S-1: Stardust Power Faces Going Concern Doubt Amidst Capital Raise Efforts

Stardust Power Inc., a development-stage lithium refinery, has filed an S-1 registration statement for the resale of up to 2 million shares by B. Riley Principal Capital II, LLC, while acknowledging substantial doubt about its ability to continue as a going concern.

Summary

• Stardust Power Inc. is a development-stage American manufacturer of battery-grade lithium products, aiming to construct a refinery in Muskogee, Oklahoma, with a projected capacity of up to 50,000 tons per annum (tpa).
• The company has not generated any revenue to date and reported an accumulated deficit of approximately $64.59 million as of September 30, 2025, with negative operating cash flow of approximately $6.55 million for the nine months ended September 30, 2025.
• Management has identified conditions that raise substantial doubt about the company's ability to continue as a going concern, necessitating additional capital raises or borrowings.
• A Common Stock Purchase Agreement with B. Riley Principal Capital II, LLC allows Stardust Power, at its discretion, to sell up to $10 million in common stock over 36 months, with 2 million shares currently registered for resale by B. Riley.
• The company completed a 1-for-10 reverse stock split on September 8, 2025, to maintain Nasdaq listing compliance.
• Stardust Power has secured non-binding letters of intent for lithium chloride feedstock supply from Prairie Lithium Limited (6,000 metric tpa) and Mandrake Resources Limited (7,500 metric tpa).
• An exclusive license agreement with KMX Technologies, Inc. grants Stardust Power rights to KMX's vacuum membrane distillation (VMD) technology for refining and upstream operations across the U.S., Canada, and select international markets.
• The estimated total cost for Phase 1 of the refinery (25,000 metric tpa capacity) is approximately $500 million, with construction expected to take about 24 months from the start of major work.
• The company received an illustrative incentive analysis for up to $257 million in performance-based incentives from the State of Oklahoma, subject to meeting certain criteria.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing with a low-to-moderate sentiment score due to the company's development stage, significant accumulated losses, and explicit 'going concern' doubt. While there are positive strategic developments and capital raising efforts, the fundamental financial health and execution risks remain very high.

Positives

• Stardust Power is developing a large-scale lithium refinery in the U.S. with a projected capacity of up to 50,000 tpa, positioning itself to address domestic demand for battery-grade lithium.
• The company has secured non-binding letters of intent for significant lithium chloride feedstock supply from Prairie Lithium (6,000 metric tpa for 6 years) and Mandrake Resources (7,500 metric tpa for 12 years).
• An exclusive license agreement for KMX's VMD Technology provides a competitive advantage in refining and upstream operations, with low technology risk due to proven systems.
• The Muskogee, Oklahoma site offers strategic advantages, including existing multi-modal transportation infrastructure, favorable industrial regulations, and a Foreign Trade Zone designation.
• The company has received an illustrative incentive package of up to $257 million from the State of Oklahoma, and may qualify for federal grants under the IRA and BIL.
• The refinery design is optimized for multiple lithium chloride inputs and aims for sustainable operations with minimized air emissions, water usage (zero-liquid discharge system), and use of local sustainable power sources.
• The management team possesses extensive experience in investments, mining, civil engineering, finance, and operations within the energy and clean energy sectors.

Negatives

• Stardust Power is a development-stage company with a limited operating history, no revenue generated to date, and a history of significant operating losses, including a $64.59 million accumulated deficit as of September 30, 2025.
• Management has identified conditions that raise substantial doubt about the company's ability to continue as a going concern, indicating a critical need for additional capital.
• The company's ability to secure additional funding on satisfactory terms or at all is uncertain, which could severely restrict liquidity and impact business plans.
• The sale of shares by the Selling Stockholder, or the perception of such sales, could cause the price of common stock to fall and dilute existing shareholders.
• The company faces numerous risks related to exploration, construction, and extraction of brine by its suppliers, with no guarantee of commercially viable extraction or consistent feedstock supply.
• Logistics costs associated with a hub-and-spoke refinery model could increase prices to an economically unviable level.
• The company may be unable to successfully negotiate final, binding terms for its current non-binding memoranda of understanding and letters of intent for supply and offtake agreements.
• The company identified material weaknesses in its internal control over financial reporting in prior years, though management believes these were remediated in 2024.
• The company is subject to a lawsuit from H.C. Wainwright & Co., LLC alleging breach of an engagement agreement, seeking payment of purported unpaid sums.

Risks

• Inability to predict the actual number of shares sold under the Purchase Agreement or the gross proceeds, leading to uncertainty in funding.
• Potential for substantial dilution to existing stockholders from future share sales, depressing the market price of common stock.
• Limited operating history and lack of revenue make future performance difficult to evaluate, increasing investment risks.
• Substantial doubt about the company's ability to continue as a going concern due to significant operating losses and negative cash flows.
• No guarantee that development will result in commercial production of lithium from brine sources, or that extraction will be economically viable.
• Risks related to exploration, construction, and extraction of brine by suppliers, including geological formations, natural disasters, power outages, construction delays, labor costs, and permitting issues.
• Fluctuations in quarterly and annual operating and financial results due to lack of working capital, equipment malfunction, regulatory delays, and weather.
• Dependence on generating revenues, achieving profitability, and developing positive cash flows from battery-grade lithium production activities for long-term success.
• Pipeline of lithium feedstock may prove non-viable, or sufficient supply may not be available at the onset of production.
• Logistics costs in a hub-and-spoke refinery model may increase to an economically unviable level.
• Inability to commence and expand commercial operations even after completing initial phases and achieving first commercial production.
• Challenges in managing future growth, including developing prospects, identifying suppliers, maintaining partnerships, retaining skilled personnel, and accessing capital.
• Products may not qualify for use by intended customers due to strict purity requirements for lithium-ion batteries.
• Inability to secure long-term buyers for products due to evolving market dynamics, competitive pricing, logistical costs, or changes in demand.
• Delays and other obstacles (permitting, construction, procurement, workforce, community opposition) may prevent successful completion of the Facility.
• Inability to successfully access capital and financial markets, limiting liquidity, funding operations, and executing business plans.
• Failure to develop, maintain, and grow strategic relationships with suppliers, offtakers, and technology partners.
• Risks associated with lithium being highly combustible, potentially leading to incidents that impact operations, business, and profitability.
• Competition from well-capitalized companies in the DLE and lithium processing sectors with extensive resources.
• Disruption from low-cost producers in foreign jurisdictions with less rigorous regulatory standards.
• Inability to qualify for existing federal and state grants and incentives, or delays in their disbursement, impacting timely and cost-effective operations.
• Development of non-lithium battery technologies could adversely affect demand for lithium compounds.
• Unpredictable fluctuations in lithium prices due to economic trends, supply-demand dynamics, and new discoveries.
• Future growth and success dependent on consumer demand for electric vehicles in a competitive, cyclical, and volatile automotive industry.
• Inability to successfully negotiate final, binding terms for current non-binding memoranda of understanding and letters of intent for supply and offtake agreements.
• Escalation of geopolitical conflicts (e.g., Ukraine, Middle East) could adversely affect business by impacting capital markets or global economy.
• Potential tariffs or global trade wars could increase product costs and impact competitiveness.
• Increased stakeholder focus on sustainability matters could adversely impact business, reputation, and operating results if the company fails to adapt or comply.
• Subject to environmental, health, and safety laws and regulations, which may impose substantial compliance requirements and increased operating costs.
• Compliance with data privacy regulations could require additional expenditures and impact operating cash flows.
• Material weaknesses in internal control over financial reporting in prior years, with a risk of future deficiencies impacting financial reporting accuracy and stock price.
• Stockholders may not recoup all or any portion of their investment upon dissolution.
• An active trading market for common stock may never develop or be sustained, making it difficult to sell shares.
• Inability to satisfy Nasdaq's continued listing requirements, potentially leading to delisting.
• Delaware law and governing documents contain anti-takeover provisions that could limit stockholder actions.
• Warrants may be exercised for common stock, increasing shares eligible for future resale and resulting in further dilution.
• Volatility in the price of the company's securities due to various market and industry factors.
• No intention to pay cash dividends for the foreseeable future, meaning investors may only see returns through stock price appreciation.
• Qualifying as an emerging growth company and smaller reporting company may make common stock less attractive to investors due to reduced reporting requirements.
• A small number of stockholders continue to have substantial control, limiting other stockholders' ability to influence corporate matters.
• Issuance of additional shares of common stock or other equity securities without approval could dilute ownership interests.

Future Outlook

Stardust Power's future outlook is highly dependent on its ability to raise additional capital, successfully construct its lithium refinery, secure binding supply and offtake agreements, and achieve commercial production. The company anticipates robust growth in U.S. lithium demand, driven by electric vehicles and energy storage systems, and aims to become a leading domestic supplier. However, it acknowledges significant risks related to market volatility, competition, and the uncertainty of government incentives.

Management Comments

• Management expects operating losses and negative cash flows to continue to increase, particularly due to capital expenditure and expenses related to site preparation, engineering, feasibility studies, and investment in upstream companies and salaries.
• Management believes that the new procedures and controls implemented in fiscal year 2024 provide an appropriate remediation of the material weaknesses identified in internal control over financial reporting.
• Management believes that the secured site at Southside Industrial Park within the Port Muskogee, and Oklahoma in general, is an ideal location for its Facility.
• Management believes these improvements (at Port Muskogee) could increase its operational efficiency, improve resiliency to weather events, and support continuous growth with increased multi-modal throughout the terminal area.
• Management believes these costs (logistics based on hub and spoke model) can be limited through concentration and or crystallization.
• Management believes that the long-term prospects for both (EVs and lithium prices) remain positive.

Industry Context

StockSavvy.ai notes that Stardust Power is entering a rapidly evolving U.S. lithium refinery landscape, driven by increasing demand for battery-grade lithium from e-mobility, grid infrastructure, and data centers. The industry is characterized by China's dominance in the battery supply chain, creating a national security priority for the U.S. to develop domestic production. Stardust Power's focus on a midstream refinery process, optimized for multiple lithium chloride inputs from brine, differentiates it from hard rock or clay lithium refineries of other U.S. players like Tesla, ExxonMobil, Ioneer Ltd, and Lithium Americas. The company aims to leverage government incentives like the IRA and BIL, which are designed to stimulate domestic production, though the stability and disbursement of these incentives remain uncertain due to political shifts.

Comparison to Industry Standards

• Stardust Power's planned refinery capacity of up to 50,000 metric tpa positions it to be one of the largest in North America, comparable in scale to announced projects by established players like Standard Lithium (22,500 tpa) and ExxonMobil (supporting over 1 million EVs by 2030).
• The company's focus on brine-derived lithium chloride inputs and a hub-and-spoke model differentiates it from hard rock or clay lithium refineries, which are common among competitors and may offer environmental and cost advantages.
• The use of commercially proven technologies in its refinery process aims to minimize technology risk, contrasting with some emerging Direct Lithium Extraction (DLE) technologies that are still being tested at scale.
• The estimated capital expenditure of approximately $500 million for Phase 1 (25,000 metric tpa) is a significant investment, typical for large-scale refinery projects in the industry, and includes a conservative contingency amount consistent with FEL 3 studies.
• The company's strategy to source feedstock from multiple suppliers (e.g., Prairie Lithium, Mandrake Resources) aims to reduce dependence on a single source, a common risk in the critical minerals supply chain.

Management Changes

Corporate Governance

Legal Proceedings

• On July 7, 2025, H.C. Wainwright & Co., LLC filed a complaint against Stardust Power Inc. in the Supreme Court of the State of New York, County of New York (Case No: 654037/2025), alleging breach of an engagement agreement and seeking payment of purported unpaid sums.
• On September 19, 2025, the company filed its answer, denying all liability and asserting affirmative defenses, with plans to vigorously defend against the lawsuit.

Related Party Transactions

• In December 2024, the company entered into a binding term sheet with DRE Chicago LLC (a related party) for a $250,000 loan at 15% interest, maturing in March 2025. The company also agreed to issue $375,000 in Common Stock as an Equity Kicker and warrants. The loan, interest, shares, and warrants were fully repaid/issued by September 30, 2025.
• In December 2024, the company entered into a binding term sheet with Endurance Antarctica Partners II, LLC (an affiliate of a director and shareholder) for a $1,750,000 loan at 15% interest, maturing in March 2025. The company also agreed to issue $3,500,000 in Common Stock as an Equity Kicker and warrants. The loan, interest, shares, and warrants were fully repaid/issued by September 30, 2025.
• In March 2023, the company entered into unsecured notes payable with three related parties, providing the ability to draw up to $1,000,000 ($160,000 until Dec 31, 2023, and $840,000 until Dec 31, 2025) at a 4.71% interest rate. In June 2025, $250,000 was drawn from Energy Transition Investors LLC and repaid in full the same month. As of September 30, 2025, $840,000 remained available to draw.
• The company previously had a services agreement with VIKASA Capital Partners LLC (VCP) for corporate and advisory services, with $980,000 paid by December 31, 2023. All services were completed by December 31, 2024, with no further payments pending.
• A consulting agreement with 7636 Holdings LLC (a related party) for strategic advisory services was terminated effective September 19, 2023, with no outstanding dues as of December 31, 2024.
• The Sponsor (Global Partner Sponsor II, LLC) purchased 5,566,667 Private Warrants at $1.50 per warrant, exercisable for Common Stock at $115.00 per share (10 warrants for one share).
• The Sponsor was issued 100,000 Sponsor Earnout Shares at the closing of the Business Combination, subject to vesting based on achieving certain trading price thresholds ($120.00 and $140.00 per share) or a change in control.

Stakeholder Impact

• **Shareholders:** Potential for significant dilution from future equity sales, especially given the company's need for capital. The 'going concern' doubt poses a high risk to investment value. The 1-for-10 reverse stock split aimed to maintain Nasdaq listing, but does not fundamentally change underlying value.
• **Employees:** The company's growth and success depend on attracting and retaining skilled personnel, particularly in engineering and technical roles. Stock-based compensation plans are in place to incentivize employees.
• **Customers (Potential Offtakers):** The company aims to provide a domestic supply of battery-grade lithium, which is critical for U.S. EV manufacturers and the defense industrial base, potentially offering supply chain stability.
• **Suppliers (Feedstock Providers):** The company's business model relies on securing multiple sources of lithium brine feedstock, creating opportunities for upstream partners.
• **Creditors:** The 'going concern' warning indicates elevated risk for current and future creditors. The company has engaged in various debt financings, some with related parties and collateral pledges.
• **Local Communities (Muskogee, Oklahoma):** The planned refinery is expected to bring job creation and economic development to an economically distressed area, potentially benefiting local residents and educational institutions.

Next Steps

• The company needs to raise additional capital from equity issuance or additional borrowings to fund operating and investing activities.
• Continue construction of the lithium refinery facility in Muskogee, Oklahoma, with Phase 1 targeting 25,000 metric tpa production.
• Diligently proceed to completion of the Facility without unreasonable delays, subject to Force Majeure events.
• Negotiate definitive, binding supply agreements for lithium chloride feedstock with partners like Prairie Lithium and Mandrake Resources.
• Negotiate a definitive long-term commercial offtake agreement with Sumitomo Corporation of Americas.
• Apply for and secure federal and state grants and incentives, including those under the IRA, BIL, and Oklahoma state programs.
• Continue to evaluate DLE technologies and prospective partners in the space.
• Address the H.C. Wainwright & Co., LLC lawsuit through the discovery stage and further proceedings.
• Monitor Nasdaq listing compliance and maintain listing on an Eligible Market.

Key Dates

Recommendation

Stardust Power is a development-stage company with no revenue and a substantial accumulated deficit, leading management to express 'substantial doubt about its ability to continue as a going concern.' While the company has secured some non-binding agreements and potential capital, the execution risk for building a $500 million refinery and achieving commercial production is extremely high. The ongoing need for significant capital, coupled with the explicit going concern warning and the potential for substantial dilution from future equity raises, makes this a highly speculative and risky investment. The recent Nasdaq compliance issues, despite being resolved, highlight underlying operational and financial challenges. A seasoned investor would view the current financial state and the inherent risks of a pre-revenue, capital-intensive project as overwhelmingly negative, warranting a strong sell recommendation.

Keywords

Lithium, Battery-grade lithium carbonate, Lithium refinery, Electric vehicles, Energy storage systems, Critical minerals, Direct Lithium Extraction, SEC filing, S-1, Capital raise, Going concern, Oklahoma, Sustainable operations, KMX Technologies, B. Riley Principal Capital II