SDSTW

The following discussion and analysis of the financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes thereto contained elsewhere in this Quarterly Report. Company Overview and History On July 8, 2024, Stardust Power Operating Inc. (f/k/a Stardust Power Inc. prior to the consummation of the Business Combination, or “Legacy Stardust Power”) consummated the business combination contemplated by the Business Combination Agreement, dated as of November 21, 2023 (as amended, the “Business Combination Agreement”), by and among Global Partner Acquisition Corp. II, a Cayman Islands exempted company (“GPAC II”), Strike Merger Sub I, Inc., a Delaware corporation and direct wholly owned subsidiary of GPAC II (“First Merger Sub”), Strike Merger Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of GPAC II (“Second Merger Sub”), and Legacy Stardust Power (the “Business Combination”). Pursuant to the Business Combination Agreement, First Merger Sub merged into Legacy Stardust Power, with Legacy Stardust Power being the surviving corporation. Legacy Stardust Power then merged into Second Merger Sub, with Second Merger Sub being the surviving entity. Upon the completion of the Business Combination, GPAC II was renamed Stardust Power Inc. Unless the context otherwise requires, any reference in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us,” “our,” or “Stardust Power” refers to Stardust Power Inc. and its consolidated subsidiaries. We are a U.S.-based development stage battery grade lithium manufacturer designed to foster clean energy independence for the United States. We are in the process of creating capacity to manufacture battery grade lithium products, for a wide variety of applications, including energy storage systems, e-mobility, grid infrastructure, and data centers, by developing a large-scale lithium refinery in the United States. We seek to become a sustainable, cost effective supplier of battery grade lithium carbonate, by our innovative approach in the development of a large central refinery optimized for multiple inputs of lithium chloride in Oklahoma. We intend to source lithium chloride feedstock from various suppliers and may make investments upstream to secure additional feedstock. We seek to sell our products to electric vehicle (“EV”) manufacturers as our primary market, with potential applications in other areas such as battery manufacturers, the U.S. military, and original equipment manufacturers (“OEMs”). Some of the key driving factors are the demand for battery grade lithium products, fueled largely by the demand for energy storage solutions, production of electric vehicles and automotive OEMs, and battery manufacturers seeking domestic supply options, leading to demand for minerals used in battery cells, such as lithium, governmental incentives for American manufacturing and evolving geopolitical climate that is creating a national security priority for the U.S. market. In February 2023, we received an illustrative incentive analysis for up to $257 million in performance-based incentives from the State of Oklahoma and potential federal incentives, which also included potential eligibility for further federal grants. The state incentives were based on initial job creation, equipment procurement, training and recruitment incentives, property tax exemptions, sales tax exemptions, and capital expenditure projections submitted to the Oklahoma Department of Commerce in the first quarter of 2023 and could be subject to changes as we progress in setting up our planned lithium refinery in Muskogee, Oklahoma (the “Facility”) and commercial production of battery grade lithium in the future. These incentives may change based on the actual financial metrics of the Company in the future, which may be lower or higher. We believe that we are well positioned to address these opportunities by emerging as a leading, fully integrated domestic lithium supplier, and contribute to restoring American energy independence, thereby bridging the gap in the domestic supply of battery grade lithium products. 25 Recent Developments Recent Financing Activity On December 23, 2025, we entered into a Securities Purchase Agreement (the “Lind Securities Purchase Agreement”) with Lind Global Asset Management XIII LLC (“Lind”) providing for up to $15,000,000 in senior secured convertible debt financing. Simultaneously, we initially drew down gross proceeds of approximately $4,000,000 in exchange for issuance to Lind of a Senior Secured Convertible Promissory Note in the amount of $4,800,000 (the “2025 Convertible Note”) and a Common Stock Purchase Warrant for the purchase of approximately 411,245 shares (the “2025 Lind Warrant”). On February 12, 2026, we entered into a Common Stock Purchase Agreement (the “B. Riley Purchase Agreement”) and a Registration Rights Agreement (the “B. Riley Registration Rights Agreement”, and together with the B. Riley Purchase Agreement, the “B. Riley Agreements”) with B. Riley Principal Capital II, LLC (“B. Riley Principal Capital II”). Pursuant to the B. Riley Agreements, we have the right, in our sole discretion, to sell to B. Riley Principal Capital II, from time to time during the 36-month investment period, up to $10,000,000 of newly issued shares of our Common Stock (the “Total Commitment”), subject to an exchange cap and other conditions and limitations set forth in the agreement. On April 20, 2026, we entered into a Letter of Intent (the “LOI”) with a single institutional investor to support project level financing for our Facility. Under the terms of the LOI, the institutional investor has indicated its intent to invest up to $150 million at the project level, with flexibility across equity, debt, and hybrid financing structures. The agreement is non-binding and outlines a framework for a potential investment, including the ability to support the financing through syndication and direct capital participation. We and the investor have also agreed to proceed through customary due diligence and negotiation of definitive agreements, and any potential investment remains subject to satisfactory due diligence and the execution of definitive documentation and is not committed capital for purposes of liquidity or going concern analysis. On May 8, 2026, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”). Pursuant to the terms of the Sales Agreement, we may sell from time to time through the Agent, shares of our Common Stock, par value $0.0001 per share, having an aggregate offering price of up to $5,000,000 (the “Shares”). We intend to use this facility to raise capital as needed. Notice from Nasdaq On April 24, 2026, we were notified by the listing qualifications staff of Nasdaq that we did not satisfy the minimum $35 million market value of the listed securities requirement for 30 consecutive business days, as required under Nasdaq Listing Rule 5550(b)(2) for the Nasdaq Capital Market (the “MVLS Requirement”). Nasdaq also noted that we do not meet the requirements under Listing Rules 5550(b)(1) and 5550(b)(3). In accordance with Nasdaq rules, we have a period of 180 calendar days (or until October 21, 2026) to regain compliance with the MVLS Requirement. To the extent we seek to regain compliance through the MVLS Requirement, our market value of listed securities must close at $35 million or more for a minimum of 10 consecutive business days during the 180-day compliance period. The notification received has no immediate effect on the listing of our securities on The Nasdaq Capital Market. Recent Supply Agreements On March 13, 2026, we entered into a non-binding letter agreement with a strategic counterparty for the supply of 15,000 metric tons per annum of lithium carbonate equivalent in the form of lithium chloride. The initial contract term would span 12 years starting from the date on which first commercial shipment is received by us, with the option for us to renew for an additional six-year term. Air Permit During six months ended June 30, 2026, we received our air quality construction permit from the Oklahoma Department of Environmental Quality (“ODEQ”) for our lithium refinery in Muskogee, Oklahoma. This key milestone represents the final significant permit required for construction and commissioning, positioning us to advance one of the largest planned lithium refineries in the United States. 26 Reverse Stock Split On September 3, 2025, we filed a certificate of amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware to effectuate a 1-for-10 reverse stock split (the “Reverse Stock Split”) of the outstanding shares of our common stock, par value $0.0001 (“Common Stock”). Our stockholders previously approved the Reverse Stock Split at the Company’s annual meeting of stockholders held on June 9, 2025 and granted our board of directors (the “Board”) the authority to determine the exact split ratio and when to proceed with the Reverse Stock Split. The Reverse Stock Split became effective on September 8, 2025, and our Common Stock began trading on the Nasdaq on a Reverse Stock Split-adjusted basis on September 8, 2025 at market open. The Reverse Stock Split did not decrease the number of authorized shares of Common Stock and preferred stock or otherwise affect the par value of the Common Stock. No fractional shares were issued in connection with the Reverse Stock Split and any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole share. Stockholders who were otherwise entitled to receive fractional shares as a result of the Reverse Stock Split were paid cash in lieu thereof. As a result of the Reverse Stock Split, shares of Common Stock, outstanding warrants, stock options, and restricted stock units were proportionately decreased (and the respective per share value and exercise prices, if applicable, were proportionately increased) (see Part I, Item 1, Note 2, Basis of Presentation and summary of significant accounting policies in the notes to unaudited condensed consolidated financial statements in this Quarterly Report). Key Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including competition from other lithium brine and other brine producers, changes to existing federal and state level incentive framework, changes in regulations, and other factors discussed under the section titled “Risk Factors” in our Form 10-K and in this Quarterly Report. We believe the factors described below are key to our success. Commencing Commercial Operations We are a development stage company, and we have purchased a site in Southside Industrial Park, Muskogee, Oklahoma to build the Facility (the “Site”). We have completed a number of required site assessments and technical studies, including the critical issue analysis, Phase I ESA, front-end loading (“FEL”) -1 study and FEL-3 study. Additional studies may be required as the project progresses. The project required evaluation for certain federal, state, and local permits. State permitting focuses on air emissions, wastewater, and stormwater permits. Federal permitting focuses on possible cultural, biological, and natural resources and threatened/endangered species impacts. The key permitting agency for the project at the state level is the ODEQ. We have received from the ODEQ the general permit for stormwater discharges from Construction Activities, approval of its stormwater pollution prevention plan and air quality construction permit (“Air Permit”). Under current design plans, we do not expect to require a waste water permit for the Facility since no waste water is expected to be discharged. We are developing a large central refinery in a phased approach. The first phase is the construction of a production line with up to 25,000 metric tons per annum. The second phase is to add a second production line with up to 25,000 tons per annum, to create a total capacity of up to 50,000 tons per annum. A technological innovation of our planned refinery is the ability for the Facility to refine different sources of lithium chloride inputs derived from lithium brines. The Facility is being designed to accept lithium chloride of a certain approved chemical composition. It is our intention that the Facility should be able to dilute and pre-treat feedstock as necessary, so that various lithium feedstock can be blended, in order to produce a consistent feedstock. Our strategy is to differentiate ourselves by screening for a broader set of contaminants, in comparison to other lithium refineries. Partnership Ecosystem Our success will depend on whether we can execute and expand our ecosystem of commercial arrangements with additional suppliers of brine and executing agreements with them at favorable terms. The availability of brine for the purpose of extracting lithium is still in a nascent stage and we would require access to multiple sources as we start commercial production and grow our business. Our management team frequently evaluates current and future sources of supplies for reliability and geographic locations for logistics and cost efficiency. We would also have to maintain technology arrangements with existing strategic affiliations on whose patented and proprietary processes we depend on, as well as forge new technology affiliations as exploration, extraction and purification processes evolve, to obtain raw materials required to manufacture high-quality lithium suitable for consumption by the EV industry, and other potential usages. These affiliations should enable us to refine and sell battery grade lithium at competitive prices, which in turn helps secure the growth and profitability of our business operations in the long term. 27 Adequate Capital Raise The success of our refinery’s activities relating to producing battery grade lithium from brine and our ability to obtain relevant permits in a timely manner require significant capital investment and financing to fund the initial investment in all aspects of setting up the operations, and may subsequently be impacted by our operating losses, competition from substitute products and services from larger companies, protection of proprietary technology of our strategic partners, and dependence on key individuals. Our unaudited condensed consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have not earned any revenue and have been operating at a loss since inception. We have an accumulated deficit and stockholders’ deficit. We believe that the cash on hand and additional investments available through issuance of new Common Stock will be inadequate to satisfy our working capital and capital expenditure requirements for at least the next twelve months. These conditions raise substantial doubt about our ability to continue as a going concern for one year from the issuance of these unaudited condensed consolidated financial statements. As a development stage company, we need to raise additional capital to realize our business objectives. Our long-term success and ability to continue as a going concern are dependent upon our ability to successfully raise additional capital or financing, or successfully enter into strategic partnerships. Until commercial production is achieved from our planned operations, we will continue to incur operating and investing net cash outflows associated with, among other things, maintaining and acquiring exploration properties and undertaking ongoing exploration activities. Limited Operating History We have a limited operating history and there is limited historical financial information upon which to base an evaluation of our performance. Our business and financial condition must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operation. Key Business Metrics Since we have yet to start the construction of our Facility and associated commercial production, we do not have financial information on key business metrics. We do not currently present any non-GAAP financial measures. However, based on our experience and industry knowledge, we expect the following would be key business metrics: ● Raw Material Cost/ton: This includes the input cost of lithium chloride for the plant. As this may be obtained from various sources, the weighted average cost will be calculated to arrive at the raw material cost per ton and reflects our ability to procure high-quality raw materials at an appropriate price. The weighted average method also helps in calculating the gross margin on a per-ton basis. The technology implemented and the efficiency of the operations are also reflected in the gross margin per ton. ● Selling Price/ton: This multiple is driven by the demand and supply of the lithium price as well as the efficient operations of the plant. The computation of the selling price may be based on the output sold per long-term contract, which is expected to have a floor and a cap, as well as the spot price on the date of placing a purchase order by the customer, with us and the customer sharing the difference between the floor and spot price. ● Capex/ton: This reflects the Capex incurred on a per-ton basis. It includes both direct and indirect costs. It also has contingency costs built in for any impact on Capex, to account for unforeseen events. The key is to optimize plant efficiency in long-term operations with the appropriate technology and set-up. 28 ● Opex/ton: This includes the ongoing expenses incurred from the day-to-day running of the operations. It helps in measuring how much profit a company makes on a dollar of sales after paying for variable costs of production, such as wages and raw materials, but before paying interest or tax. The lower multiple reflects the efficient functioning of the management. ● Capacity Utilization: This measures how much output a plant is producing, compared to its maximum potential output, which is dependent on two key factors: (a) design capacity, which impacts the operational efficiency of the plant, and (b) the plant’s downtime for its maintenance. Timely maintenance is also the key to running any efficient operations. Further, since we are yet to generate revenue, we do not currently utilize non-GAAP financial measures such as EBITDA or EBITDA margin. To the extent we introduce any non-GAAP financial measures in future periods, we will provide the disclosures required by Item 10(e) of Regulation S-K, including a reconciliation to the most directly comparable financial measure calculated in accordance with U.S. GAAP.