ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this
report (the “Annual Report”) to “we,” “us” or the “Company” refer to Solidion Technology,
Inc. References to our “management” or our “management team” refer to our officers and directors. The following
discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Annual Report. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary
Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based
these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied
by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,”
“should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,”
“estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or
contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
33
Overview
Solidion
Technology, Inc. is a Dallas, TX, USA-based advanced battery technology company focused on the development and commercialization of battery
materials, components, cells, and selected module/pack technologies. Solidion holds a portfolio of over 550 patents, covering innovations
such as high-capacity, non-silane gas and graphene-enabled silicon anodes, biomass-based graphite, advanced lithium-sulfur and lithium-metal
technologies. Solidion offers two lines of battery products: (i) advanced anode materials (ready for production expansion); and (ii)
three classes of solid-state batteries, including Silicon-rich all-solid-state lithium-ion cells (Gen 1), anode less lithium metal cells
(Gen 2), and lithium-sulfur cells (Gen 3), all featuring an advanced polymer- or polymer/inorganic composite-based solid electrolyte
that is process-friendly.
History
Honeycomb
Battery Company Merger
On
February 2, 2024, Nubia Brand International Corp., a Delaware corporation (“Nubia” and after the Transactions described herein,
“Solidion” or “Solidion Technology, Inc.”), consummated a merger (the “Closing”) pursuant to a Merger
Agreement, dated February 16, 2023 (as amended on August 25, 2023, the “Merger Agreement”), by and among Nubia, Honeycomb
Battery Company, an Ohio corporation (“HBC”), and Nubia Merger Sub, Inc., an Ohio corporation and wholly-owned subsidiary
of Nubia (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into HBC (the “Merger,”
and the transactions contemplated by the Merger Agreement, the “Transactions”), with HBC surviving such merger as a wholly
owned subsidiary of Nubia, which was renamed “Solidion Technology, Inc.” upon Closing.
We
received net proceeds from the Merger totaling $17,555. The Company is applying the proceeds from the Merger toward its corporate growth
strategy related to the commercialization of our battery technology and the scaling of its manufacturing operations.
Equity
Financings
On March 13, 2024, Solidion entered into a private
placement transaction (the “March Private Placement”), pursuant to a Securities Purchase Agreement (the “March Subscription
Agreement”) with certain institutional investors (the “Purchasers”) for aggregate gross proceeds of $3,850,000, before
deducting fees to the placement agent and other expenses payable by the Company in connection with the March Private Placement. The net
proceeds from the March Private Placement were used for working capital and general corporate purposes. The March Private Placement closed
on March 15, 2024.
As part of the March Private Placement, the Company
issued an aggregate of 5,133,332 units and pre-funded units (collectively, the “Units”) at a purchase price of $0.75 per unit
(less $0.0001 per pre-funded unit). Each Unit consists of (i) one share of Solidion Common Stock, (ii) two Series A warrants (“Series
A Warrants”) each to purchase one share of Common Stock, and (iii) one Series B warrant (“Series B Warrants”) to purchase
such number of shares of Common Stock as determined on the reset date, and in accordance with the terms therein.
The reset period ended
on July 2, 2024 (the “Reset Date”), with the lowest 10-day VWAP on June 28, 2024, being $0.4347. Consequently, the reset price
was established at $0.3478. As a result, the Series A Warrants and Series B Warrants held by investors were reset to 22,141,701 shares
and 5,749,598 shares, respectively. As of December 31, 2024, investors had exercised 13,742,879 Series A Warrants and 5,749,598 Series
B Warrants, resulting in the issuance of 19,492,477 common shares. As of December 31, 2024, 8,398,822 Series A Warrants and no Series
B Warrants remained outstanding.
On August 30, 2024, the Company entered into a
private placement transaction (the “August Private Placement”), pursuant to a Securities Purchase Agreement (the “August
Subscription Agreement”) with certain institutional investors (the “Purchasers”) for aggregate gross proceeds of $4,000,000,
before deducting fees to the placement agent and other expenses payable by the Company in connection with the August Private Placement.
The Company intends to use the net proceeds from the August Private Placement for working capital and general corporate purposes.
As part of the August Private Placement, the
Company issued an aggregate of 12,217,468 units and pre-funded units (collectively, the “Units”) at a purchase price of $0.3274
per unit. Each Unit consists of (i) one share of common stock, par value $0.0001 per share of the Company (the “Common Stock”)
(or one pre-funded warrant to purchase one share of Common Stock (the “Pre-Funded Warrant”)), (ii) two Series C warrants
each to purchase one share of Common Stock (the “Series C Warrant”) and (iii) one Series D warrant to purchase such number
of shares of Common Stock as determined on the Reset Date (as defined in Note 10) and in accordance with the terms therein (the “Series
D Warrant” and together with the Pre-Funded Warrant and the Series C Warrant, the “Warrants”).
The Company accounts for the outstanding Series A, Series B, Series
C, and Series D warrants issued in connection with the March and August 2024 private placement financings (the “PIPE Warrants”)
as liability-classified instruments because certain settlement adjustments prevent them from meeting the fixed-for-fixed equity classification
criteria under ASC 815-40.
34
Components
of Results of Operations
Revenue
The
Company is focused on commercializing and manufacturing battery materials and next-generation battery cells. Historically, and during
the periods presented, we have generated minimal revenue from product samples. We do not expect to begin generating significant revenue
until we complete the commercialization process and build out manufacturing capacity. Future capacity may come from joint ventures with
strategic partners, sourcing third-party manufacturing from our network, or pursuing mergers and acquisitions.
Operating
Expenses
Research
and Development
Research
and development expenses consist primarily of personnel expenses, including salaries, benefits, third party technology validation testing,
equipment, engineering, maintenance of facilities, data analysis, and materials.
Selling,
general and, administrative
Selling,
general and administrative expenses primarily consist of personnel expenses, including salaries, benefits, and stock-based compensation
related to executive management, finance, legal, and human resource functions. Other costs include business development, contractor and
professional services fees, audit and compliance expenses, insurance costs and general corporate expenses, such rent, office supplies
and information technology costs.
Other
Income (Loss)
Change
in fair value of Derivative Liabilities
Change
in fair value of Derivative Liabilities consists of fluctuations in the fair value of an agreement between the Company and investors
facilitating future purchases of the Company’s stock by the Investor based on a Monte Carlo simulation model.
Interest
Income
Interest
income is derived from the Company’s operating cash account, which is periodically invested in short-term money market funds.
Interest
Expense
Interest
expense consists primarily of the interest on the Company’s short-term notes and D&O insurance premium financing arrangement.
Results
of Operations
This data
should be read in conjunction with Solidion’s financial statements and accompanying notes. These results of operations are not necessarily
indicative of future performance.
35
Summary of Statements of Operations for
the Years Ended December 31, 2024 and 2023
Years Ended December 31,
Net sales $ - $ 6,944
Cost of goods sold - -
Operating Expenses
Operating
expenses increased by $7,969,914 for the year ended December 31, 2024. This increase was
primarily driven by third party validation testing of our proprietary silicon anode, professional fees, stock-based compensation, insurance,
and other administrative costs associated with the Company operating as a public entity as of February 2, 2024.
Other Income (loss)
Other loss increased by $12,627,521 for the year
ended December 31, 2024. This increase was largely driven by a gain of $18,011,100 due to a change in the fair value of derivative liabilities
related to the Forward Purchase Agreement, and warrants related to the March and August private placement financing. This was offset by
a loss of $30,281,475 from the issuance of common stock and warrants related to the convertible note and private placement financing activity.
Summary of Cash Flows for the Years Ended
December 31, 2024 and 2023
Years Ended December 31,
Net cash provided by (used in):
Net Cash
used in Operating Activities
For the year ended December 31, 2024, cash used
in operating activities was $7,377,807. This primarily resulted from a net loss of $25,929,003, which included non-cash gains and losses,
driven by a gain of $18,011,100 due to a change in the fair value of derivative liabilities related to the Forward Purchase Agreement
and private placement warrants, and a loss of $30,281,475 from the issuance of common stock and warrants related to the convertible note
and private placement financing activity. These non-cash losses were added back to reconcile net loss to net cash used in operating activities,
as part non-cash adjustments that also included depreciation and amortization, stock-based compensation and equity compensation expense
for services, totaling $17,266,959. Additionally, changes in operating assets and liabilities provided $1,284,237 of cash from operating
activities, driven primarily by a $1,344,669 increase in accounts payable and accrued expenses. The increase in accounts payable and accrued
expenses was mainly due to higher accrual expense associated with the Company operating as a public entity as of February 2, 2024.
For the year ended December 31, 2023, cash used in operating activities
was $4,068,302. This primarily resulted from a net loss of $5,324,624, which included non-cash losses, depreciation and amortization,
totaling $552,855 Additionally, changes in operating assets and liabilities provided $703,467 of cash from operating activities, driven
primarily by a $872,485 increase amounts due to related parties.
Net
Cash used in Investing Activities
For the year ended December 31, 2024, the Company used cash of $246,074
in investing activities consisting of capitalized patent costs.
For the year ended December 31, 2023, the Company used cash of $376,150
in investing activities consisting of capitalized patent costs.
36
Net Cash
provided by Financing Activities
For the year ended December 31, 2024, the Company
generated cash of $10,976,833 from financing activities. This primarily resulted from proceeds from private placement financing, and warrant
exercises of $7,850,000 and $4,259,241, respectively. These increases were offset by repayment of short-term notes and related party advances
of $1,389,146 and $1,026,091, respectively.
For the year ended December 31, 2023, the Company generated cash of
$3,823,657 from financing activities, consisting of capital contributions by G3.
Going
Concern Considerations, Liquidity and Capital Resources
Since
Solidion’s inception, the Company has experienced recurring net losses and has generated minimal sales. This raises substantial
doubt about the Company’s ability to continue as a going concern. Management’s ability to fund our operations and capital
expenditures depends on our ability to raise additional external capital. This is subject to our future operating performance and general
economic, financial, competitive, legislative, regulatory, and other conditions, some of which are beyond our control. We are currently
engaged in discussions with various financing counterparties to secure sufficient capital to meet our business needs for the foreseeable
future. The Company plans to finance its operations with proceeds from the sale of equity securities, government grants and loans, or
debt; however, there is no assurance that management’s plans to obtain additional debt, grants or equity financing will be successfully
implemented or implemented on terms favorable to the Company.
As of December 31, 2024, we had an accumulated
deficit of $115,880,509. Additionally, $1,400,717 in NUBI transaction costs incurred at the Closing Date in connection with the Merger
remain outstanding and are due within the next twelve months. For the year ended December 31, 2024, we
incurred losses from operations totaling $25,929,003 and net cash used in operating activities of $7,377,807. We expect to continue to
incur such losses for at least the next twelve (12) months.
Critical
Accounting Estimates
We
prepare our financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make
estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance
sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material
differences between these estimates and actual results, our financial condition or results of operations would be affected. 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.
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 as of and for the year ended December 31, 2024:
Forward
Purchase Agreement
The Company accounts for the forward purchase agreement as either equity-classified
or liability-classified instruments based on an assessment of the Forward Purchase Agreement (“FPA”) specific terms and applicable
authoritative guidance in FASB ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”), and FASB ASC 815,
“Derivatives and Hedging” (“ASC 815”). The assessment considers whether the FPA is a freestanding financial instrument
pursuant to ASC 480, meets the definition of a liability pursuant to ASC 480, and whether the FPA meets all of the requirements for equity
classification under ASC 815, including whether the FPA is indexed to the Company’s own common shares and whether the FPA holders
could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions
for equity classification. This assessment is conducted at the time of FPA issuance and as of each subsequent quarterly period end date
while the FPA is outstanding.
37
For issued or modified FPA that meet all of the criteria for equity
classification, the FPA is required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or
modified FPAs that do not meet all of the criteria for equity classification, the FPA are required to be recorded at their initial fair
value on the date of issuance, and each balance sheet date thereafter. The Company accounts for outstanding FPA as liability-classified
instrument.
The fair value of the FPA is Level 3. The determination
of the fair value requires significant estimates and judgments. Please see Note 14 – Fair Value Measurements to the financial statements
for the significant assumptions and estimates.
Changes
in the significant assumptions and estimates could materially impact the valuation and the amounts recorded in the financial statements.
Recently Adopted Accounting Standards
In November
2023, the FASB issued Accounting Standards Update (ASU) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures,” to enhance disclosures for significant segment expenses for all public entities required to report segment information
in accordance with ASC 280. The standard did not change the definition of a segment, the method for determining segments or the criteria
for aggregating operating segments into reportable segments. The amendments are effective for fiscal years beginning after December 15,
2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective adoption is required for all prior periods
presented in the financial statements. The Company adopted the amendment effective January 1, 2024 for annual reporting purposes. The
adoption did not have a material impact to the Company’s financial statements or disclosures.
Recently
Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosures of incremental income tax
information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. 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.
In November 2024, the FASB issued ASU 2024-03,
“Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement
Expenses” to improve disclosures by providing more detailed information about the types of expenses in commonly presented expense
captions. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal
years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect this standard will
have on its consolidated financial statements and related disclosures.
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
Evaluation of Disclosure Controls and Procedures
Based on an evaluation of our disclosure controls
and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not
effective as of December 31, 2024, because of certain material weaknesses in our internal control over financial reporting, as further
described below.
Notwithstanding these material weaknesses, our
management concluded that our consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material
respects, our financial condition, results of operations and cash flows as of and for the periods presented in conformity with accounting
principles generally accepted in the United States (“U.S. GAAP”).
38
Management’s Report on Internal Control
Over Financial Reporting
The management of Solidion Technology, Inc.is
responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we
conducted an evaluation of the effectiveness of Solidion’s internal control over financial reporting as of December 31, 2024. In
making this assessment, we used the criteria set forth in the framework in Internal Control—Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our evaluation under these criteria,
management determined, based upon the existence of the material weaknesses described below, that we did not maintain effective internal
control over financial reporting as of December 31, 2024.
Material Weaknesses
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 our annual or interim financial statements will not be prevented or detected on a timely basis.
Management identified deficiencies in the principles
associated with the control environment, risk assessment, control activities, information & communication, and monitoring components
of internal control, based on the criteria established by the COSO framework, that constitute material weaknesses, either individually
or in the aggregate as described below.
Control Environment: Solidion does not
maintain a sufficient complement of qualified technical accounting and financial reporting personnel to perform control activities, including
those related to complex and/or non-routine transactions. Additionally, Solidion did not implement sufficient segregation of duties within
its financial reporting function in order to demonstrate independence and proper oversight. This material weakness contributed to the additional
material weaknesses further described below.
Risk Assessment: Solidion did not design
and implement an effective risk assessment based on the criteria established in the COSO framework. A material weakness, either individually
or in the aggregate, was identified pertaining to (i) identifying, assessing, and communicating appropriate objectives; (ii) identifying
and analyzing risks to achieve these objectives; and (iii) implementing an effective risk assessment to identify and assess changes in
the business if such changes were to occur.
Control Activities: Solidion did not effectively
design and implement control activities to support the operating effectiveness of controls to prevent and detect potential material errors
based on the criteria established in the COSO framework. As a result, the following control deficiencies constitute material weaknesses,
individually or in the aggregate: (i) ineffective controls related to the review and approval of journal entries and reconciliations,
and (ii) a lack of appropriate accounting policies and procedures.
Information and Communication: We identified
control deficiencies that constitute material weaknesses, either individually or in the aggregate, related to (i) internal communication
of information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control;
and (ii) communicating relevant information to external parties timely.
Monitoring: Solidion did not maintain effective
monitoring activities to determine whether the components of internal control over financial reporting were present and functioning based
on the criteria established in the COSO framework.
Remediation Plans and Status
We are committed to maintaining a strong internal
control environment and implementing measures designed to ensure that control deficiencies contributing to the material weaknesses are
remediated as soon as practicable. We plan to engage a third party to assist in our remediation efforts. We will design and implement
a risk assessment process and establish processes and controls to support an effective control environment. These actions are intended
to enable Solidion to enhance our monitoring of our internal controls over financial reporting as well as enhance required communication.
In addition, we will design and implement controls to address material weaknesses in control activities including the proper review and
approval of journal entries and reconciliations.
As Solidion continues to evaluate its internal
controls, it may take additional remediation actions. The material weaknesses will be considered remediated when Solidion’s management
designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing,
that these controls are effective. Solidion’s management will monitor the effectiveness of its remediation plans and will make changes
management determines to be appropriate.
Changes in Internal Control over Financial
Reporting
Except for the identification of the material weaknesses described
above, there were no changes during the quarter ended December 31, 2024, in our internal control over financial reporting that 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.
39
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 2025 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, 2024 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 2025 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, 2024 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 2025 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, 2024 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 2025 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, 2024 and is incorporated by reference in this Annual Report.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Public Accounting
Fees
The firms of Deloitte
& Touche LLP (“Deloitte”) and GBQ Partners (“GBQ”) act as our independent registered public accounting firms.
The following is a summary of fees billed by Deloitte and GBQ for services rendered.
Audit Fees. For
the years ended December 31, 2024, and 2023, fees for our independent registered public accounting firms were approximately $775,985 and
$98,500, respectively, for audit services performed by Deloitte and GBQ in connection with the audit of our financial statements included
in this Annual Report on Form 10-K.
Audit-Related Fees. For
the years ended December 31, 2024 and 2023, Deloitte and GBQ did not render audit-related services.
Tax Fees. For the years ended December 31, 2024 and 2023, Deloitte
and GBQ did not render tax compliance, tax advice and tax planning services.
All Other Fees. For the year ended December
31, 2024 and 2023, there were no fees billed for products and services provided by Deloitte and GBQ other than those set forth above.
40
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
41
SOLIDION
TECHNOLOGY, INC.
TABLE
OF CONTENTS
Page
Reports of Independent Registered Public Accounting Firm (PCAOB Firm #34) F-2
Reports of Independent Registered Public Accounting Firm (PCAOB Firm #1808) F-3
Consolidated and Combined Financial Statements:
Balance Sheets F-4
Statements of Operations F-5
Statements of Changes in Stockholders’ Equity (Deficit) F-6
Statements of Cash Flows F-7
Notes to Consolidated and Combined Financial Statements F-8
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders
and the Board of Directors of Solidion Technology, Inc.
Opinion
on the Financial Statements
We have audited the accompanying consolidated and combined balance
sheet of Solidion Technology, Inc. and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated and combined
statements of operations, changes in stockholders’ (deficit) equity, and cash flows, for the year ended December 31, 2024, and the
related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash
flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America
(“US GAAP”).
Substantial Doubt About the Entity’s Ability
to Continue as a Going Concern
The accompanying financial statements for the year ended December 31,
2024 have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements,
the Company has experienced recurring net losses and net cash used in operating activities, has generated minimal sales, is not in compliance
with Nasdaq listing rules, and has stated that substantial doubt exists about its ability to continue as going concern. Management’s
evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect
to this matter.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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 audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audit, 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 audit included performing procedures to assess the risks of material
misstatement of the 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 financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Dayton, Ohio
April 15, 2025
We have served as the Company’s auditor since 2024.
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and the Board of Directors of
Solidion Technology, Inc.
Opinion on the Financial Statements
We have audited the accompanying combined carved-out
balance sheet of the Battery Group of Global Graphene Group, Inc. (the “Company”) as of December 31, 2023 and the related combined
carved-out statements of operations, parent’s net equity and cash flows for the year then ended (collectively referred to as the “financial
statements”). In our opinion, the carved-out financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.
Continuation as a Going Concern
The accompanying combined carved-out
financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the Summary of Significant
Accounting Policies note to the financial statements, the Company has experienced recurring losses from operations and negative cash flows
from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters
are also described in the notes to the financial statements. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. 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 audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audit 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 audit included performing procedures to assess
the risks of material misstatement of the 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 financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ GBQ Partners LLC
We served as the Company’s auditor from 2022 to 2024
Columbus, Ohio
April 15, 2024
F-3
SOLIDION
TECHNOLOGY, INC.
CONSOLIDATED AND COMBINED BALANCE
SHEETS
ASSETS
Current Assets:
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Income taxes payable 6,369 -
Short-term notes payable 1,917,962 -
Commitments and contingencies (Note 7)
Stockholders’ Equity (Deficit):
Stock subscription receivable (80,241 ) -
Total Liabilities and Stockholders’ Equity (Deficit) $ 7,955,811 $ 4,429,867
The
accompanying notes are an integral part of these consolidated financial statements.
F-4
SOLIDION
TECHNOLOGY, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
Year Ended December 31,
Net sales $ - $ 6,944
Cost of goods sold - -
Operating Expenses
Other Income (Expense)
Change in fair value of derivative liabilities 18,011,100 -
Loss on issuance of common stock and warrants (30,281,475 ) -
Net (loss) income before provision for income taxes (25,929,003 ) (5,324,624 )
Provision for income taxes - -
The
accompanying notes are an integral part of these consolidated financial statements.
F-5
SOLIDION
TECHNOLOGY, INC.
Consolidated AND COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERs’ (DEFICIT) EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2024 AND DECEMBER
31, 2023
Additional Stock Stockholders’
Common Stock Paid-in Accumulated Subscription Equity
Shares Amount Capital Deficit Receivable (Deficit)
Contributions and net transfers with related parties — — 2,753,657 — — 2,753,657
Capital contributions from related party — — 487,273 — — 487,273
Stock subscription receivable — — — — (80,241 ) (80,241 )
Stock-based compensation to consultant — — 700,000 — — 700,000
The
accompanying notes are an integral part of these consolidated financial statements.
F-6
SOLIDION
TECHNOLOGY, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
For the Year Ended December 31,
Cash Flows From Operating Activities:
Stock based compensation 2,367,014 —
Equity compensation expense 1,976,000 —
Non-cash interest expense 303,061 —
Change in fair value of derivative liabilities (18,011,100 ) —
Loss on issuance of common stock and warrants 30,281,475 —
Changes in operating assets and liabilities:
Income taxes payable (82,898 ) —
Cash Flows From Investing Activities:
Cash Flows From Financing Activities:
Capital contributions from Global Graphene Group 487,273 3,823,657
Cash received from NUBI Trust 25,160,047 —
Discount payment related to Non Redemption Agreement (13,937,997 ) —
Transaction expenses in connection with the Merger (8,948,009 ) —
Inflow from Merger 17,555 —
Proceeds from convertible notes 527,500 —
Proceeds from short-term notes 670,000 —
Repayment of short-term notes (1,389,146 ) —
Proceeds from issuance of common stock from exercise of warrants 4,259,241 —
Issuance costs in connection with Private Placement (419,499 ) —
Repayment of related party payable (1,026,091 ) —
Supplemental disclosure
Cash paid for interest $ 169,911 $ —
Cash paid for federal income taxes $ 89,959 $ —
Supplemental disclosure of non-cash financing activities:
Issuance of Common Stock upon the closing of the Merger $ 4,993 $ —
The
accompanying notes are an integral part of these consolidated financial statements.
F-7
SOLIDION
TECHNOLOGY, INC.
NOTES TO CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS
NOTE 1
— DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN
Solidion Technology, Inc (the “Company”, “Solidion”
or “Solidion Technology”), formerly known as Nubia Brand International Corp. prior to February 2, 2024, was incorporated in
Delaware on June 14, 2021 and is an advanced battery technology company focused on the development and commercialization of next-generation
battery materials, components, and energy storage solutions. Headquartered in Dallas, Texas, with research and development (R&D) and
manufacturing operations in Dayton, Ohio, Solidion.
On February 2, 2024, Nubia Brand International
Corp., a Delaware corporation (“Nubia” and after the Transactions described herein, the “Company”, “Solidion”
or “Solidion Technology, Inc.”), consummated the merger (the “Closing”) pursuant to a Merger Agreement, dated
February 16, 2023 (as amended on August 25, 2023, the “Merger Agreement”), by and among Nubia, Honeycomb Battery Company,
an Ohio corporation (“HBC”), and Nubia Merger Sub, Inc., an Ohio corporation and wholly-owned subsidiary of Nubia (“Merger
Sub”). HBC was formerly the energy solutions division of Global Graphene Group, Inc. (“G3”). 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.
In
accordance with the Merger Agreement the Company issued to the HBC stockholders aggregate consideration of 70,000,000 shares of Solidion’s
common stock, minus up to 200,000 Holdback Shares, subject to adjustment for any additional interest or penalties related to the G3 Tax
Lien (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 “Earnout Arrangement”):
If,
prior to the expiration of the earn out periods set forth in (i)-(iii) above, there occurs any transaction resulting in a change in control,