| FAIR VALUE MEASUREMENTS |
NOTE
13 – FAIR VALUE MEASUREMENTS
The
following tables summarize the Company’s assets and liabilities that are measured at fair value in the consolidated financial statements:
SCHEDULE
OF ASSETS AND LIABILITIES ARE MEASURED AT FAIR VALUE
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| | |
Fair Value Measurements as at December 31, 2023 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Other noncurrent assets: | |
| | | |
| | | |
| | | |
| | |
| Investment in equity securities (a) | |
$ | 218,556 | | |
$ | - | | |
$ | - | | |
$ | 218,556 | |
| Total financial assets | |
$ | 218,556 | | |
$ | - | | |
$ | - | | |
$ | 218,556 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| | |
Fair Value Measurements as at December 31, 2024 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Other noncurrent assets: | |
| | | |
| | | |
| | | |
| | |
| Investment in equity securities (a) | |
$ | 1,496,422 | | |
$ | - | | |
$ | - | | |
$ | 1,496,422 | |
| Total financial assets | |
$ | 1,496,422 | | |
$ | - | | |
$ | - | | |
$ | 1,496,422 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| | |
Fair Value Measurements as at December 31, 2023 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| SAFE notes (b) | |
$ | - | | |
$ | - | | |
$ | 5,212,200 | | |
$ | 5,212,200 | |
| Total financial liabilities | |
$ | - | | |
$ | - | | |
$ | 5,212,200 | | |
$ | 5,212,200 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| | |
Fair Value Measurements as at December 31, 2024 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| Total financial liabilities | |
$ | - | | |
$ | - | | |
$ | 532,700 | | |
$ | 532,700 | |
| (a) |
|
These
represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance
with ASC 321, Investments-Equity Securities, based on quoted prices in active markets. |
Stardust Power Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
| (b) |
|
The valuation of the Level
3 measurement considered the probabilities of the occurrence of the scenarios as discussed in Note 2 the audited consolidated financial
statements of Legacy Stardust Power and notes thereto for the period March 16, 2023 (inception) to December 31, 2023, included in
the Company’s Registration Statement on Form S-4/A filed with the SEC on May 8, 2024. |
| (c) |
|
For
Level 3 earnout liability, the Company assesses the fair value of expected earnout liability at each reporting period using the Monte
Carlo Method, which is consistent with the initial measurement of the expected earnout consideration. This fair value measurement
is considered a Level 3 measurement because the Company estimates projections during the earnout period utilizing various potential
pay-out scenarios. The Monte Carlo simulation method repeats a process thousands of times in an attempt to predict all the possible
future outcomes. At the end of the simulation, several random trials produce a distribution of outcomes that are then analyzed to
determine the average present value of earnout. Change in the fair value of earnout liability is reflected in our consolidated statements
of operations. |
The make-whole obligation liability related to the
Purchase Agreement is measured at fair value categorized within Level 1 of the fair value hierarchy. See Note 6.
The
following table provides a reconciliation of activity and changes in fair value for the Company’s SAFE notes, convertible notes
and Sponsor earnout liability:
SCHEDULE
OF RECONCILIATION OF ACTIVITY AND CHANGES IN FAIR VALUE
| | |
SAFE notes at fair value | | |
Convertible notes at fair value | | |
Sponsor Earnout
liability at fair value | |
| Balance as at March 16, 2023 (inception) | |
$ | - | | |
$ | - | | |
$ | |
| Issuance of notes | |
| 5,000,000 | | |
| - | | |
| |
| Change in fair value | |
| 212,200 | | |
| - | | |
| |
| Balance as at December 31, 2023 | |
$ | 5,212,200 | | |
$ | - | | |
$ | |
| Issuance of notes | |
| 200,000 | | |
| 2,100,000 | | |
| |
| Sponsor earnout liability recognized on closing of Business Combination | |
| - | | |
| - | | |
| |
| Change in fair value | |
| 955,000 | | |
| 471,400 | | |
| ) |
| Issuance of common stock upon conversion | |
| (6,367,200 | ) | |
| (2,571,400 | ) | |
| |
| Balance as at December 31, 2024 | |
$ | - | | |
$ | - | | |
$ | |
The
valuation of the Level 3 measurement for SAFE notes considered the probabilities of the occurrence of the scenarios as discussed in Note
2 of the audited consolidated financial statements and notes thereto for the period March 16, 2023 (inception) to December 31, 2023, included
in the Company’s Registration Statement on Form S-4/A filed with the SEC on May 8, 2024. The Company valued the SAFE notes based
on the occurrence of the preferred financing or a SPAC transaction. As of the date of initial measurement and December 31, 2023, the
management has assigned zero probability for a change in control event or a dissolution event. Pursuant to the consummation of the Business
Combination and in accordance with the terms of the convertible equity and SAFE note agreements, the SAFE notes and convertible notes
converted into 636,916 and 257,216 shares of the Company’s Common Stock, respectively.
Stardust Power Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
|