08/14/2024 | Press release | Distributed by Public on 08/14/2024 14:17
Exhibit 99.1
Stardust Power Inc. & Subsidiary
CONDENSED CONSOLIDATED BALANCE SHEETS
(all amounts in USD, except number of shares)
As of June 30, 2024 |
As of December 31, 2023 |
|||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 641,966 | $ | 1,271,824 | ||||
Prepaid expenses and other current assets | 226,683 | 426,497 | ||||||
Deferred transaction costs | 2,829,196 | 1,005,109 | ||||||
Total current assets | $ | 3,697,845 | $ | 2,703,430 | ||||
Computer and equipment, net | 8,883 | 1,968 | ||||||
Pre-acquisition capital project costs | 835,219 | 100,000 | ||||||
Investment in equity securities | 55,884 | 218,556 | ||||||
Other long term assets | 50,000 | - | ||||||
Total assets | $ | 4,647,831 | $ | 3,023,954 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 2,713,812 | $ | 1,256,792 | ||||
Accrued liabilities and other current liabilities | 597,556 | 208,107 | ||||||
Current portion of early exercised shares option liability | 3,889 | 2,990 | ||||||
Short-term loan | 24,824 | 72,967 | ||||||
Total current liabilities | $ | 3,340,081 | $ | 1,540,856 | ||||
SAFE notes | 6,367,200 | 5,212,200 | ||||||
Convertible notes | 2,571,400 | - | ||||||
Other long term liability |
75,002 |
- | ||||||
Early exercised shares option liability | 4,561 | 5,660 | ||||||
Total liabilities | $ | 12,358,244 | $ | 6,758,716 | ||||
Commitments and contingencies (Note 2) | ||||||||
Stockholders' equity (deficit) | ||||||||
Common stock, $0.00001 par value, 15,000,000 shares authorized, 9,017,300 shares issued and outstanding as at June 30, 2024 and December 31, 2023 | 87 | 87 | ||||||
Additional paid-in capital | 176,660 | 58,736 | ||||||
Accumulated deficit | (7,887,160 | ) | (3,793,585 | ) | ||||
Total stockholders' deficit | $ | (7,710,413 | ) | (3,734,762 | ) | |||
Total liabilities and stockholders' deficit | $ | 4,647,831 | $ | 3,023,954 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1 |
Stardust Power Inc. & Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(all amounts in USD, except number of shares)
(Unaudited)
Three months ended | Six months ended |
Period from March 16, 2023 (inception) through |
||||||||||||||
June 30, 2024 |
June 30, 2023 |
June 30, 2024 |
June 30, 2023 |
|||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
General and administrative expenses | 1,267,059 | 1 | 878,796 | 1 | 2,502,425 | 1 | 1,124,198 | 1 | ||||||||
Operating Loss | (1,267,059 | ) | (878,796 | ) | (2,502,425 | ) | (1,124,198 | ) | ||||||||
Other incomes (expenses) | ||||||||||||||||
SAFE note issuance costs |
- |
(436,647 |
)2 | - | (436,647 | )2 | ||||||||||
Other transaction costs | - | (416,829 | )3 | - | (416,829 | )3 | ||||||||||
Interest expense | (789 | ) 4 | (7,008 | ) 4 | (2,078 | ) 4 | (7,111 | )4 | ||||||||
Change in fair value of investment in equity securities | (108,014 | ) | - | (162,672 | ) | - | ||||||||||
Change in fair value of convertible notes |
(471,400 |
) | - |
(471,400 |
) | - | ||||||||||
Change in fair value of SAFE notes |
(847,100 |
) | - | (955,000 | ) | - | ||||||||||
Total other expenses | (1,427,303 | ) | (860,484 | ) | (1,591,150 | ) | (860,587 | ) | ||||||||
Net Loss | $ | (2,694,362 | ) | $ | (1,739,280 | ) | $ | (4,093,575 | ) | $ | (1,984,785 | ) | ||||
Loss per share | ||||||||||||||||
Basic | $ | (0.31 | ) | $ | (0.20 | ) | $ | (0.47 | ) | $ | (0.23 | ) | ||||
Diluted | $ | (0.31 | ) | $ | (0.20 | ) | $ | (0.47 | ) | $ | (0.23 | ) | ||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | $ | 8,686,350 | $ | 8,757,603 | $ | 8,677,870 | $ | 8,755,120 | ||||||||
Diluted | $ | 8,686,350 | $ | 8,757,603 | $ | 8,677,870 | $ | 8,755,120 |
(1) | Includes related party amounts of $Nil and $517,281 for the three months ended June 30, 2024 and 2023, respectively and $Nil and $624,438 for the six months ended June 30, 2024 and from March 16, 2023 to June 30, 2023, respectively. |
(2) | Includes related party amounts of $Nil and $435,000 for the three months ended June 30, 2024 and 2023, respectively and $Nil and $435,000 for the six months ended June 30, 2024 and from March 16, 2023 to June 30, 2023, respectively. |
(3) | Includes related party amounts of $Nil and $100,000 for the three months ended June 30, 2024 and 2023, respectively and $Nil and $100,000 for the six months ended June 30, 2024 and from March 16, 2023 to June 30, 2023, respectively. |
(4) | Includes related party amounts of $Nil and $7,008 for the three months ended June 30, 2024 and 2023, respectively and $Nil and $7,111 for the six months ended June 30, 2024 and from March 16, 2023 to June 30, 2023, respectively. |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2 |
Stardust Power Inc. & Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(all amounts in USD, except number of shares)
(Unaudited)
For the period from March 16, 2023 (inception) through June 30, 2023 | ||||||||||||||||||||
Total | ||||||||||||||||||||
Common Stock | Additional | Accumulated | Stockholders' | |||||||||||||||||
Shares | Amount | paid-in capital | Deficit | Deficit | ||||||||||||||||
Balance as at March 16, 2023 (inception) | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Issuance of common stock | 9,000,000 | 90 | - | - | 90 | |||||||||||||||
Net loss | - | - | - | (1,984,785 | ) | (1,984,785 | ) | |||||||||||||
Balance as at June 30, 2023 | 9,000,000 | $ | 90 | $ | - | $ | (1,984,785 | ) | $ | (1,984,695 | ) |
For the period from March 31, 2023 through June 30, 2023 | ||||||||||||||||||||
Total | ||||||||||||||||||||
Common Stock | Additional | Accumulated | Stockholders' | |||||||||||||||||
Shares | Amount | paid-in capital | Deficit | Deficit | ||||||||||||||||
Balance as at March 31, 2023 | 9,000,000 | $ | 90 | $ | - | $ | (245,505 | ) | $ | (245,415 | ) | |||||||||
Net loss | - | - | - | (1,739,280 | ) | (1,739,280 | ) | |||||||||||||
Balance as at June 30, 2023 | 9,000,000 | $ | 90 | $ | - | $ | (1,984,785 | ) | $ | (1,984,695 | ) |
For the six months ended June 30, 2024 | ||||||||||||||||||||
Total | ||||||||||||||||||||
Common Stock | Additional | Accumulated | Stockholders' | |||||||||||||||||
Shares | Amount | paid-in capital | Deficit | Deficit | ||||||||||||||||
Balance as at December 31, 2023 | 9,017,300 | $ | 87 | $ | 58,736 | $ | (3,793,585 | ) | $ | (3,734,762 | ) | |||||||||
Transfer from early exercised stock option liability on vesting (Note 3) | - | - | 200 | - | 200 | |||||||||||||||
Net loss | - | - | - | (4,093,575 | ) | (4,093,575 | ) | |||||||||||||
Stock based compensation (Note 3) | - | - | 117,724 | - | 117,724 | |||||||||||||||
Balance as at June 30, 2024 | 9,017,300 | $ | 87 | $ | 176,660 | $ | (7,887,160 | ) | $ | (7,710,413 | ) |
For the three months ended June 30, 2024 | ||||||||||||||||||||
Total | ||||||||||||||||||||
Common Stock | Additional | Accumulated | Stockholders' | |||||||||||||||||
Shares | Amount | paid-in capital | Deficit | Deficit | ||||||||||||||||
Balance as at March 31, 2024 | 9,017,300 | $ | 87 | $ | 118,435 | $ | (5,192,798 | ) | $ | (5,074,276 | ) | |||||||||
Transfer from early exercised stock option liability on vesting (Note 3) | - | - | 100 | - | 100 | |||||||||||||||
Net loss | - | - | - | (2,694,362 | ) | (2,694,362 | ) | |||||||||||||
Stock based compensation (Note 3) | - | - | 58,125 | - | 58,125 | |||||||||||||||
Balance as at June 30, 2024 | 9,017,300 | $ | 87 | $ | 176,660 | $ | (7,887,160 | ) | $ | (7,710,413 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3 |
Stardust Power Inc. & Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(all amounts in USD)
(Unaudited)
Six months ended June 30, 2024 |
Period from March 16, 2023 (inception) through June 30, 2023 |
|||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (4,093,575 | ) | $ | (1,984,785 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Stock based compensation | 117,724 | - | ||||||
Change in fair value of investment in equity securities | 162,672 | - | ||||||
Change in fair value of SAFE notes | 955,000 | - | ||||||
Change in fair value of convertible notes |
471,400 |
- | ||||||
Depreciation expense | 505 | - | ||||||
SAFE note issuance costs | - |
436,647 |
||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other current assets | (65,185 | ) | (12,540 | ) | ||||
Accounts payable | 266,068 | 253,598 | ||||||
Accrued liabilities and other current liabilities | 81,465 | 395,869 | ||||||
Due to related parties | - | 247,119 | ||||||
Net cash used in operating activities | $ | (2,103,926 | ) | $ | (664,092 | ) | ||
Cash flows from investing activities: | ||||||||
Pre-acquisition capital project costs | (442,966 | ) | (25,000 | ) | ||||
Investment in other long term assets | (50,000 | ) | - | |||||
Purchase of computer and equipment | (7,421 | ) | - | |||||
Net cash used in investing activities | $ | (500,387 | ) | $ | (25,000 | ) | ||
Cash flows from financing activities: | ||||||||
Proceeds from investor for issuance of SAFE notes | 200,000 | - | ||||||
Proceeds from investor deposits | - | 2,000,000 | ||||||
Proceeds from issuance of notes payable to related parties | - | 1,000,000 | ||||||
Repayment of notes payable to related parties | - | (1,000,000 | ) | |||||
Proceeds from stock issuance | - | 90 | ||||||
Deposit received for PIPE Investments |
75,002 |
- | ||||||
Proceeds from issuance of convertible notes | 2,100,000 | - | ||||||
Deferred transaction costs paid | (346,401 | ) |
- |
|||||
Payment of SAFE note issuance cost to related parties | - | (435,000 | ) | |||||
Repayment of short term loan | (48,143 | ) | - | |||||
Repurchase of unvested shares | (6,003 | ) | - | |||||
Net cash provided by financing activities | $ | 1,974,455 | $ | 1,565,090 | ||||
Net (decrease) / increase in cash | $ | (629,858 | ) | $ | 875,998 | |||
Cash at the beginning of the period | 1,271,824 | - | ||||||
Cash at the end of the period | $ | 641,966 | $ | 875,998 | ||||
Supplemental disclosure for cash flow information: | ||||||||
Interest paid | $ | 2,189 | $ | - | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Unpaid deferred transaction costs | $ | 1,612,331 | $ | - | ||||
Unpaid SAFE note issuance costs | $ | - | $ |
1,647 |
||||
Unpaid pre-acquisition capital project costs | $ | 27,253 | $ | - |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - DEscription of the company
Nature of Business
Stardust Power Inc., ("the Company", "Stardust Power") which was incorporated on March 16, 2023, is a development stage company engaged in setting-up vertically integrated battery grade lithium production, designed to foster energy independence in the United States. While the Company has not earned any revenue yet, the Company is in the process of developing a strategically central, vertically integrated lithium refinery capable of producing up to 50,000 tons per annum of battery-grade lithium.
Business combination
On November 21, 2023, the Company entered into a business combination agreement (the "Business Combination Agreement") with Global Partner Acquisition Corp II ("GPAC II"), a Cayman Islands exempted company, Strike Merger Sub I, Inc. ("First Merger Sub"), a Delaware corporation and direct wholly-owned subsidiary of GPAC II, Strike Merger Sub II ("Second Merger Sub"), LLC, a Delaware limited liability company and direct wholly-owned subsidiary of GPAC II.
On July 8, 2024, the Company completed the merger. GPAC II deregistered as a Cayman Islands exempted company and domesticated as a Delaware corporation. As per the Business Combination Agreement, First Merger Sub merged into the Company, with the Company being the surviving corporation. Following the First Merger, the Company merged into Second Merger Sub, with Second Merger Sub being the surviving entity. Upon the merger, GPAC II was renamed as Stardust Power Inc. ("the Combined Company"), with the ticker symbol "SDST".
As per the Business Combination Agreement:
● | Each share of Stardust Power Common Stock issued and outstanding immediately prior to the first effective time converted into the right to receive the number of GPAC II common stock equal to the merger consideration divided by the number of shares of the Company fully-diluted stock. |
● | Each outstanding Stardust Power Option, whether vested or unvested, automatically converted into an option to purchase a number of shares of GPAC II common stock equal to the number of shares of GPAC II Common Stock subject to such Stardust Power Option immediately prior to the first effective time multiplied by the per share consideration. |
● | Each share of Stardust Power Restricted Stock outstanding immediately prior to the first effective time converted into a number of shares of GPAC II common stock equal to the number of shares of Stardust Power common stock subject to such Stardust Power restricted stock multiplied by the per share consideration. |
● | Additionally, GPAC II will issue five million shares of GPAC II common stock to the holders of Stardust Power as additional merger consideration in the event that prior to the eighth (8th) 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. |
● | Immediately prior to the closing of the business combination, the SAFEs automatically converted into the 138,393 shares of common stock of Stardust Power. |
● | Immediately prior to the closing of the business combination, the convertible notes automatically converted into 55,889 shares of common stock of the Stardust Power. |
● | The Combined Company issued 1,077,541 shares of Combined Company Common Stock in exchange for $10,075,000 of cash in accordance with the terms of the Private Placement Agreement (PIPE) in connection with the Business Combination, of which $75,002 was received prior to June 30, 2024 and is presented as a deposit under other long term liability on the condensed consolidated balance sheet. |
The Company's basis of presentation within these unaudited condensed consolidated financial statements do not reflect any adjustments as a result of the Business Combination closing. The Business Combination will be accounted for as a reverse recapitalization. Under this method of accounting, GPAC II will be treated as the acquired company for financial statement reporting purposes.
5 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission ("SEC") regarding interim financial reporting.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the unaudited condensed consolidated financial statements) considered necessary to present fairly the Company's condensed consolidated balance sheet as of June 30, 2024, its condensed consolidated statements of operations, stockholders' deficit for the three and six months ended June 30, 2024, three months ended June 30, 2023 and for the period March 16, 2023 (since inception) through June 30, 2023 and condensed statement of cashflows for six months ended June 30, 2024 and for the period March 16, 2023 (since inception) through June 30, 2023. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this report should be read in conjunction with the audited consolidated financial statements and notes thereto for the period March 16, 2023 to December 31, 2023 included in the Company's registration statement on Form S-4/A filed with the SEC on May 8, 2024.
The condensed consolidated balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date but does not include all disclosures including notes required by U.S. GAAP.
The condensed consolidated financial statements include the accounts of Stardust Power Inc. and its wholly owned subsidiary, Stardust Power LLC. All material intercompany balances have been eliminated upon consolidation.
These unaudited condensed consolidated financial statements are presented in U.S. dollars.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Those estimates and assumptions include, but are not limited to, useful life of computer and equipment, realization of deferred tax assets, fair valuation of investment in equity securities and fair valuation of stock-based compensation, simple agreement for future equity note ("SAFE note") and convertible notes. The Company evaluates estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates, and those differences could be material to the unaudited condensed consolidated financial statements.
Going Concern
The Company's unaudited condensed 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 and has incurred a net loss of $2,694,362 and $4,093,575 for the three and six months ended June 30, 2024, respectively. The Company has an accumulated deficit of $7,887,160 and stockholders' deficit of $7,710,413 as of June 30, 2024. The Company expects to continue to incur significant costs in pursuit of its operating and investment plans. These costs exceed the Company's existing cash balance and net working capital. These conditions raise substantial doubt about its ability to continue as a going concern.
6 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of June 30, 2024 the Company has $641,966 of unrestricted cash. Upon completion of the Business Combination with GPAC II on July 8, 2024, the Company's consolidated cash balance increased due to the PIPE investments of $10,075,000, and $1,481,835 of trust account proceeds, net of redemptions and related fees. The Company is also required to make various payments including SPAC transaction costs incurred aggregating to $7,550,717 upon the close of the Business Combination.
As of the date on which these unaudited condensed consolidated financial statements were available to be issued, we believe that the cash on hand, additional investments obtained through the Business Combination will be inadequate to satisfy 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 issuance of equity or receive additional borrowings to fund the Company's operating and investing activities over the next year. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Summary of Significant Accounting Policies
The significant accounting policies applied in the Company's audited consolidated financial statements as of and for the period March 16, 2023 (inception) through December 31, 2023, as disclosed in the Company's registration statement on Form S-4/A filed with the SEC on May 8, 2024, are applied consistently in these unaudited interim condensed consolidated financial statements.
Net Loss per Share
The Company adopted ASC 260, "Earnings per Share", at its inception. Basic net loss per share is calculated by dividing the net loss by the weighted average number of common stock outstanding for the period. Diluted loss per share is calculated by dividing the Company's net loss available to common stockholders by the diluted weighted average number of shares outstanding for the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as at the first of the year for any potentially dilutive debt or equity.
The following table sets forth the computation of the basic and diluted net loss per share:
Three months ended | ||||||||||||||||
June 30, 2024 | June 30, 2023 |
Six months ended June 30, 2024 |
Period from March 16, 2023 (inception) through
June 30, |
|||||||||||||
Numerator: | ||||||||||||||||
Net loss | $ | (2,694,362 | ) | $ | (1,739,280 | ) | $ | (4,093,575 | ) | $ | (1,984,785 | ) | ||||
Denominator: | ||||||||||||||||
Weighted average shares outstanding | 8,686,350 | 8,757,603 | 8,677,870 | 8,755,120 | ||||||||||||
Net loss per share, basic and diluted | $ | (0.31 | ) | $ | (0.20 | ) | $ | (0.47 | ) | $ | (0.23 | ) |
The following potentially dilutive shares were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have had an anti-dilutive effect:
June 30, 2024 | June 30, 2023 | |||||||
Unvested common stock - shares (Note 3) | 322,542 | 226,625 |
Deferred Transaction Costs
In 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. The Company has deferred $2,829,196 and $1,005,109 of related costs incurred towards proposed public offering which are presented within current assets in the unaudited condensed consolidated balance sheets as at June 30, 2024 and December 31, 2023, respectively. Upon completion of the public offering contemplated herein, these amounts will be recorded as a reduction of stockholders' equity as an offset against the proceeds of the offering. If the offering is terminated, the deferred offering costs will be expensed.
7 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Commitments and Contingencies
Certain conditions may exist as at the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. The Company monitors the arrangements that are subject to guarantees in order to identify if the obligor who is responsible for making the payments fails to do so. If the Company determines it is probable that a loss has occurred, then any such estimable loss would be recognized under those guarantees. The methodology used to estimate potential loss related to guarantees considers the guarantee amount and a variety of factors, which include, depending on the counterparty, the latest financial position of the counterparty, actual defaults, historical defaults, and other economic conditions. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company's financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company's business, financial position, and results of operations or cash flows.
On March 13, 2024, Stardust and IGX Minerals LLC ("IGX"), entered into an exclusive Letter of Intent ("IGX LOI") to potentially acquire interests in certain mining claims ("IGX Claims"). The contemplated transaction is subject to the entering into of a definitive agreement, due diligence by Stardust, and other factors. In connection with the entering into the non-binding IGX LOI, Stardust has paid a non-refundable payment of $30,000 in connection with obtaining a binding exclusivity right. Further, Stardust Power has agreed to binding provisions relating to (i) a right of first refusal in favor of Stardust Power and (ii) the delivery of a form promissory note in favor of IGX. If executed, the promissory note, in the amount of approximately $235,000, is to be used for the payment of the maintenance fees of the IGX Claims and is for a term of twenty-four (24) months with an annual interest rate of six percent (6%) and repayment due upon maturity. The IGX LOI provides that the promissory note will be entered into regardless of whether the parties have reached a definitive agreement by July 1, 2024. If Stardust acquires an interest in any of the IGX Claims, the balance of the promissory note shall be credited as part of Stardust's investment and IGX shall not be required to repay the note. The promissory note has not been issued as of the date of issuance of unaudited condensed financial statements.
On March 15, 2024, Stardust and Usha Resources Inc ("Usha Resources") entered into a non-binding letter of intent, except for certain binding terms such as those relating to the exclusivity period until September 30, 2024 ("Jackpot LOI") to acquire an interest in Usha Resources' lithium brine project, situated in the United States. The contemplated transaction is subject to entering into a definitive agreement, due diligence by Stardust, and other factors. Stardust has made a non-refundable payment of $25,000 upon execution of the Jackpot LOI in connection with securing exclusivity and a further $50,000 payment (the "Second Payment") is intended to be made by Stardust sixty days from March 15, 2024; provided that the Second Payment shall be non-refundable except if Usha Resources breaches the terms of the Jackpot LOI at which point Usha Resources shall refund the Second Payment together with all out-of-pocket expenses (including the fees and expenses of legal counsel, accountants and other advisors hereof) incurred by Stardust. If the parties enter into definitive agreements pursuant to the Jackpot LOI, (i) depending on the earn-in level, the total consideration could total up to $26,025,000 over five years inclusive of up to $18,025,000 in payments comprising cash and stock and a work commitment of $8,000,000. Upon completion of the full earn-in, including Net Smelter Royalty buyback, Usha Resources would retain 10% of the project and a 1% Net Smelter Royalty and would be carried in the joint venture's (formed between Usha Resources and Stardust) receipt of a formal Decision to Mine following completion of a Feasibility Study. Usha Resources is in the process of conducting additional water testing with respect to a second hole. Given the early stage of this project, the full scope of any additional financing that may be required is not fully known; however, the Company has not entered into any arrangement for financing outside of the Jackpot LOI. On May 14, 2024, Company made the second payment as stated above and is presented as a deposit under other long term assets on the condensed consolidated balance sheet.
8 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Pre-acquisition capital project costs
The Company has an exclusive option purchase agreement with the City of Muskogee, Oklahoma for 66 acres of undeveloped tract (excluding wetlands and creeks). The option was scheduled to end on the earlier of February 29, 2024, the date the property is purchased, or the termination of the agreement by either party. The agreement allows for two three-month extensions, provided that the Company is performing due diligence and pursuing permits and approvals. Non-refundable option payments of $25,000 and $75,000 were made on June 8, 2023, and October 10, 2023, respectively. The Company has capitalized these payments as pre-acquisition capital project costs as at June 30, 2024 and December 31, 2023 because these payments would be credited against the full purchase price of the land upon acquisition. On January 10, 2024, the Company entered into an agreement to exercise the option and purchase the land for an additional amount of $1,562,030. Title to the land is pending to be transferred in the Company's name as at June 30, 2024. On May 2, 2024, the Company paid the first non-refundable extension payment of $33,333. The Company capitalized an additional $701,886 towards pre-acquisition capital project costs related to Front end loading (FEL-1) and environmental studies done during the six months ended June 30, 2024. On July 30, 2024, the Company paid the second non-refundable extension payment of $33,333.
Recently Issued Accounting Pronouncements Not Yet Adopted
The Company has reviewed the accounting pronouncements issued during the six months ended June 30, 2024 and concluded they were either not applicable or not expected to have a material impact on the Company's condensed consolidated financial statements.
NOTE 3 - STOCK-BASED COMPENSATION
Shares Issued at Inception
At March 16, 2023 (inception), certain employees and service providers participated in the purchase of restricted common stock of the Company aggregating to 550,000 shares. Out of the total, certain restricted stocks vested immediately and remaining unvested restricted stock aggregating to 259,000 shares vests over 24 months subject to service conditions and accelerated vesting upon certain events. The agreements also contain a repurchase option noting that if the employee or service provider is terminated, for any reason, the Company has the right and option to repurchase the service provider's unvested restricted common stock. Separate and apart from this repurchase option for unvested awards, if at any time holders of vested shares intend to sell or transfer their holdings to a third-party (other than permitted family transfers), the Company has an option to exercise a right of first refusal ("ROFR") to purchase these subject shares at the intended negotiated price between the holder and the third-party. The ROFR would remain active until the earlier of an initial public offering of the Company's common stock or the occurrence of the defined change in control event. The existence of the ROFR does not affect the equity classification for the Company's share-based awards as the possibility of a triggering event for the ROFR within six months of vesting is remote. Since all shareholders purchased the shares at par value of $0.00001 and the shares had no incremental value beyond the par value as at that date, during the period from March 16, 2023 (inception) through June 30, 2023 and six months ended June 30, 2024, the stock-based compensation expense impact is insignificant. As at June 30, 2024, 40,875 outstanding shares had not vested and the weighted average remaining contractual period of the unvested restricted stock is 0.75 years. Any shares subject to repurchase by the Company are not deemed, for accounting purposes, to be outstanding until those shares vest. The amount to be recorded as liabilities associated with shares issued with repurchase rights were immaterial as at June 30, 2024 and December 31, 2023.
9 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted stock activity for the six months ended June 30, 2024 and balances as at the end of June 30, 2024 were as follows:
Restricted Stock | ||||||||
Number of shares | Weighted Average Grant-Date Fair Value | |||||||
Unvested as of December 31, 2023 | 68,125 | 0.00001 | ||||||
Granted | - | - | ||||||
Vested | (27,250 | ) | 0.00001 | |||||
Forfeited | - | - | ||||||
Unvested as of June 30, 2024 | 40,875 | $ | 0.00001 |
Equity Incentive Plan
At March 16, 2023 (inception), the Company's stockholders approved the 2023 Equity Incentive Plan and 500,000 shares of the Company's common stock have been reserved for issuance under the plan. During the three months ended June 30, 2024, the Board adopted a resolution to increase the number of shares of Common Stock authorized for issuance under the 2023 Equity Plan by 250,000 shares of Common Stock. During the period ended June 30, 2023, there have been no grants under the 2023 Equity Incentive Plan.
During October and November 2023, the Company granted options for 495,000 shares of stock options under the 2023 Equity Incentive Plan: 475,000 options were granted to employees and 20,000 options were granted to a consultant. The employee grants vest over a period of 3 to 5 years, and the consultant grant vests over 18 months. The options granted to both employees and the consultant were exercisable at the exercise price of $0.03.
All the options under the 2023 Equity Incentive Plan were early-exercised by grantees. Accordingly, the Company received a total amount of $14,850 towards the early exercise of these options during the period from March 16, 2023 (inception) through December 31, 2023 and recorded a liability against the early exercise of these options.
On December 14, 2023, the Company repurchased 200,000 unvested shares that were granted to Abi Adeoti under the 2023 Equity Incentive Plan at the original exercise price of $0.03. The Company repaid a total amount of $6,000 for the repurchase of these early exercised shares from Abi Adeoti in January 2024. The amount is charged against the 'Early exercised shares option liability'.
The early exercised shares liability amounting to $8,450 and $8,650 is outstanding as on June 30, 2024 and December 31, 2023, respectively, and is presented under 'Early exercised shares option liability' on the unaudited condensed consolidated balance sheet.
Stock option activity for the six months ended June 30, 2024, and balances as at the end of June 30, 2024 were as follows:
Number of shares |
Weighted Average Grant-Date Fair Value |
|||||||
Unvested as at December 31, 2023 | 288,333 | 2.62 | ||||||
Granted | - | - | ||||||
Vested | (6,666 | ) | 3.50 | |||||
Forfeited | - | - | ||||||
Unvested as at June 30, 2024 | 281,667 | 2.62 |
10 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The compensation expense for stock options was as follows:
Three months ended |
||||||||||||||||
June 30, 2024 | June 30, 2023 |
Six months ended June 30, 2024 |
Period from March 16, 2023 (inception) through June 30, 2023 |
|||||||||||||
General and administrative expenses | 58,125 | - | 117,724 | - |
As at June 30, 2024, total unvested compensation cost for stock options granted to employees not yet recognized was $581,155. The Company expects to recognize this compensation over a weighted average period of approximately 3.12 years.
As at June 30, 2024, total unvested compensation cost for stock options granted to the consultant not yet recognized was $19,820. We expect to recognize this compensation over a period of 0.5 year.
The weighted average fair value of option granted during period from March 16, 2023 (inception) through December 31, 2023 are provided below. The fair value was estimated on the date of grant using the Black-Scholes pricing model with the assumptions indicated below:
2023 | ||||
Expected option life (years) | 5.07 - 5.93 years | |||
Expected volatility | 60% - 70 | % | ||
Risk-free interest rate at grant date | 3.84 - 3.86 | % | ||
Dividend yield | 0 | % |
Due to the absence of an active market for the Company's common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid (Valuation of Privately Held Company Equity Securities Issued as Compensation) to estimate the fair value of its common stock. In determining the exercise prices for options granted, the Company has considered the estimated fair value of the common stock as at the grant date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the business, financial condition and results of operations, economic and industry trends, the illiquid nature of the common stock, the market performance of peer group of similar publicly traded companies, and future business plans of the Company. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date.
The Company based the risk-free interest rate on a U.S. Treasury Bond Yield with a term substantially equal to the option's expected term.
The Company based the expected volatility on a blend of historical volatility and implied volatility derived from price of publicly traded shares of peer group of similar companies.
The expected term represents the period that stock-based awards are expected to be outstanding. The expected term for option grants is determined using the simplified method which represents the average of the contractual term of the option and the weighted average vesting period of the option. The Company considers this appropriate as there is not sufficient historical information available to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.
During the three months ended June 30, 2024, the Company granted 440,000 restricted stock units (RSU") to employees under the 2023 Equity Incentive Plan. These RSU's are subject to a service-based vesting requirement, and a liquidity plus service-based vesting requirement, which is defined as completion of a go public transaction or change in control. In order for any shares to vest, both the service-based vesting requirement and the liquidity plus service-based vesting requirement must be satisfied with respect to such shares. As at June 30, 2024, the liquidity plus service-based vesting requirement has not been met and hence no compensation expense has been recognized for these RSU's. As such these RSUs are not issued as at the date the condensed consolidated financial statements were available to be issued.
11 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 - Investment
In October 2023, the Company subscribed to and purchased 13,949,579 ordinary shares (1.26% of the total equity) of QX Resources Limited ("QX Resources"), a limited liability company whose ordinary shares are listed on the Australian Securities Exchange ("ASX"), for $200,000. This investment in the ordinary shares of QX Resources 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, USA (the "Project") for which QX Resources has a binding Option to Purchase Agreement and Operating Agreement to earn a 75% interest of the Project from IG Lithium LLC ("the Earn-in venture"). The Company is not a direct party to the Earn-in venture and accordingly has no direct or indirect economic or controlling interest either in the Project or in any of the associated rights originating from the Earn-in venture held by QX Resources. The Company will conduct feasibility studies to assess the lithium brine at its own cost and if successful, will have the option to execute a commercial off-take agreement with QX Resources for the supply of brine from the Project. No formal off-take agreement has been executed as at June 30, 2024. Further, no material expenses have been incurred towards the feasibility studies during the three and six months ended June 30, 2024. All costs associated with the feasibility studies would be expensed as incurred.
The Company neither has a controlling financial interest nor does it exercise significant influence over QX Resources. Accordingly, the investment in QX Resources' ordinary shares does not result in either consolidation or application of equity method of accounting for the Company.
QX Resources' ordinary shares are listed on the ASX with a readily determinable fair value and change in fair value is recognized in the unaudited condensed consolidated statement of operations. Accordingly, the investment in these securities has been recorded at cost at initial recognition and at fair value of $55,884 and $218,556 as at June 30, 2024 and December 31, 2023, respectively. The Company recognized a loss of $108,014 and $162,672 for the three and six months ended June 30, 2024, respectively and $Nil for both the three months ended June 30, 2023 and for the period from March 16, 2023 (inception) to June 30, 2023, respectively, due to change in fair value of securities in the unaudited condensed consolidated statement of operations. Further, this investment in securities has been disclosed outside of current assets on the unaudited condensed consolidated balance sheet in accordance with ASC 210-10-45-4 because the investment has been made for the purpose of affiliation and continuing business reasons as described above.
NOTE 5 - Common stock
Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors (the "Board"), subject to prior rights of the convertible preferred stockholders. Common stock issued and outstanding on the unaudited condensed consolidated balance sheet and condensed consolidated statement of stockholders' deficit includes shares related to restricted stock that are subject to repurchase.
The Company is authorized to issue 15,000,000 shares, par value of $0.00001 per share, of common stock. At June 30, 2024, the Company had 9,017,300 shares of common stock issued and outstanding. During the three months ended June 30, 2024, the Board adopted a resolution to increase the number of shares of Common Stock authorized for issuance under the 2023 Equity Plan by 250,000 shares of Common Stock. As at June 30, 2024, the Company reserved shares of its common stock for the potential future issuance of 15,000 shares under 2023 equity plan.
NOTE 6 - SIMPLE AGREEMENT FOR FUTURE EQUITY (SAFE Notes)
On June 6, 2023, the Company received $2,000,000 in cash from a single investor and funded a SAFE note on August 15, 2023. 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.
On November 20, 2023, the Company received an additional $2,000,000 in cash from a single investor, which, along with the $1,000,000 deposit received in September 2023, funded a new $3,000,000 SAFE note. On February 23, 2024, the Company entered into a third SAFE note and received an additional $200,000 in cash from a single investor.
12 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The SAFE notes are classified as a liability based on evaluating characteristics of the instrument and is presented at fair value as a non-current liability in the Company's unaudited condensed consolidated balance sheets. The SAFE notes provide the Company an option to call for additional preferred stock up to $25,000,000 based on the contingent event of SAFE notes conversion and notice issued by 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. The terms for SAFE notes were amended on November 18, 2023 for both the original and new issuance to introduce a discount rate of 20% to the lowest price per share of preferred stock sold or the listing price of the Company's common stock upon consummation of a SPAC transaction or IPO. Additionally, the SAFE notes provide the investor certain rights upon an equity financing, change in control or dissolution.
On March 21, 2024, the Company entered into a Financing Commitment and Equity Line of Credit Agreement with American Investor Group Direct LLC ("AIGD"). The agreement replaced the above contingent commitment feature of the SAFE notes, granting the Company an option to drawdown up to an additional $15,000,000 on terms similar to the SAFE notes prior to the first effective time. On April 24, 2024, the Company amended and restated the August 2023 SAFE note and the November 2023 SAFE note. On May 1, 2024, the Company amended and restated the February 2024 SAFE note. These amendments clarify the conversion mechanism in connection with the Business Combination.
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 at June 30, 2024 and December 31, 2023, the fair value of the SAFE notes is $6,367,200 and $5,212,200, respectively, and is classified as a non-current liability. The SAFE notes had no interest rate or maturity date, description of dividend and participation rights. The liquidation preference of the SAFE notes is junior to other outstanding indebtedness and creditor claims, on par with payments for other SAFEs and/or preferred equity, and senior to payments for other equity of the Company that is not SAFEs and/or pari preferred equity.
NOTE 7 - CONVERTIBLE NOTES
On April 24, 2024, the Company entered into a convertible equity agreement ('convertible notes') for $2,000,000 with AIGD. Further, the Company entered into separate convertible equity agreements with other individuals for a total of $100,000 in April 2024, based on similar terms to the AIGD convertible equity agreement. 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 will automatically convert into 55,889 shares of Combined Company Common Stock.
The convertible notes are classified as a liability based on evaluating characteristics of the instrument and is presented at fair value as a non-current liability in the Company's unaudited condensed consolidated balance sheets. The estimated fair value of the convertible notes considered the timing of issuance and whether there were changes in the various scenarios since issuance. As at June 30, 2024 and December 31, 2023, the fair value of the convertible notes is $2,571,400 and $Nil, respectively, and is classified as a non-current liability. The convertible notes had no interest rate or maturity date, no description of dividend and no participation rights. The liquidation preference of the convertible notes is junior to other outstanding indebtedness and creditor claims, on par with payments for other SAFE notes and/or preferred equity, and senior to payments for other equity of the Company that is not convertible and/or pari preferred equity.
13 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 8 - Fair Value Measurements
The following tables summarize the Company's assets and liabilities that are measured at fair value in the unaudited condensed consolidated financial statements:
Fair Value Measurements as at December 31, 2023 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Other noncurrent assets: | ||||||||||||||||
Investment in equity securities (a) | $ | 218,556 | $ | - | $ | - | $ | 218,556 | ||||||||
Total financial assets | $ | 218,556 | $ | - | $ | - | $ | 218,556 |
Fair Value Measurements as at June 30, 2024 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Other noncurrent assets: | ||||||||||||||||
Investment in equity securities (a) | $ | 55,884 | $ | - | $ | - | $ | 55,884 | ||||||||
Total financial assets | $ | 55,884 | $ | - | $ | - | $ | 55,884 |
Fair Value Measurements as at December 31, 2023 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
SAFE notes (b) | $ | - | $ | - | $ | 5,212,200 | $ | 5,212,200 | ||||||||
Convertible notes (c) | - | - | - | - | ||||||||||||
Total financial liabilities | $ | - | $ | - | $ | 5,212,200 | $ | 5,212,200 |
Fair Value Measurements as at June 30, 2024 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
SAFE notes (b) | $ | - | $ | - | $ | 6,367,200 | $ | 6,367,200 | ||||||||
Convertible notes (c) | - | - | 2,571,400 | 2,571,400 | ||||||||||||
Total financial liabilities | $ | - | $ | - | $ | 8,938,600 | $ | 8,938,600 |
(a) These represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance with ASC 321, Investments-Equity Securities, based on quoted prices in active markets.
(b) The valuation of the Level 3 measurement considered the probabilities of the occurrence of the scenarios as discussed in Note 2 the audited consolidated financial statements and notes thereto for the period March 16, 2023 (inception) to December 31, 2023 included in the Company's registration statement on Form S-4/A filed with the SEC on May 8, 2024.
(c) The fair value of convertible notes are expected to approximate fair value of the equivalent equity shares into which they would be converted immediately post the closing of the Business Combination, which was approved at the shareholders meeting on June 27, 2024.
14 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table provides a reconciliation of activity and changes in fair value for the Company's SAFE and convertible notes using inputs classified as:
SAFE notes at Fair Value | Convertible notes at Fair Value | |||||||
Balance as at March 16, 2023 (inception) | $ | - | $ | - | ||||
Issuance of notes | 2,000,000 | - | ||||||
Change in fair value | - | - | ||||||
Balance as at June 30, 2023 | $ | 2,000,000 | $ | - | ||||
Issuance of notes | 3,000,000 | - | ||||||
Change in fair value | 212,200 | - | ||||||
Balance as at December 31, 2023 | $ | 5,212,200 | $ | - | ||||
Issuance of notes | 200,000 | - | ||||||
Change in fair value | 107,900 | - | ||||||
Balance as at March 31, 2024 | $ | 5,520,100 | $ | - | ||||
Issuance of notes | - | 2,100,000 | ||||||
Change in fair value |
847,100 |
471,400 |
||||||
Balance as at June 30, 2024 | $ | 6,367,200 | $ | 2,571,400 |
The valuation of the Level 3 measurement for SAFE notes considered the probabilities of the occurrence of the scenarios as discussed in Note 2 of the audited consolidated financial statements and notes thereto for the period March 16, 2023 (inception) to December 31, 2023 included in the Company's registration statement on Form S-4/A filed with the SEC on May 8, 2024. The Company valued the SAFE notes based on the occurrence of the preferred financing or a SPAC transaction. As of the date of initial measurement and as of June 30, 2024 and December 31, 2023, the management has assigned zero probability for a change in control event or a dissolution event. The fair value of the SAFE notes was estimated based upon the expected conversion of the SAFE notes at the proposed business combination event with a 100% probability as at June 30, 2024. The SAFE and convertible notes are expected to be converted into preferred stock or common stock at a discount rate of 20% on the issue price. The fair value of SAFE notes and the convertible notes as at June 30, 2024 are expected to approximate fair value of the equivalent equity shares into which they would be converted immediately post the closing of the Business Combination, which was approved at the shareholders meeting on June 27, 2024, and is therefore considered reasonable.
NOTE 9 - PROMISSORY NOTES
In March 2023, the Company entered into unsecured notes payable with three related parties as described in Note 11. These notes payable provided the Company the ability to draw up to $1,000,000, in aggregate: $160,000 until December 31, 2023 and $840,000 until December 31, 2025. These loan facilities accrue interest, compounding semi-annually, at the long-term semiannual Applicable Federal Rate, as established by the Internal Revenue Service, which effectively was 3.71%.
As at June 30, 2024, the Company had $840,000 available to draw.
NOTE 10 - SEGMENT REPORTING
The 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 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 assessed. The Company has a single, common management team and our cash flows are reported and reviewed with no distinct cash flows.
NOTE 11 - RELATED PARTY TRANSACTIONS
The Company entered into a service agreement with VIKASA Capital Partners LLC ("VCP") on March 16, 2023, for services associated with setting up a lithium refinery. VCP provides formation and organization structure advisory, capital market advisory, marketing advisory services and other consulting and advisory services with respect to the Company's organization. Under the service agreement and subsequent amendments, VCP can be compensated for advisory services up to total of $1,050,000, of which $980,000 has been incurred till June 30, 2023.
15 |
Stardust Power Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On March 16, 2023, the Company entered into a consulting agreement with 7636 Holdings LLC, which was subsequently amended on April 1, 2023, and also separately entered into an agreement with VIKASA Capital LLC. The agreement primarily provides compensation for strategic, business, financial, operations and industry advisory services to the Company's planned development of a lithium refinery operation.
The Company incurred the following expenses with related parties, which were all affiliates of the Company:
Three months ended | ||||||||||||||||
June 30, 2024 | June 30, 2023 |
Six Months Ended June 30, 2024 |
Period from March 16, 2023 (inception) through June 30, 2023 |
|||||||||||||
Consulting expenses under contract due to: | ||||||||||||||||
VIKASA Capital Partners LLC | $ | - | $ | 895,000 | $ | - | $ | 980,000 | ||||||||
7636 Holdings LLC | - | 90,000 | 101,806 | |||||||||||||
VIKASA Capital LLC | - | 67,281 | - | 77,632 | ||||||||||||
Total consulting expenses | - | 1,052,281 | - | 1,159,438 | ||||||||||||
Other expenses paid on the Company's behalf due to: | ||||||||||||||||
VIKASA Capital LLC | - | 13,818 | - | 34,318 | ||||||||||||
VIKASA Capital Partners LLC | - | 8,588 | - | 9,868 | ||||||||||||
Total other expenses paid on the Company's behalf | - | 22,406 | - | 44,186 | ||||||||||||
Total | $ | - | $ | 1,074,687 | - | $ | 1,203,624 |
As of June 30, 2023, $956,505 expenses were paid and, $247,119 was due to related parties. During the period from March 16, 2023 (inception) through June 30, 2023, the Company provided shares to shareholders in exchange for a subscription of $90. The Company received the $90 on June 14, 2023. As at June 30, 2024 and December 31, 2023, no amounts were due to related parties of the Company.
The Company entered into notes payable agreement of $1,000,000 with the following related parties, which were all affiliates of the Company:
Three months ended |
||||||||||||||||
June 30, 2024 | June 30, 2023 | Six Months Ended June 30, 2024 | Period from March 16, 2023 (inception) through June 30, 2023 | |||||||||||||
Energy Transition Investors LLC | $ | - | $ | - | $ | - | $ | 750,000 | ||||||||
Vikasa Clean Energy I LP | - | - | 160,000 | |||||||||||||
Roshan Pujari | - | - | - | 90,000 | ||||||||||||
Notes obtained from related parties | - | - | - | 1,000,000 |
VIKASA Capital LLC facilitated the initial funding of the notes obtained on behalf of the related parties. As of June 30, 2023, $7,111 of interest on these notes was due to related parties. As at June 30, 2024 and December 31, 2023, the Company had repaid all the above notes.
NOTE 12 - SUBSEQUENT EVENTS
On August 4, 2024, the Company entered into an engineering agreement (the "Primero Agreement") with Primero USA, Inc. ("Primero") pursuant to which Primero agreed to provide certain engineering, design and consultancy professional services (the "Services"), including to assist in procurement of major equipment, engage relevant third parties for construction and provide a Front End Loading-3 ("FEL-3") report of the Company's Muskogee Lithium facility at Southside Industrial Park, Muskogee, Oklahoma in Port Muskogee. 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.
The Company has evaluated subsequent events through the date the consolidated financial statements were available to be issued and there are no other items that would have had a material impact on the Company's condensed consolidated financial statements.
16 |