ITEM 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our
financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related
thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results
may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth
under “Special Note Regarding Forward-Looking Statements” and elsewhere in this Annual Report on Form 10-K.
Overview
Solidion Technology, Inc, previously known as
“Honeycomb Battery Company”, formerly the energy solutions division of Global Graphene Group, 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 is recognized as a global leader in intellectual property in both the high-capacity anode and the
high-energy solid-state battery, as recognized by KnowMade, a French company that specializes in research and analysis of scientific
and patent information. Solidion is uniquely positioned to offer advanced anode materials (delivering a specific capacity from 300 to
3,500+ milliampere-hours per gram mass (“mAh/g”)) as well as silicon-rich all-solid-state lithium-ion cells, anodeless lithium
metal cells, and lithium-sulfur cells, each featuring an advanced polymer or hybrid solid electrolyte that is most process-friendly.
40
Recent Developments
Business Combination
On February 2, 2024, Nubia Brand International
Corp., a Delaware corporation (“Nubia” and after the Transactions described herein, the “Solidion” or “Solidion
Technology, Inc.”), consummated the previously announced business combination (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 Business Combination
totaling $1.6 million, prior to deducting transaction and issuance costs. The cash resulting from the Business Combination is expected
to be used toward our corporate growth strategy related to the commercialization of our battery technology and the scaling of our manufacturing
operations.
Equity Financing
On March 13, 2024, Solidion entered into a private
placement transaction (the “Private Placement”), pursuant to a Securities Purchase Agreement (the “Subscription Agreement”)
with certain institutional investors (the “Purchasers”) for aggregate gross proceeds of approximately $3.85 million, before
deducting fees to the placement agent and other expenses payable by the Company in connection with the Private Placement. The Company
intends to use the net proceeds from the Private Placement for working capital and general corporate purposes. The Private Placement
closed on March 15, 2024.
As part of the 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 (or one pre-funded warrant to purchase
one share of Common Stock), (ii) two Series A warrants each to purchase one share of Common Stock, and (iii) one Series B warrant to
purchase such number of shares of Common Stock as determined on the reset date (as defined in the Subscription Agreement), and in accordance
with the terms therein.
Results of Operations
As the closing of the Business Combination did
not occur until after the year ended December 31, 2023, the results of operations below are based on the fact that we have neither engaged
in any operations nor generated any revenues to the date of the financial statements. Our only activities from June 14, 2021 (inception)
through December 31, 2023 were organizational activities, those necessary to prepare for our IPO, described below, searching for a business
combination target and the Business Combination. We did not expect to generate any operating revenues until after the completion of our
Business Combination. We generated non-operating income in the form of interest income on marketable securities held in the trust account.
We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well
as for due diligence expenses.
For the year ended December 31, 2023, we had a net loss of $19,775,602
which consisted of operating expenses of $3,509,621 and change in fair value of derivative asset/liabilities of $18,483,096, partially
offset by interest income earned in the amount of $3,788,143 on cash and funds held in the Trust Account and interest income of $8,580
earned on cash held the operating bank account. In addition, the Company recorded an income tax provision of $1,579,608.
For the year ended December 31, 2022, we had a
net income of $593,905 which consisted of interest income earned in the amount of $1,812,882 on cash and funds held in the Trust Account,
interest income of $5,683 earned on cash held the operating bank account, a gain on the over-allotment liability of $19,432, partially
offset by operating expenses totaling $904,193. In addition, the Company recorded an income tax provision of $339,899.
Going Concern Considerations, Liquidity and Capital Resources
On March 15, 2022, we consummated the Initial
Public Offering of 11,000,000 Units at a price of $10.00 per Unit, which includes the exercise by the underwriters of the over-allotment
option to purchase an additional 1,350,000 Units, generating gross proceeds of $123,500,000. Simultaneously with the closing of the Initial
Public Offering and exercise of the over-allotment option, we consummated the sale of 5,405,000 Private Placement Warrants at a price
of $1.00 per Private Placement Warrant in a private placement to our Sponsor, generating gross proceeds of $5,405,000.
Following the Initial Public Offering, the exercise
of the over-allotment option by the underwriters’ and the sale of the Private Placement Warrants, a total of $125,970,000 was placed
in the Trust Account and as of December 31, 2022, we had $545,655 of cash held outside of the Trust Account, after payment of costs related
to the Initial Public Offering, and available for working capital purposes. Transaction costs amounted to $6,951,081 consisting of $1,235,000
of underwriting fees, $4,322,500 of deferred underwriting fees payable and $597,334 of other offering costs. In addition, the Company
recorded the fair value of $776,815 for representative shares issued upon close of the Public Offering as well as the fair value of the
remaining over-allotment option of $19,432 as offering costs.
For the year ended December 31, 2023, cash used
in operating activities was $2,661,093 which consisted of a net loss of $19,775,602, interest earned on marketable securities held in
the Trust Account of $3,788,143, and changes in operating assets and liabilities provided $20,902,653 of cash from operating activities.
41
For the year ended December 31, 2022, cash used
in operating activities was $725,102 which consisted of net income of $593,905, interest earned on marketable securities held in the
Trust Account of $1,812,882, the gain on the change in fair value of the over-allotment liability of $19,432 and changes in operating
assets and liabilities provided $513,307 of cash from operating activities.
For the year ended December 31, 2023, the Company
generated cash of $88,576,752 in investing activities primarily from the withdrawal of investments in the Trust Account for redemptions.
For the year ended December 31, 2022, the Company
used cash of $125,970,000 in investing activities for the purchase of investments in the Trust Account following the Initial Public Offering,
the exercise of the over-allotment option by the underwriters’ and the sale of the Private Placement Warrants.
For the year ended December 31, 2023, cash used
in financing activities was $86,441,335, primarily for repayment of redemptions.
For the year ended December 31, 2022, cash from
financing activities provided $127,240,757. The Company received gross proceeds of $128,905,000 from the Initial Public Offering, the
exercise of the over-allotment option by the underwriters’ and the sale of the Private Placement Warrants. These increases were
offset by payment of the underwriting fees and offering costs of $1,235,000 and $429,243, respectively.
As of December 31, 2023, we had cash held in the Trust
Account of $42,994,274. Interest income on the balance in the Trust Account may be used by us to pay taxes, and to pay up to $100,000
of any dissolution expenses. In 2023, $1,523,258 was withdrawn from the Trust to pay taxes. The amount of cash withdrawn from the Trust
and remaining payable for taxes at the year-end totaled $170,387.
At December 31, 2023, the Company had cash outside of trust of $19,979
and working capital deficit of $6,544,950. The accompanying financial statements have been prepared in conformity with generally accepted
accounting principles in the United States of America (“US GAAP”), which contemplate continuation of the Company as a going
concern.
Prior to the consummation of the Business Combination,
the Company used the funds not held in the Trust Account for identifying and evaluating target businesses, performing due diligence on
prospective target businesses, traveling to and from the offices, plants or similar location of prospective target businesses or their
representatives or owners, reviewing corporate documents and material agreements of prospective target businesses and structuring, negotiating
and completing a Business Combination, which was the Business Combination with Honeycomb Battery Company, which was completed on January
31, 2023.
On February 2, 2024 (the “Closing Date”),
the Company consummated the business combination (the “Closing”) pursuant to a Merger Agreement, dated February 16, 2023
(as amended on August 25, 2023, the “Merger Agreement”) with HBC surviving such merger as a wholly owned subsidiary of Nubia,
which was renamed “Solidion Technology, Inc.” upon Closing.
Since Solidion’s inception, the Company has experienced recurring
net losses and has generated minimal sales. For the year ended December 31, 2023, Solidion recorded net losses of approximately $5,300,000,
net cash used in operating activities of approximately $4,100,000 and, as of December 31, 2023, had cash and cash equivalents on hand
of approximately $1,000, which factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company
plans to finance its operations with proceeds from the sale of equity securities or debt; however, there is no assurance that management’s
plans to obtain additional debt or equity financing will be successfully implemented or implemented on terms favorable to the Company.
On July 27, 2021, the Sponsor issued an unsecured
promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal
amount of $300,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) March 31, 2022 or (ii) the consummation
of the Initial Public Offering (the “Original Maturity Date”). On May 20, 2022, the Company and the Sponsor amended and restated
the Promissory Note (the “Amended Note”) (i) to extend the Original Maturity Date to a new maturity date which shall be upon
the earlier of the closing of the Company’s initial business combination or the Company’s liquidation, and (ii) to permit
the holder of the Amended Note, in its sole discretion, to convert any or all of the unpaid principal under the Amended Note into warrants,
at a price of $1.00 per warrant, upon consummation of the Company’s initial business combination. On May 17, 2023, the Sponsor
issued an unsecured promissory note to the Company (the “Note”), pursuant to which the Company may borrow up to an aggregate
principal amount of $1,000,000. The Promissory Note is non-interest bearing and payable on the earlier of the closing of the Company’s
initial business combination or the Company’s liquidation, and to permits the holder of the Note, in its sole discretion, to convert
any or all of the unpaid principal under the Amended Note into warrants, at a price of $1.00 per warrant, upon consummation of the Company’s
initial business combination.
42
As of December 31, 2023 and December 31, 2022, there was $1,297,500, and
$125,341, respectively, outstanding under the Promissory Note. On January 29, 2024, the Promissory Notes with the Sponsor was amended
such that any or all of the unpaid principal upon consummation of the Company’s initial business combination was convertible into
common shares at a conversion price of $1.00 per share.
At various dates in the third and fourth quarters
of 2023, the Company issued Convertible Notes to related parties of $905,000 to meet our working capital requirements. As of December
31, 2023 and December 31, 2022, there was $905,000 and $0 in Convertible Notes from Related Parties outstanding.
At various dates in the second and third quarters
of 2023, the Target advanced funds of $187,500 to extend the period of time to complete an initial business combination. As of December
31, 2023 and December 31, 2022, there was $187,500 and $0 in Advances from Target outstanding.
At
various dates in the third and fourth quarters of 2023, related parties provided advances totaling $332,000 to meet our working capital
requirements. As of December 31, 2023, and December 31, 2022, outstanding
balances due to related parties amounted to $332,500 and $0, respectively. Preceding the consummation of the initial business combination,
we issued Convertible Notes corresponding to advances made by related parties throughout 2023.
On December 9, 2023, we instructed Continental Stock
& Trust to liquidate the investments held in the Trust Account and deposit the proceeds into a cash deposit account with Continental
serving as trustee. These funds remained in the cash deposit account until the consummation of our initial Business Combination on February
2, 2024. As a result, following the liquidation of investments in the Trust Account, the remaining proceeds from the Initial Public Offering
and Private Placement are no longer invested in money market funds but held as cash deposits with Continental.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities
which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated
entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose
of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet
financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into
any non-financial agreements involving assets.
Contractual Obligations
At December 31, 2023, we did not have any long-term
debt, capital lease obligations, operating lease obligations or long-term liabilities. In connection with the Public Offering, we entered
into an administrative support agreement pursuant to which we agreed to pay an affiliate of the Sponsor a total of $10,000 per month
for office space, utilities and secretarial, and administrative support services. We began incurring these fees on March 14, 2022 and
continued to incur these fees monthly until the completion of our Business Combination.
The Underwriter in the initial public offering
was entitled to a deferred fee of 3.5% of the gross proceeds of the Public Offering (exclusive of any applicable finders’ fees
which might become payable) or $4,322,500 in the aggregate. The deferred fee was paid in connection with the closing of the Business
Combination.
At a special meeting of Nubia Brand stockholders
held on December 14, 2023, Nubia Brand’s stockholders approved the proposed business combination with HBC. In addition, in a special
meeting on December 15, 2023, Nubia Brand stockholders approved an amendment to the certificate of incorporation that changed the date
by which Nubia Brand must consummate an initial business combination to March 15, 2024.
Critical Accounting Estimates
We prepare our consolidated
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. 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 information. We evaluate these estimates on an ongoing basis.
43
We
consider an accounting estimate to be critical if: (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 or results of operations. There are items within our financial statement that require estimation but are not
deemed critical, as defined above. We have identified the following as our critical accounting estimate for the year ended December
31, 2023:
Forward Purchase Agreement and Non Redemption
Agreement
The Company accounts for the forward purchase
agreement and non-redemption agreement as either equity-classified or liability-classified instruments based on an assessment of the FPA
and NRA specific terms and applicable authoritative guidance in ASC 480, and FASB ASC 815, “Derivatives and Hedging” (“ASC
815”). The assessment considers whether the FPA and NRA are freestanding financial instruments pursuant to ASC 480, meet the definition
of a liability pursuant to ASC 480, and whether the FPA and NRA meet all of the requirements for equity classification under ASC 815,
including whether the FPA and NRA are indexed to the Company’s own common shares and whether the FPA and NRA 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 and NRA issuance and as of each subsequent quarterly period end date while
the FPA and NRA are outstanding.
For issued or modified FPA and NRAs that meet
all of the criteria for equity classification, the FPA and NRA are required to be recorded as a component of additional paid-in capital
at the time of issuance. For issued or modified FPA and NRAs that do not meet all of the criteria for equity classification, the FPA
and NRAs 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 and NRA as liability-classified instruments.
The fair value of the FPA and NRA is Level
3. The determination of the fair value requires significant estimates and judgments. Please see Note 9 – 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.
Recent 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. ASU 2023-09 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.
Management does not believe that any recently issued,
but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
44
ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required
to make disclosures under this Item.
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
Our financial statements and the notes thereto
begin on page F-1 of this Annual Report.
ITEM 9. CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS
AND PROCEDURES
Disclosure controls and procedures are designed to
ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within
the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
A material weakness is a deficiency, or combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Under
the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting
officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal period
ended December 31, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our
principal executive officer and principal financial officer have concluded that during the period covered by this report, our disclosure
controls and procedures were not effective as of December 31, 2023 due to the Company utilizing
cash withdrawn from the trust account for tax obligations for operating purposes. In hindsight, the amounts withheld from the trust should
have been promptly remitted, or held as restricted cash. Since the business combination has been completed and the trust no longer exists,
any remedial measures to correct this would be futile. The tax obligation has been entered as income taxes payable and the Company intends
to remit payment as soon as practically possible, in conjunction with applicable tax authority deadlines.
Management’s Report on Internal Controls
Over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Because
of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a material misstatement
of our consolidated financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. Internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Under the supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December
31, 2023 based on the framework established in “Internal Control – Integrated Framework (2013)” issued by the Committee
of Sponsoring Organizations of the Treadway Commission. As disclosed above, our management concluded that our internal control over financial
reporting were not effective as of that date, due to the Company utilizing cash withdrawn from the trust account for tax obligations for
operating purposes.
In addition, as an emerging growth company,
management’s assessment of internal control over financial reporting was not subject to attestation by our independent registered
public accounting firm.
Changes in Internal Control over Financial
Reporting
There have been no changes in our internal control
over financial reporting during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE
REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
45
PART
III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND
CORPORATE GOVERNANCE
Information about our executive officers is contained
in the section titled “Executive Officers” in Part I of this Annual Report.
The other information required
by this Item will be included in our Proxy Statement for the 2024 Annual General Meeting of Stockholders under the captions “Director
Nominees,” “Continuing Members of the Board of Directors,” “Additional Information Concerning the Board of Directors
of the Company,” Committees of the Board of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance,”
which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2023 and is incorporated
by reference in this Annual Report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this
Item will be included in our Proxy Statement for the 2024 Annual General Meeting of Stockholders under the captions “Executive
Compensation” and “Director Remuneration,” which will be filed with the SEC no later than 120 days after the close
of the fiscal year ended December 31, 2023 and is incorporated by reference in this Annual Report.
ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this
Item will be included in our Proxy Statement for the 2024 Annual General Meeting of Stockholders under the caption “Security Ownership
of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans,”
which will be filed with the SEC no later than 120 days after the close of the fiscal year ended December 31, 2023 and is incorporated
by reference in this Annual Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this
Item will be included in our Proxy Statement for the 2024 Annual General Meeting of Stockholders under the captions “Certain Relationships
and Related Party Transactions” and “Director Independence,” which will be filed with the SEC no later than 120 days
after the close of the fiscal year ended December 31, 2023 and is incorporated by reference in this Annual Report.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Public Accounting
Fees
The firm of Marcum LLP,
or Marcum, acts as our independent registered public accounting firm. The following is a summary of fees paid to Marcum for services
rendered.
Audit Fees.
For the year ended December 31, 2023 and 2022, fees for our independent registered public accounting firm were approximately $192,630
and $77,250, respectively, for the services Marcum performed in connection with the audit of our December 31, 2023 and 2022 financial
statements included in this Annual Report on Form 10-K, and our IPO.
Audit-Related
Fees. For the year ended December 31, 2023 and 2022, our independent registered public accounting firm did not render audit-related
services.
Tax Fees. For the year
ended December 31, 2023 and 2022, fees for our independent registered public accounting firm were approximately $0, for the services
Marcum performed in connection with tax compliance, tax advice and tax planning.
All Other Fees.
For the year ended December 31, 2023 and 2022, there were no fees billed for products and services provided by our independent registered
public accounting firm other than those set forth above.
46
PART
IV
ITEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements:
(3) See attached Exhibit Index of this Annual Report on Form 10-K
47
SOLIDION TECHNOLOGY,
INC.
(F/K/A NUBIA BRAND INTERNATIONAL
CORP.)
TABLE OF CONTENTS
Page
Reports of Independent Registered Public Accounting Firm (PCAOB Firm # 688) F-2
Financial Statements:
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Solidion Technology, Inc. (f/k/a Nubia Brand International
Corp.)
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Solidion Technology, Inc. (f/k/a Nubia Brand International Corp.) (the “Company”) as of December 31, 2023
and 2022, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each
of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2023 and 2022, and the results of their operations and their cash flows for each of the two years in
the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These
conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters
are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for
our opinion.
/s/ Marcum llp
Marcum llp
We have served as the Company’s auditor since 2021.
Hartford, CT
April 11, 2024
F-2
SOLIDION
TECHNOLOGY, INC.
(F/K/A NUBIA BRAND INTERNATIONAL
CORP.)
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
ASSETS
Current Assets:
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
Current Liabilities:
Accrued offering costs — 5,000
Funds allocated for share redemption 17,834,235 —
Advances from Related Party 332,500 —
Convertible note – Related Party 905,000 —
COMMITMENTS AND CONTINGENCIES
Stockholders’ Deficit:
Additional paid-in capital — —
The accompanying notes are an integral part of
these consolidated financial statements.
F-3
SOLIDION
TECHNOLOGY, INC.
(F/K/A NUBIA BRAND INTERNATIONAL
CORP.)
CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2023 For the Year Ended December 31, 2022
EXPENSES
OTHER (EXPENSE) INCOME
Change in fair value of derivative asset/liabilities (18,483,096 ) —
Change in fair value of over-allotment liability — 19,432
Net (loss) income before provision for income taxes (18,195,994 ) 933,804
The accompanying notes are an integral part of
these consolidated financial statements.
F-4
SOLIDION
TECHNOLOGY, INC.
(F/K/A NUBIA BRAND INTERNATIONAL
CORP.)
Consolidated
STATEMENT OF CHANGES IN STOCKHOLDERs’ (DEFICIT) EQUITY
FOR THE YEARS ENDED DECEMBER
31, 2023 AND DECEMBER 31, 2022
Class A Class B Additional Stockholders’
Common Stock Common Stock Paid-in Accumulated Equity
Shares Amount Shares Amount Capital Deficit (Deficit)
Forfeiture of Class B Common Stock — — (75,000 ) (8 ) — 8 —
Excise tax on redemption of Class A Common Stock — — — — — (890,385 ) (890,385 )
The accompanying notes are an integral part of
these consolidated financial statements.
F-5
SOLIDION
TECHNOLOGY, INC.
(F/K/A NUBIA BRAND INTERNATIONAL
CORP.)
CONSOLIDATED
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2023 For the Year Ended December 31, 2022
Cash Flows From Operating Activities:
Income earned on Investments held in Trust Account (3,788,143 ) (1,812,882 )
Change in fair value of over-allotment liability — (19,432 )
Derivative asset/liabilities 18,483,096 —
Changes in operating assets and liabilities:
Accrued formation and offering costs (5,000 ) —
Cash Flows From Investing Activities:
Cash withdrawn for taxes 1,523,258 —
Cash withdrawn for redemptions of Class Common Stock 89,038,494 —
Cash Flows From Financing Activities:
Proceeds from convertible note – Sponsor 1,172,159 —
Proceeds from convertible note 905,000 —
Advances from Related Party 332,500 —
Payments for redemption of Class A Common Stock (89,038,494 )
Proceeds from sale of Private Placement Warrants — 5,405,000
Payment of underwriter fees — (1,235,000 )
Payment of offering costs — (429,243 )
Cash at beginning of period 545,655 —
Supplemental disclosure
Cash paid for income taxes $ 1,012,944 $ —
Supplemental disclosure of non-cash financing activities:
Deferred offering costs included in accrued offering costs $ — $ 25,000
Deferred offering costs included in related party payable $ — $ 939
Fair value of representative shares $ — $ 776,815
Fair value of over-allotment option $ — $ 19,432
Excise tax on redemption of Class A Common Stock $ 890,385 $ —
Reclassification of redeemed Class A ordinary shares $ 17,834,235 —
The accompanying notes are an integral part of
these consolidated financial statements.
F-6
SOLIDION TECHNOLOGY, INC.
(F/K/A NUBIA BRAND INTERNATIONAL
CORP.)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS
AND GOING CONCERN
Solidion Technology, Inc, formerly known as Nubia
Brand International Corp. prior to February 2, 2024 (the “Closing Date”) was incorporated in Delaware on June 14, 2021 and
Nubia Merger Sub, Inc., an Ohio corporation, (collectively, the Company”) was formed for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business
Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination.
The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early
stage and emerging growth companies.
As of December 31, 2023, the Company had not
commenced any operations. All activity for the period from June 14, 2021 (inception) through December 31, 2023 relates to the Company’s
formation and the initial public offering (“Initial Public Offering” or “IPO”), which is described below. The
Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The
Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The Company has selected December 31 as its fiscal year end.
On February 16, 2023, the Company entered into
a Merger Agreement (the “Merger Agreement”) by and among Honeycomb Battery Company, an Ohio corporation (the “Honeycomb”),
the Company, and Nubia Merger Sub, Inc., an Ohio corporation (“Merger Sub”) and wholly-owned subsidiary of the Company, pursuant
to which Merger Sub will merge with and into Honeycomb (the “Merger”) with Honeycomb as the surviving corporation of the
Merger and becoming a wholly-owned subsidiary of the Company. In connection with the Merger, the Company will change its name to “Honeycomb
Battery Company” or such other name designated by Honeycomb by notice to the Company, which is referred to herein as the “Solidion.”
The board of directors of the Company (the “Nubia Board”) has unanimously (i) approved and declared advisable the Merger
Agreement, the Merger and the other transactions contemplated thereby (collectively, the “Transactions”) and (ii) resolved
to recommend approval of the Merger Agreement and related matters by the stockholders of the Company.
The Merger Agreement provides that the Company
will issue to the Honeycomb stockholders aggregate consideration of 70,000,000 shares of Solidion’s common stock (the “Closing
Merger Consideration Shares”) at the effective time of the Merger Agreement (the “Effective Time”), plus up to an additional
22,500,000 shares of Solidion’s common stock (the “Earnout Shares”) upon the occurrence of the following events (or
earlier upon a change of control of Solidion but subject to (and only to the extent that) the valuation of Solidion’s common stock
implied by such change of control transaction meeting the respective volume weighted average price (“VWAP”), as defined in
the Merger Agreement, thresholds set forth below):
The Merger Agreement contains customary representations
and warranties of the parties.
The Merger is accounted for as a reverse recapitalization
with Honeycomb as the accounting acquirer.
On
February 2, 2024 (the “Closing Date”), the Company consummated the business combination
(the “Closing”) pursuant to a Merger Agreement, dated February 16, 2023
(as amended on August 25, 2023, the “Merger Agreement”) with HBC surviving such
merger as a wholly owned subsidiary of Nubia, which was renamed “Solidion Technology,
Inc.” upon Closing.
F-7
Business Prior to the Business Combination
The registration statement for the Company’s
Initial Public Offering was declared effective on March 10, 2022. On March 15, 2022, the Company consummated the Initial Public Offering
of 11,000,000 units (“Units” and, with respect to the shares of common stock included in the Units being offered, the “Public
Shares”), generating gross proceeds of $110,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the private sale (the “Private Placement”) of an aggregate of 5,000,000 warrants
(the “Private Placement Warrants”) to Mach FM Acquisitions LLC (the “Sponsor”) at a purchase price of $1.00 per
Private Placement Warrant, generating gross proceeds to the Company in the amount of $5,000,000.
On March 15, 2022, the underwriters purchased
an additional 1,350,000 Units pursuant to the partial exercise of the over-allotment option. The Units were sold at an offering price
of $10.00 per Unit, generating additional gross proceeds to the Company of $13,500,000. Also, in connection with the partial exercise
of the over-allotment option, the Sponsor and the underwriter purchased an additional 405,000 Private Placement Warrants at a purchase
price of $1.00 per warrant generating additional gross proceeds to the Company of $405,000.
The Company’s ability to commence operations
is contingent upon obtaining adequate financial resources through its Initial Public Offering of 12,350,000 Units (including a partial
exercise of the underwriters’ over-allotment option) at $10.00 per Unit, which is discussed in Note 3, and the sale of 5,405,000
Private Placement Warrants (including a partial exercise of the underwriters’ over-allotment option) at a price of $1.00 per Private
Placement Warrant in private placements to the Sponsor that will close simultaneously with the Initial Public Offering.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There
is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more
initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net
assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment
Company Act”). Upon the closing of the Initial Public Offering, management agreed that an amount equal to at least $10.20 per Unit
sold in the Initial Public Offering, including proceeds of the Private Placement Warrants, will be held in a trust account (“Trust
Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section
2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself
out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the
Trust Account, as described below. On December 15, 2023 the funds in the Trust Account were moved into a non-interest bearing, segregated
account, as determined by the Company, until the earlier of (i) the completion of a Business Combination and (ii) the distribution of
the funds held in the Trust Account, as described below.
F-8
The holders of the Founder Shares have agreed
(a) to waive their redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion
of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing
of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares
if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any
other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment.
On
March 13, 2023, in accordance with the current certificate of incorporation, the Company contributed an aggregate of $1,235,000 (or $0.10
per share for each outstanding public share) to the trust account and extended the time to complete a business combination from March
15, 2023 to June 15, 2023. On June 14, 2023, the Company held a special meeting of stockholders (the “Special Meeting”). At
the Special Meeting, stockholders approved to amend the Company’s Amended and Restated Certificate of Incorporation to allow the
Company to extend the date by which the Company must consummate a business combination (the “Extension”) on a monthly basis
up to six times from June 15, 2023 (the date that is 15 months from the closing date of the Company’s initial public offering of
units) to December 15, 2023 (the date that is 21 months from the closing date of the IPO).The
Company contributed an additional $125,000 per month from June through November 2023 for a total of $750,000 related to the Special Meeting
Extension.
Stockholders elected
to redeem an aggregate 8,430,383 or shares of Common Stock in connection with the Special Meeting. As such, $89,038,494 was withdrawn
from the Trust.
In connection with the
redemption, the Company recorded an excise tax liability and equity adjustment of $0.9 million.
On December 14, 2023,
the Company held another special meeting of stockholders (the “Second Special Meeting”). At the Second Special Meeting, stockholders
approved the business combination.
Stockholders elected
to redeem an aggregate 1,625,876 shares of Common Stock in connection with the Second Special Meeting. The funds of $17,834,235 are due
and payable to the redeeming stockholders on the earlier of the closing of the business combination or the liquidation date. As such,