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.

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.

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.

Summary of Statements of Operations for the Years Ended December 31, 2024 and 2023

		Years Ended December 31,
		2024				2023
Net sales		$	-			$	6,944
Cost of goods sold			-				-
Operating expenses			13,299,537				5,329,623
Total other income (loss)			(12,629,466	)			(1,945	)
Net loss		$	(25,929,003	)		$	(5,324,624	)

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,
		2024				2023
Net cash provided by (used in):
Operating Activities		$	(7,377,807	)		$	(4,068,302	)
Investing Activities			(246,074	)			(376,150	)
Financing Activities			10,976,833				3,823,657
Net increase (decrease) in cash		$	3,352,952			$	(620,795	)

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.

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.

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.