stardust Power entered into a service agreement with VCP, an affiliate of Roshen Pujari, 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 a total of $1,050,000.

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

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

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

the period from March 16, 2023 (inception) to December 31, 2023, Legacy Stardust Power incurred total consulting expenses of $980,000

to VCP, $180,806 to 7636 Holdings LLC and $171,213 to VIKASA Capital LLC.

Other expenses that were incurred on behalf of Legacy Stardust

Power was $44,186, in aggregate, including $34,318 by VIKASA Capital LLC and $9,868 by VCP, respectively.

As of December 31, 2023, no amounts were due to related parties of the Company.

the period from March 16, 2023 (inception) through December 31, 2023, Legacy Stardust Power entered into notes payable agreements for

$1,000,000 with related parties, including $750,000 with Energy Transition Investors LLC, $160,000 with VIKASA Clean Energy I LP and

$90,000 with Roshan Pujari.

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

The same notes were repaid during the year ended December 31, 2023.

On September 18, 2024,

the Company entered into a consulting agreement in the amount of $500,000 with DRE Chicago LLC, whose principal is Paramita Das.

Das was onboarded as the Chief Strategy Officer and Senior Advisor to CEO of the Company.

Additionally, as discussed above, in

December 2024, the Company entered into a binding term sheet with DRE Chicago LLC and other lenders, 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, 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 in accordance with the Private Placement terms.

Subsequent to year end, the Company has fully

repaid the principal amount and the accrued interest.

The Company is yet to issue the equity shares and warrants to DRE Chicago as

of the date of the issuance of the consolidated financial statements.

As discussed above, in

December 2024, the Company entered into a binding 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, bearing interest at a rate of 15% per year, and maturing on March 2025 (the “Maturity Date”).

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 in accordance with

the Private Placement terms.

Subsequent to year end, the Company has fully repaid the principal amount and the accrued interest.

Company is yet to issue the equity shares and warrants to Endurance as of the date of the issuance of the consolidated financial

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 the Company’s

initial public offering (the “Private Warrants”).

At the closing of the Business Combination, Stardust Power acquired the

net liabilities for GPAC II including the Private Warrants.

Each Private Warrant entitles the holder to purchase one share of Common

Stock at $11.50 per share.

At December 31, 2024 there were 5,566,667 Private Warrants outstanding.

As at December 31, 2024, the fair

value of Private Warrants amounted to $1,308,166.

The Company valued its Private Warrants based on the closing price of the Public Warrants

since they are similar instruments.

Related Party Loans

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

to $4,127,189.

As part of the closing of the Business Combination, the Sponsor forgave a portion of the loan amounting to $2,564,355.

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

Earnout Shares

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

These shares are subject to vesting

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

percent of the Sponsor Earnout Shares will vest when the VWAP of the Combined Company Common Stock price equals or exceeds $12.00 per

share for a period of 20 trading days in a 30 trading day period, and the remaining fifty percent of the Sponsor Earnout Shares will

vest when the VWAP of the Combined Company Common Stock price equals or exceeds $14.00 per share for a period of 20 trading days in a

30 trading day period.

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

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

Note 19 to our consolidated financial statements included elsewhere in this report for additional details regarding

subsequent events.

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 7. Management’s Discussion and Analysis