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Item 7. Management’s Discussion and Analysis

2026-04-15 compared with 2025-04-16 · 414 added, 182 removed, 90 unchanged (87% of the section changed)

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

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this

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set forth below includes forward-looking statements that involve risks and uncertainties.

Note Regarding Forward-Looking Statements

Cautionary Note

Regarding Forward-Looking Statements

This Annual Report on Form 10-K includes forward-looking

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contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.

Technology, Inc.

is a Dallas, TX, USA-based advanced battery technology company focused on the development and commercialization of battery

materials, components, cells, and selected module/pack technologies.

Solidion holds a portfolio of over 550 patents, covering innovations

such as high-capacity, non-silane gas and graphene-enabled silicon anodes, biomass-based graphite, advanced lithium-sulfur and lithium-metal

technologies.

Solidion offers two lines of battery products:

Solidion Technology, Inc.

is a Dallas, TX, USA-based

advanced battery technology company focused on the development and commercialization of battery materials, components, cells, and selected

module/pack technologies.

Solidion holds a portfolio of over 550 patents, covering innovations such as high-capacity, non-silane gas

and graphene-enabled silicon anodes, biomass-based graphite, advanced lithium-sulfur and lithium-metal technologies.

Solidion offers

two lines of battery products:

(i) advanced anode materials (ready for production expansion);

three classes of solid-state batteries, including Silicon-rich all-solid-state lithium-ion cells (Gen 1), anode less lithium metal cells

(Gen 2), and lithium-sulfur cells (Gen 3), all featuring an advanced polymer- or polymer/inorganic composite-based solid electrolyte

that is process-friendly.

Battery Company Merger

February 2, 2024, Nubia Brand International Corp., a Delaware corporation (“Nubia” and after the Transactions described herein,

“Solidion” or “Solidion Technology, Inc.”), consummated a merger (the “Closing”) pursuant to a Merger

Agreement, dated February 16, 2023 (as amended on August 25, 2023, the “Merger Agreement”), by and among Nubia, Honeycomb

Battery Company, an Ohio corporation (“HBC”), and Nubia Merger Sub, Inc., an Ohio corporation and wholly-owned subsidiary

of Nubia (“Merger Sub”).

Pursuant to the Merger Agreement, Merger Sub merged with and into HBC (the “Merger,”

and the transactions contemplated by the Merger Agreement, the “Transactions”), with HBC surviving such merger as a wholly

owned subsidiary of Nubia, which was renamed “Solidion Technology, Inc.” upon Closing.

received net proceeds from the Merger totaling $17,555.

The Company is applying the proceeds from the Merger toward its corporate growth

strategy related to the commercialization of our battery technology and the scaling of its manufacturing operations.

On March 13, 2024, Solidion entered into a private

placement transaction (the “March Private Placement”), pursuant to a Securities Purchase Agreement (the “March Subscription

Agreement”) with certain institutional investors (the “Purchasers”) for aggregate gross proceeds of $3,850,000, before

deducting fees to the placement agent and other expenses payable by the Company in connection with the March Private Placement.

proceeds from the March Private Placement were used for working capital and general corporate purposes.

The March Private Placement closed

on March 15, 2024.

As part of the March Private Placement, the Company

issued an aggregate of 5,133,332 units and pre-funded units (collectively, the “Units”) at a purchase price of $0.75 per unit

(less $0.0001 per pre-funded unit).

Each Unit consists of (i) one share of Solidion Common Stock, (ii) two Series A warrants (“Series

A Warrants”) each to purchase one share of Common Stock, and (iii) one Series B warrant (“Series B Warrants”) to purchase

such number of shares of Common Stock as determined on the reset date, and in accordance with the terms therein.

The reset period ended

on July 2, 2024 (the “Reset Date”), with the lowest 10-day VWAP on June 28, 2024, being $0.4347.

Consequently, the reset price

was established at $0.3478.

As a result, the Series A Warrants and Series B Warrants held by investors were reset to 22,141,701 shares

and 5,749,598 shares, respectively.

As of December 31, 2024, investors had exercised 13,742,879 Series A Warrants and 5,749,598 Series

B Warrants, resulting in the issuance of 19,492,477 common shares.

As of December 31, 2024, 8,398,822 Series A Warrants and no Series

B Warrants remained outstanding.

On August 30, 2024, the Company entered into a

private placement transaction (the “August Private Placement”), pursuant to a Securities Purchase Agreement (the “August

Subscription Agreement”) with certain institutional investors (the “Purchasers”) for aggregate gross proceeds of $4,000,000,

before deducting fees to the placement agent and other expenses payable by the Company in connection with the August Private Placement.

The Company intends to use the net proceeds from the August Private Placement for working capital and general corporate purposes.

As part of the August Private Placement, the

Company issued an aggregate of 12,217,468 units and pre-funded units (collectively, the “Units”) at a purchase price of $0.3274

Each Unit consists of (i) one share of common stock, par value $0.0001 per share of the Company (the “Common Stock”)

(or one pre-funded warrant to purchase one share of Common Stock (the “Pre-Funded Warrant”)), (ii) two Series C warrants

each to purchase one share of Common Stock (the “Series C Warrant”) and (iii) one Series D warrant to purchase such number

of shares of Common Stock as determined on the Reset Date (as defined in Note 10) and in accordance with the terms therein (the “Series

D Warrant” and together with the Pre-Funded Warrant and the Series C Warrant, the “Warrants”).

The Company accounts for the outstanding Series A, Series B, Series

C, and Series D warrants issued in connection with the March and August 2024 private placement financings (the “PIPE Warrants”)

as liability-classified instruments because certain settlement adjustments prevent them from meeting the fixed-for-fixed equity classification

criteria under ASC 815-40.

of Results of Operations

Company is focused on commercializing and manufacturing battery materials and next-generation battery cells.

Historically, and during

the periods presented, we have generated minimal revenue from product samples.

We do not expect to begin generating significant revenue

until we complete the commercialization process and build out manufacturing capacity.

Future capacity may come from joint ventures with

strategic partners, sourcing third-party manufacturing from our network, or pursuing mergers and acquisitions.

and Development

and development expenses consist primarily of personnel expenses, including salaries, benefits, third party technology validation testing,

equipment, engineering, maintenance of facilities, data analysis, and materials.

general and, administrative

general and administrative expenses primarily consist of personnel expenses, including salaries, benefits, and stock-based compensation

related to executive management, finance, legal, and human resource functions.

Other costs include business development, contractor and

professional services fees, audit and compliance expenses, insurance costs and general corporate expenses, such rent, office supplies

and information technology costs.

Income (Loss)

in fair value of Derivative Liabilities

in fair value of Derivative Liabilities consists of fluctuations in the fair value of an agreement between the Company and investors

facilitating future purchases of the Company’s stock by the Investor based on a Monte Carlo simulation model.

income is derived from the Company’s operating cash account, which is periodically invested in short-term money market funds.

expense consists primarily of the interest on the Company’s short-term notes and D&O insurance premium financing arrangement.

of Operations

and (ii) three classes of solid-state batteries,

including Silicon-rich all-solid-state lithium-ion cells (Gen 1), anode less lithium metal cells (Gen 2), and lithium-sulfur cells (Gen

3), all featuring an advanced polymer- or polymer/inorganic composite-based solid electrolyte that is process-friendly.

Business Combination

On February 2, 2024, Nubia Brand International

Corp., a Delaware corporation (“Nubia” and after the Transactions described herein, “Solidion” or “Solidion

Technology, Inc.”), consummated a merger (the “Closing”) pursuant to a Merger Agreement, dated February 16, 2023 (as

amended on August 25, 2023, the “Merger Agreement”), by and among Nubia, Honeycomb Battery Company, an Ohio corporation (“HBC”),

and Nubia Merger Sub, Inc., an Ohio corporation and wholly-owned subsidiary of Nubia (“Merger Sub”).

Pursuant to the Merger

Agreement, Merger Sub merged with and into HBC (the “Merger,” and the transactions contemplated by the Merger Agreement, the

“Transactions”), with HBC surviving such merger as a wholly owned subsidiary of Nubia, which was renamed “Solidion Technology,

Inc.” upon Closing.

We received net proceeds from the Merger totaling

The Company is applying the proceeds from the Merger toward its corporate growth strategy related to the commercialization of

our battery technology and the scaling of its manufacturing operations.

Recent Developments

Memorandum of Understanding

On February 10, 2026, we entered into a non-binding

memorandum of understanding (“MOU”) with an entity that manufactures and distributes energy storage systems for the Company

to supply pouch cells for use in energy storage systems.

While the MOU is non-binding in nature and may result in no actual sales, a definitive

agreement could potentially add an estimated $4 to $6 million in revenue over the next 12 months.

Grants from the U.S.

During the fourth quarter of 2025 and the first

quarter of 2026, the Company was notified that it had received three grants from various departments of the U.S.

Department of Energy (“DOE”) provided the first grant (the “First Grant”), which was to advance research

and development of Electrochemical Manufacturing of High-Performance Graphite based on Biomass-Derived Carbon.

The Company had received

the prestigious 2025 R&D 100 Award in partnership with Oak Ridge National Laboratory for innovation in Electrochemical Graphitization

in Molten Salts, and the First Grant was for research to be conducted jointly with Oak Ridge National Laboratory to reduce imports of

critical energy materials from foreign sources, improve American energy independence, and ensure that the U.S.

maintains a technological

lead in developing and deploying advanced energy technologies.

The DOE provided the second grant (the “Second

Grant”) to scale up the synthesis of a carbon-nanosphere material that will be used as an anti-corrosive additive in molten-salts-based

heat transfer fluids for advanced molten salt nuclear reactors.

The Second Grant was also for research to be conducted jointly with Oak

Ridge National Laboratory, this time to develop a nanofluids-based energy material, engineered colloidal suspension of hollow carbon nanoparticles

in conventional molten salts, to enhance heat transfer and reduce corrosion in nuclear reactors, which is critical for reducing costs,

increasing safety, and accelerating the commercialization of small modular nuclear reactors such as advanced molten salt reactors.

Army provided the third grant (the

“Third Grant”) to develop an advanced fiber-based electronic battery system built on a coaxial carbon nanotube (“CNT”)

yarn architecture.

The Third Grant was for research to be conducted jointly with The University of Texas at Dallas to develop a flexible,

rechargeable lithium-ion battery in fiber form:

a CNT yarn serves as both the structural core and current collector of the anode, integrated

with Solidion’s silicon (Si) as the high-capacity anode material.

Reverse Stock Split

On May 12, 2025, the Company effected a 1-for-50

reverse stock split of its common stock (the “Reverse Stock Split”).

As a result, each 50 shares of common stock issued and

outstanding immediately prior to the reverse split were converted into one share of common stock.

Additionally, this transaction resulted

in a reclassification of $13,311 from common stock to additional paid-in capital during the period ended March 31, 2025.

stock split did not change the total number of authorized shares or the par value of the common stock.

During the three-month period ended

June 30, 2025, the Company paid cash of approximately $460 to shareholders in lieu of issuing fractional shares.

Warrant Conversion

On October 8, 2025 (the “Purchase Date”),

Madison Bond LLC and Bayside Project LLC (together, the “Purchasers”) announced the purchase of all of the outstanding Series C

and Series D Warrants (together, the “Warrants”) previously issued by the Company pursuant to the Securities Purchase

Agreement, dated as of August 30, 2024 (the “Original Purchase Agreement”).

Immediately thereafter, the Company determined

to invoke certain provisions in the Warrants and the Original Purchase Agreement in order to convert (the “Conversion”) all

remaining unexercised portions of the Series C and Series D Warrants into shares of the Company’s common stock, at a ratio

of 1 to 1, such that each outstanding Series C and Series D warrant was converted into one share of common stock.

The Purchasers

received 3,447,957 shares (the “Conversion Shares”) of the Company’s common stock in the Conversion and the Company

cancelled all outstanding Series C and Series D Warrants.

Purchase Agreement Amendment

In connection with the Conversion, the Purchasers

and the Company amended the Original Purchase Agreement to remove or modify certain financing restrictions, including limitations on future

equity issuances and participation rights, subject to agreed-upon dilution protections.

In connection with the Conversion, the Purchasers

have agreed, subject to certain customary exceptions, not to (i) sell, offer to sell, agree to offer or sell, solicit offers to purchase,

convert, contract or agree to sell, pledge, encumber, assign, borrow, or otherwise dispose of, directly or indirectly, any shares of common

stock held by them (such shares, together with any securities convertible into or exchangeable for or representing the rights to receive

shares of common stock if any, acquired during the Lock-Up Period (as defined below), the “Lock-Up Shares”), (ii) enter

into a transaction that would have the same effect, (iii) enter into any swap, hedge or other arrangement that transfers to another,

in whole or in part, any of the economic consequences of ownership of the Lock-Up Shares or otherwise, or engage in any short sales or

other arrangement with respect to the Lock-Up Shares or (iv) publicly announce any intention to effect any transaction specified

in clause (i) or (ii) until the date that is 12 months after the October 21, 2025 (the “Lock-up Date,”

and the period from the Lock-up Date until such date, the “Lock-Up Period”).

The exceptions also generally include transfers

(A) of no more than five percent (5%) of the total Lock-Up Shares in the aggregate taking into account all transfers during the Lock-Up

Period (provided that total transfers during any period of five consecutive trading days shall not exceed five percent (5%) of the

daily average trading volume of the common stock over the immediately preceding five trading days and (B) in connection with

the pledge, hypothecation or other grant of a security interest in any Lock-Up Shares to one or more lending institutions as collateral

or security for any loan, advance or extension of credit and any transfer upon foreclosure upon such Lock-Up Shares.

Unregistered Sales of Equity Securities

On the Purchase Date, the Company issued the Conversion

Shares pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

No underwriting discounts

or commissions were paid with respect to such sales.

On October 9, 2025, the Company issued 40,000

bonus shares of common stock to each of its non-executive directors, John Davis and Karin-Joyce Tjon, and its former non-executive director

Cynthia Ekberg Tsai.

The issuances were in consideration of their prior board service from the closing of the Company’s business

combination on February 2, 2024 until one year thereafter.

The issuances were pursuant to the exemption from registration contained

in Section 4(a)(2) of the Securities Act.

No underwriting discounts or commissions were paid with respect to such issuances.

On October 9, 2025, the Company issued 120,000

bonus shares of common stock to certain of its employees that are not executive officers.

The issuances were in consideration of their

prior service to the Company from the closing of the Company’s business combination on February 2, 2024 until one year thereafter.

The issuances were pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

No underwriting

discounts or commissions were paid with respect to such issuances.

On October 9, 2025, the Company issued 450,000

shares of common stock to G3, pursuant to an “earn-out” provision in the Merger Agreement following the approval by the board

of directors of the Company to deem the earn-out conditions satisfied in full in light of, among other things, the Company’s capital

structure and the ongoing Shared Services Agreement, dated as of February 2, 2024 (the “SSA”), between the Company and

Bor Jang is the Chairman of the Board of Directors and Chief Science Officer of the Company, as well as the Chairman of the

Board of Directors and Chief Executive Officer of G3.

The issuance was pursuant to the exemption from registration contained in Section 4(a)(2) of

the Securities Act.

No underwriting discounts or commissions were paid with respect to such issuance.

On October 29, 2025, the Company entered

into a Promissory Note with Great Point Capital, LLC in the principal amount of $1,000,000.

The Note bears interest at 8.0% per annum,

payable quarterly, and matures on October 25, 2026.

The proceeds will be used for general corporate purposes, including working capital

See Note 10 to the consolidated and combined financial statements for more details.

In addition, the Company entered in to

the Investor Agreement, which provided for the issuance of 345,000 shares of common stock to Great Point Capital, LLC.

The issuances

were pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

No underwriting discounts or

commissions were paid with respect to such issuances.

On December 8, 2025, the Company entered

into an agreement with Anson Investments Master Fund LP (“Anson”), pursuant to which it issued 240,400 shares of common stock

to Anson in exchange for the termination of all warrants and other obligations of the Company under the Securities Purchase Agreement,

dated as of August 30, 2024.

Further, Anson agreed to limit sales of common stock to no more than 10% of the daily trading volume

on the Nasdaq Stock Market of all of the Company’s common stock.

On February 5, 2026, the Company issued the 240,400 shares of its

common stock to Anson pursuant to this agreement.

The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of

the Securities Act.

No underwriting discounts or commissions were paid with respect to the issuance.

See Note 14 – Subsequent Events

for additional information.

Change of Control

As of the Purchase Date, the Conversion was effected,

which resulted in a change in control of the Company by virtue of the Purchasers holding approximately 47.5% of the Company’s issued

and outstanding common stock and being the largest stockholder of the Company.

To the Company’s knowledge, there are no arrangements or understandings

among members of both the former and new control persons and their respective associates with respect to the election of directors or

other matters.

Additionally, there are no arrangements, known to the Company, including any pledge by any person of securities of the

Company, the operation of which may at a subsequent date result in a change in control of the Company.

See “Beneficial Ownership

of Securities.”

Change to Board of Directors

On September 3, 2025 (the “Resignation Date”), Cynthia

Ekberg Tsai notified the Board of Directors (the “Board”) of the Company of her resignation as a member of the Board, including

all committees on which she serves, effective as of the Resignation Date.

Ekberg Tsai’s resignation did not result from any

disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

As a result of Ms.

Ekberg Tsai’s resignation,

the Company’s Audit Committee is composed of two members.

On September 8, 2025, the Company notified The Nasdaq Stock Market,

LLC of its non-compliance with Nasdaq Rule 5605(c)(2)(A), which requires that the Audit Committee be composed of three directors.

Pursuant to Nasdaq Listing Rule 5605(c)(4), the Company has a cure period to regain compliance by appointing a new independent director

to the Audit Committee.

The cure period extends until the earlier of the Company’s next annual shareholders’ meeting or September 3,

provided, however, that if the annual shareholders’ meeting occurs no later than March 2, 2026, the Company has until

March 2, 2026, to regain compliance.

The Company intends to appoint a new independent director to the Audit Committee as soon as

practicable within the cure period.

On March 24, 2026, the company announced an annual meeting scheduled

for June 11, 2026.

As a result, the Company’s cure period to regain compliance with Nasdaq Listing Rule 5605(c)(2)(A) extends until

the date of the annual meeting.

The Company is actively evaluating potential candidates to fill the vacancy on its Audit Committee and

intends to regain compliance within the applicable cure period.

Components of Results of Operations

The Company is focused on commercializing and

manufacturing battery materials and next-generation battery cells.

Historically, and during the periods presented, we have generated minimal

revenue from product samples.

We do not expect to begin generating significant revenue until we complete the commercialization process

and build out manufacturing capacity.

Future capacity may come from joint ventures with strategic partners, sourcing third-party manufacturing

from our network, or pursuing mergers and acquisitions.

Operating Expenses

Research and Development

Research and development expenses consist primarily

of personnel expenses, including salaries, benefits, third party technology validation testing, equipment, engineering, maintenance of

facilities, data analysis, and materials.

Selling, general and administrative

Selling, general and administrative expenses primarily

consist of personnel expenses, including salaries, benefits, and stock-based compensation related to executive management, finance, legal,

and human resource functions.

Other costs include business development, contractor and professional services fees, audit and compliance

expenses, insurance costs and general corporate expenses, such rent, office supplies and information technology costs.

Other Income (Expense)

Change in fair value of Derivative Liabilities

Change in fair value of derivative liabilities

consists of fluctuations in the fair value of the Company’s Forward Purchase Agreement and warrant liabilities.

The fair value of

these instruments is estimated using valuation models, including Monte Carlo simulation for the Forward Purchase Agreement and certain

warrant liabilities, and the Black-Scholes option pricing model for other warrant liabilities.

Interest Income

Interest income is derived from the Company’s

operating cash account, which is periodically invested in short-term money market funds.

Interest Expense

Interest expense consists primarily of the interest

on the Company’s short-term notes and D&O insurance premium financing arrangement.

Results of Operations

should be read in conjunction with Solidion’s financial statements and accompanying notes.

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indicative of future performance.

Summary of Statements of Operations for

the Years Ended December 31, 2024 and 2023

Summary of Statements of Operations for the

Years Ended December 31, 2025 and 2024

Cost of goods sold

Operating expenses

Total other income (loss)

Total other income (expense)

(28,083,094 )

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$ (41,004,000 )

$ (32,417,033 )

Operating Expenses

expenses increased by $7,969,914 for the year ended December 31 , 2024.

This increase was

primarily driven by third party validation testing of our proprietary silicon anode, professional fees, stock-based compensation, insurance,

and other administrative costs associated with the Company operating as a public entity as of February 2, 2024.

Other Income (loss)

Other loss increased by $12,627,521 for the year

ended December 31, 2024.

This increase was largely driven by a gain of $18,011,100 due to a change in the fair value of derivative liabilities

related to the Forward Purchase Agreement, and warrants related to the March and August private placement financing.

This was offset by

a loss of $30,281,475 from the issuance of common stock and warrants related to the convertible note and private placement financing activity.

Summary of Cash Flows for the Years Ended

December 31, 2024 and 2023

Operating expenses decreased

by $371,929 for the year ended December 31, 2025.

This decrease was primarily driven by lower general and administrative costs, including

reduced personnel and professional services expenses.

The decrease was partially offset by higher research and development costs, including

increased personnel expenses associated with the commercialization of our battery cell products and third-party validation testing of

our proprietary silicon anode.

Other Income (Expense)

Other expense increased by $8,965,598 for the

year ended December 31, 2025.

This increase was largely driven by a non-cash loss of $28,250,727 due to a change in the fair value of

derivative liabilities related to the Forward Purchase Agreement, and warrants related to the March and August private placement financing.

Additionally, during 2025, the Company significantly reduced its derivative liabilities, primarily through the conversion and cancellation

of the Series C and Series D warrants in connection with the Madison Bond and Bayside Project transaction.

As a result of this transaction,

all remaining unexercised warrants were converted into shares of the Company’s common stock, eliminating the associated derivative

The reduction of these liabilities, together with the required fair value remeasurement prior to settlement, contributed

to the non-cash loss recognized during the period.

Summary of Cash Flows for the Years Ended December

31, 2025 and 2024

Net cash provided by (used in):

Operating Activities

$ (7,377,807 )

$ (4,068,302 )

Investing Activities

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used in Operating Activities

For the year ended December 31, 2025, cash used in operating activities

was $4,536,702.

This primarily resulted from a net loss of $41,004,000, driven by a non-cash loss of $28,250,727 due to a change in the

fair value of derivative liabilities related to the Forward Purchase Agreement and private placement warrants.

These non-cash losses were

added back to reconcile net loss to net cash used in operating activities, as part non-cash adjustments that also included depreciation

and amortization, stock-based compensation and equity compensation expense for services, totaling $35,058,699.

Additionally, changes in

operating assets and liabilities provided $1,408,599 of cash from operating activities, driven primarily by a $1,404,127 increase in accounts

payable and accrued expenses.

The increase in accounts payable and accrued expenses was mainly due to higher accrued expenses.

For the year ended December 31, 2024, cash used

11 unchanged sentences

expenses was mainly due to higher accrual expense associated with the Company operating as a public entity as of February 2, 2024.

For the year ended December 31, 2023, cash used in operating activities

was $4,068,302.

This primarily resulted from a net loss of $5,324,624, which included non-cash losses, depreciation and amortization,

totaling $552,855 Additionally, changes in operating assets and liabilities provided $703,467 of cash from operating activities, driven

primarily by a $872,485 increase amounts due to related parties.

Cash used in Investing Activities

For the year ended December 31, 2024, the Company used cash of $246,074

in investing activities consisting of capitalized patent costs.

For the year ended December 31, 2023, the Company used cash of $376,150

in investing activities consisting of capitalized patent costs.

used in Investing Activities

For the year ended December 31, 2025, the Company

used cash of $240,742 in investing activities consisting of purchases of Silicon Oxide (SiOx) manufacturing equipment and capitalized

patent costs.

For the year ended December 31, 2024, the Company

used cash of $246,074 in investing activities consisting of capitalized patent costs.

provided by Financing Activities

1 unchanged sentence

generated cash of $1,628,437 from financing activities.

The Company received proceeds from short term notes of $1,000,000.

These increases

were offset by repayment of short-term notes of $42,671.

In addition, during the year ended December 31, 2025, the Company converted

$527,500 of convertible notes into shares of its common stock.

This transaction was a non-cash financing activity and is reflected in

the supplemental schedule of non-cash financing activities in the consolidated and combined statements of cash flows.

For the year ended December 31, 2024, the Company

generated cash of $10,976,833 from financing activities.

This primarily resulted from proceeds from private placement financing, and warrant

2 unchanged sentences

of $1,389,146 and $1,026,091, respectively.

For the year ended December 31, 2023, the Company generated cash of

$3,823,657 from financing activities, consisting of capital contributions by G3.

Concern Considerations, Liquidity and Capital Resources

Solidion’s inception, the Company has experienced recurring net losses and has generated minimal sales.

This raises substantial

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

Management’s ability to fund our operations and capital

expenditures depends on our ability to raise additional external capital.

This is subject to our future operating performance and general

economic, financial, competitive, legislative, regulatory, and other conditions, some of which are beyond our control.

We are currently

engaged in discussions with various financing counterparties to secure sufficient capital to meet our business needs for the foreseeable

The Company plans to finance its operations with proceeds from the sale of equity securities, government grants and loans, or

however, there is no assurance that management’s plans to obtain additional debt, grants or equity financing will be successfully

implemented or implemented on terms favorable to the Company.

Going Concern Considerations, Liquidity

and Capital Resources

Since Solidion’s inception, the Company

has experienced recurring net losses and has generated minimal sales.

This raises substantial doubt about the Company’s ability

to continue as a going concern.

Management’s ability to fund our operations and capital expenditures depends on our ability to raise

additional external capital.

This is subject to our future operating performance and general economic, financial, competitive, legislative,

regulatory, and other conditions, some of which are beyond our control.

We are currently engaged in discussions with various financing

counterparties to secure sufficient capital to meet our business needs for the foreseeable future.

The Company plans to finance its operations

with proceeds from the sale of equity securities, government grants and loans, or debt;

however, there is no assurance that management’s

plans to obtain additional debt, grants or equity financing will be successfully implemented or implemented on terms favorable to the

As of December 31, 2025, we had an accumulated

4 unchanged sentences

incurred losses from operations totaling $41,004,000 and net cash used in operating activities of $4,536,702.

We expect to continue to

incur such losses for at least the next twelve (12) months.

Accounting Estimates

prepare our financial statements in accordance with U.S.

generally accepted accounting principles, which require our management to make

estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance

sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.

To the extent that there are material

differences between these estimates and actual results, our financial condition or results of operations would be affected.

estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances

and expectations for the future based on available information.

During 2025, the

Company significantly reduced its derivative liabilities, primarily through the conversion and cancellation of the Series C and Series

D warrants associated with the Madison Bond and Bayside Project warrant conversion transaction.

As part of this transaction, all remaining

unexercised warrants were converted into shares of the Company’s common stock, eliminating the related derivative liabilities.

does not currently expect to utilize financing arrangements that would require derivative accounting, which is expected to reduce non-cash

volatility in future results.

However, these improvements do not eliminate the need for additional capital to fund operations.

Off-Balance Sheet Arrangements

At December 31, 2025 and 2024, 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 non-financial agreements involving assets.

Critical Accounting Estimates

We prepare our financial statements in accordance

generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of

assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts

of revenues and expenses during the reporting periods.

To the extent that there are material differences between these estimates and actual

results, our financial condition or results of operations would be affected.

We base our estimates on our own historical experience and

other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available

We evaluate these estimates on an ongoing basis.

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(i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the

time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or

use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition

time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use

of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition

or results of operations.

There are items within our financial statement that require estimation but are not deemed critical, as defined

We have identified the following as our critical accounting estimate as of and for the year ended December 31, 2024:

Purchase Agreement

The Company accounts for the forward purchase agreement as either equity-classified

or liability-classified instruments based on an assessment of the Forward Purchase Agreement (“FPA”) specific terms and applicable

authoritative guidance in FASB ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”), and FASB ASC 815,

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

The assessment considers whether the FPA is a freestanding financial instrument

pursuant to ASC 480, meets the definition of a liability pursuant to ASC 480, and whether the FPA meets all of the requirements for equity

classification under ASC 815, including whether the FPA is indexed to the Company’s own common shares and whether the FPA holders

could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions

for equity classification.

This assessment is conducted at the time of FPA issuance and as of each subsequent quarterly period end date

while the FPA is outstanding.

For issued or modified FPA that meet all of the criteria for equity

classification, the FPA is required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or

modified FPAs that do not meet all of the criteria for equity classification, the FPA are required to be recorded at their initial fair

value on the date of issuance, and each balance sheet date thereafter.

There were no changes to the Company’s critical accounting estimates from those disclosed in the Annual Report on Form 10-K

for the year ended December 31, 2024.

Forward Purchase Agreement

The Company accounts for the forward purchase

agreement as either equity-classified or liability-classified instruments based on an assessment of the Forward Purchase Agreement (“FPA”)

specific terms and applicable authoritative guidance under FASB ASC 815, “Derivatives and Hedging” (“ASC 815”).

The assessment considers whether the FPA meets all of the requirements for equity classification under ASC 815, including whether the

FPA is indexed to the Company’s own common shares and whether the FPA holders could potentially require “net cash settlement”

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

This assessment is conducted

at the time of FPA issuance and as of each subsequent quarterly period end date while the FPA is outstanding.

The Company has determined that the FPA does not

meet all of the criteria for equity classification under ASC 815, as the FPA fails the fixed-for-fixed test under ASC 815-40 due to the

bi-weekly Reset Price mechanism, the Dilutive Offering Reset provision, and the VWAP Trigger Event, each of which creates variability

in the settlement amount that is not purely a function of the Company’s own stock price.

Accordingly, the FPA is classified as a liability-classified

derivative instrument, recorded at fair value on the date of issuance and remeasured at fair value at each balance sheet date thereafter.

The Company utilizes a Monte Carlo simulation model to determine the fair value of the FPA.

The resulting fair value is recorded as a

derivative liability on the consolidated and combined balance sheets.

The Company records changes in the fair value of the FPA as a non-cash

other income (expense) within change in fair value of derivative liabilities account on the Company’s consolidated and combined

statements of operations.

Upon the issuance of shares in connection with the FPA, the Company

recognizes (i) an increase to APIC measured at the fair value of the FPA at the time of share issuance, (ii) a corresponding stock subscription

receivable of equal amount as a contra-equity component within stockholders’ equity (deficit), representing the present value of the consideration

receivable for the shares issued, and (iii) a loss on issuance of common stock within Other Income (Expense) representing the difference

between the face value of the stock subscription receivable and its present value at the issuance date.

The discount between the face

value and present value of the stock subscription receivable is accreted using the effective interest method over the remaining term of

the FPA, with each period’s accretion recorded as an increase to both the stock subscription receivable and APIC within stockholders’

equity (deficit).

The stock subscription receivable is presented as a reduction to total stockholders’ equity (deficit) and is relieved

as Optional Early Termination proceeds are received from the Forward Purchase Investor.

For issued or modified FPA that meet all of the criteria for

equity classification, the FPA is required to be recorded as a component of additional paid-in capital at the time of issuance.

or modified FPAs that do not meet all of the criteria for equity classification, the FPA are required to be recorded at their initial

fair value on the date of issuance, and each balance sheet date thereafter.

The Company accounts for outstanding FPA as liability-classified

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of the fair value requires significant estimates and judgments.

Please see Note 14 – Fair Value Measurements to the financial statements

for the significant assumptions and estimates.

in the significant assumptions and estimates could materially impact the valuation and the amounts recorded in the financial statements.

See Note 13 – Fair

Value Measurements to the financial statements for the significant assumptions and estimates.

Changes in the significant assumptions and estimates

could materially impact the valuation and the amounts recorded in the financial statements.

The Company evaluates warrants issued in connection

with financing transactions to determine whether the instruments should be classified as equity or liabilities in accordance with the

applicable guidance in ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging.

This assessment considers

whether the warrants meet the criteria for equity classification, including whether the warrants are indexed to the Company’s own

common stock and whether the settlement provisions could require net cash settlement or contain adjustment features that would preclude

equity classification.

This assessment is performed at the time of issuance and reassessed at each reporting date while the warrants remain

For issued or modified warrants that meet all

of the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance.

For warrants that do not meet the criteria for equity classification, the warrants are recorded at fair value as derivative liabilities

on the consolidated and combined balance sheets at the date of issuance and remeasured at fair value at each subsequent reporting date.

The Company accounts for the outstanding Series A, Series B, Series

C, and Series D warrants issued in connection with the March and August 2024 private placement financings (the “PIPE Warrants”)

as liability-classified instruments.

The fair value of the Series A and Series B warrants is determined using the Black-Scholes option

pricing model, while the fair value of the Series C and Series D warrants is determined using a Monte Carlo simulation model due to their

more complex features.

These valuation models require significant estimates and judgments, including assumptions related to the Company’s

stock price volatility, expected term, risk-free interest rates, and other market-based inputs.

As these warrants are classified as derivative

liabilities, changes in their fair value are recognized as non-cash gains or losses within change in fair value of derivative liabilities

in the consolidated and combined statements of operations.

The fair value of the PIPE Warrants is classified

as Level 3 within the fair value hierarchy.

The determination of the fair value requires significant estimates and judgments.

13 – Fair Value Measurements to the financial statements for the significant assumptions and estimates used in the valuation.

in these assumptions could materially impact the valuation and the amounts recorded in the Company’s financial statements.

Because the valuation of these instruments requires significant estimates

and assumptions, changes in these assumptions could materially affect the reported fair value of the derivative liabilities and the resulting

non-cash gains or losses recorded in the Company’s results of operations.

Recently Adopted Accounting Standards

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adoption did not have a material impact to the Company’s financial statements or disclosures.

Issued Accounting Standards

In December 2023, the FASB issued ASU 2023-09,

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosures of incremental income tax

information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.

is effective for the fiscal year beginning after December 15, 2024.

Early adoption is permitted.

The Company’s management does

not believe the adoption of ASU 2023-09 will have a material impact on its financial statements and disclosures.

Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosures of incremental income tax information

within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.

ASU 2023-09 is effective

for the fiscal year beginning after December 15, 2024.

Effective January 1, 2025, the Company adopted ASU 2023-09.

The adoption of ASU

2023-09 did not have a material impact on the Company’s consolidated and combined financial statements.

The adoption affected disclosures,

such as expanded income tax disclosures, and did not impact the Company’s financial position, results of operations, or cash flows.

See Note 11 – Income Taxes to the consolidated and combined financial statements for additional information.

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU 2024-03,

“Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement

Expenses” to improve disclosures by providing more detailed information about the types of expenses in commonly presented expense

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal

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

The Company is currently evaluating the effect this standard will

have on its consolidated financial statements and related disclosures.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a smaller reporting company, we are not required to make disclosures under this Item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

financial statements and the notes thereto begin on page F-1 of this Annual Report.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Disaggregation of Income

Statement Expenses” to improve disclosures by providing more detailed information about the types of expenses in commonly presented

expense captions.

The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within

fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the effect this standard

will have on its consolidated financial statements and related disclosures.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required

to make disclosures under this Item.

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