10-K: Damon Inc. Faces Delisting, Losses Amid EV Push

Damon Inc. reports significant losses and a going concern warning, with its shares delisted from Nasdaq and now trading on the OTCID Basic Market, as it continues electric motorcycle development.

Summary

• Damon Inc. (formerly Grafiti Holding Inc.) completed a business combination with Damon Motors Inc. on November 13, 2024, with Damon Motors as the accounting acquirer.
• The company is an early-stage electric motorcycle developer with a history of operating losses, accumulating a deficit of $145,958,256 as of June 30, 2025.
• A going concern warning is issued due to significant working capital deficiency ($10.4 million) and negative cash flows from operating activities ($19.6 million for FY2025).
• The company's common shares were delisted from Nasdaq on May 20, 2025, and now trade on the OTCID Basic Market under DMNIF.
• Damon is developing electric motorcycles (HyperSport, HyperFighter, HyperLite) with proprietary technologies like HyperDrive, CoPilot, and Shift, aiming for commercial production of HyperSport after 2026.
• The company also operates a SAVES software distribution business, which generated $222,736 in revenue for FY2025, with a gross profit margin of 52%.
• Research and development expenses decreased by $1.5 million to $3,045,949 in FY2025, primarily due to headcount reduction and an asset-light manufacturing model, partially offset by increased engineering contract expenses.
• General and administrative expenses increased by $4.2 million to $8,551,784 in FY2025, driven by professional fees, legal fees, investor relations, and salaries.
• A non-recurring impairment charge of $14,045,955 for goodwill and $74,000 for intangible assets was recorded in FY2025, reducing their carrying value to nil.
• The company faces multiple legal proceedings, including claims from a former CEO (Jay Giraud) and a former advisor (Andy DeFrancesco), and a landlord (Moz Holdings Canada Inc.) for unpaid rent.
• Significant dilution occurred from the exercise of Series A warrants, issuing 18,347,300 common shares (pre-reverse split).
• The company has a backlog of 3,097 reservations for HyperSport and HyperFighter motorcycles, all with fully refundable deposits.

Sentiment

Score: 2

Explanation: The company faces severe challenges, including a going concern warning, Nasdaq delisting, significant accumulated losses, and ongoing legal disputes. While there are positive developments in product development and strategic partnerships, the financial instability and operational risks heavily outweigh them, indicating a very high-risk investment.

Positives

• Successful completion of a business combination with Damon Motors Inc., positioning the company in the electric personal mobility sector.
• Development of advanced electric motorcycle platforms (HyperDrive, HyperLite) and proprietary technologies (CoPilot, Shift, AI-enabled cloud platform).
• Strategic partnerships with world-class suppliers (Continental, Fukuta, Brembo, Ohlins, Pirelli, Auteco, Indika Energy, Engines Engineering) for asset-light assembly and scalable production.
• A backlog of 3,097 reservations for HyperSport and HyperFighter motorcycles, indicating initial customer interest.
• Reduction in research and development expenses by $1.5 million in FY2025 due to cost efficiencies and headcount reduction.
• Net loss significantly decreased from $33,968,248 in FY2024 to $5,350,662 in FY2025, primarily due to a positive change in the fair value of financial liabilities.
• The SAVES distribution business generated $222,736 in revenue with a 52% gross profit margin in FY2025, providing a diversified revenue stream.
• Strong intellectual property portfolio with 33 national and international utility patents awarded or filed.
• Management team with extensive experience in electric vehicle and ADAS engineering, design, development, and manufacturing.

Negatives

• History of operating losses and an accumulated deficit of $145,958,256 as of June 30, 2025.
• Going concern warning due to significant working capital deficiency ($10.4 million) and negative cash flows from operating activities ($19.6 million for FY2025).
• Delisting of common shares from Nasdaq on May 20, 2025, now trading on the OTCID Basic Market, which may adversely affect market price and liquidity.
• Unproven ability to economically produce vehicles at scale and successfully commercialize SaaS solutions.
• Significant capital requirements for its business plan, with no assurance of securing additional funding on acceptable terms.
• All 3,097 vehicle reservations are fully refundable and may be cancelled, with no guarantee of conversion to sales.
• Significant delays expected in the design, manufacture, regulatory approval, launch, transportation, and delivery of motorcycles.
• Dependence on a single licensor (Grafiti LLC, controlled by former CEO Nadir Ali) for SAVES products, with potential adverse changes to terms.
• Incurred a non-recurring impairment of goodwill ($14,045,955) and intangible assets ($74,000) in FY2025.
• Increase in general and administrative expenses by $4.2 million in FY2025, driven by professional and legal fees.
• Multiple ongoing legal proceedings, including claims from former CEO Jay Giraud, former advisor Andy DeFrancesco, and a landlord for unpaid rent.
• Significant dilution from the exercise of Series A warrants (18,347,303 common shares issued pre-reverse split) and potential future dilution from other financing arrangements.
• Identified material weaknesses in internal control over financial reporting, leading to a restatement of prior financial statements.
• Technical default on a pre-paid security purchase agreement with Streeterville Capital, LLC, though Streeterville has not issued a default letter.
• The company does not intend to pay cash dividends to shareholders.

Risks

• Going Concern Risk: Incurred significant losses and expects to continue incurring losses, requiring substantial capital, with no assurance of achieving profitability or raising additional financing.
• Production and Commercialization Risk: Success depends on the ability to economically produce vehicles at scale and commercialize SaaS solutions, which remains unproven.
• Capital Requirements: Requires significant capital to fund its business plan and may be unable to reduce and control costs, or raise additional capital on acceptable terms.
• Development Delays: May experience significant delays in the design, manufacture, finance, regulatory approval, launch, transportation, and delivery of motorcycles.
• Demand Estimation: Inability to accurately estimate supply and demand for vehicles could lead to inefficiencies and hinder revenue generation.
• Reservation Cancellations: Limited number of vehicle reservations are fully refundable and may be cancelled, with no assurance of conversion to sales.
• Brand and Reputation Harm: Failure to establish and strengthen the Damon brand, or negative publicity, could harm business.
• Highly Competitive Market: Operates in a highly competitive motorcycle and personal mobility market with larger, more resourced competitors.
• Regulatory Changes: Adversely affected by complexity, uncertainties, and changes in automotive or internet-related Canadian regulations or similar regulations in other countries.
• Supplier Dependence: Dependent on single or limited source suppliers, and their inability to deliver components at acceptable prices and volumes could have a material adverse effect.
• Key Personnel Dependence: Success depends on retaining and attracting qualified management, technical, and vehicle engineering personnel.
• Manufacturing Facility Risks: Business plan dependent on developing manufacturing facilities or partnering with third parties, which involves inherent risks and complex machinery.
• SAVES Business Licensor Dependence: Dependence on a single licensor (Grafiti LLC) for SAVES products, with potential adverse changes to terms.
• Global Economic Conditions: Adverse impact from global economic conditions, including inflation, on demand for products and services.
• Legal Proceedings: Adverse judgments or settlements in legal proceedings, including claims from former CEO Jay Giraud, Andy DeFrancesco, and Moz Holdings Canada Inc., could harm business.
• Intellectual Property Protection: Patent applications may not result in issued patents, and the company may need to defend against infringement claims.
• Government Incentives: Lack of availability, reduction, or elimination of government incentives for electric vehicles could adversely affect business.
• Regulatory Approvals for Facilities: Construction and operation of assembly facilities are subject to regulatory approvals, delays, and cost overruns.
• Motor Vehicle Standards Compliance: Failure to satisfy mandated motor vehicle safety standards would have a material adverse effect.
• Anti-Corruption/Bribery Laws: Noncompliance with anti-corruption, anti-bribery, anti-money laundering, financial, and economic sanctions laws could lead to penalties and reputational damage.
• Cybersecurity and Privacy: Failure of information security and privacy concerns could lead to penalties, reputational damage, and harm business. Inability to leverage vehicle and customer data could impact servicing, software algorithms, and R&D.
• Product Liability and Recalls: May become subject to product liability claims or recalls, which could harm financial condition and brand image.
• Warranty Reserves: Warranty reserves may be insufficient to cover future claims.
• Stock Price Volatility: Stock price is volatile, and delisting from Nasdaq may adversely affect liquidity and ability to raise capital.
• Dilution: Significant dilution from past warrant exercises and potential future issuances under financing arrangements.
• Foreign Private Issuer Status: Exempt from certain U.S. securities laws, which may afford less protection to shareholders, and loss of this status could incur significant costs.
• Internal Control Weaknesses: Identified material weaknesses in internal control over financial reporting, impairing ability to produce timely and accurate financial statements.
• Forum Selection: Articles designate specific courts as exclusive forums for certain actions, potentially limiting shareholders' ability to choose judicial forum.
• Control Blocks: Sales by control persons or purchases by persons acquiring 20% or more of voting securities are subject to specific Canadian securities laws.

Future Outlook

The company expects to incur significant expenses and continuing losses for the foreseeable future, with profitability not anticipated until 2026 at the earliest, contingent on achieving sufficient sales and production capacity. Research and development expenses are projected to increase due to ongoing development agreements, and sales and marketing expenses will rise with planned product launches. The HyperDrive platform's engineering and development is nearing completion, with HyperSport production and commercialization expected between Q4 FY 2026 and Q3 FY 2027. Subsequent models, HyperFighter and HyperLite, have later production timelines extending to FY 2028 and FY 2030, respectively. Damon plans to commercialize its Damon I/O SaaS platform and expand its SAVES software distribution business for recurring revenues, though significant expansion of the latter is not expected. The company will continue to evaluate strategic partnerships and acquisitions to support growth and is assessing the impact of new tax legislation.

Management Comments

• Management continues to pursue a corporate strategy that is focused on building and developing our business as a provider of end-to-end solutions ranging from personal mobility products to the collection of data to delivering insights from that data to our customers with a focus on safety and data intelligence and engineering services.
• We believe these complementary technologies will add value to the Company and allow us to provide a comprehensive integrated personal mobility ecosystem to our customers.
• Damon believes it is well-positioned with its combination of commitment, capabilities and advanced technology to lead the growing electric motorcycle market.
• Damon believes it has a significant competitive advantage stemming from the coordinated application of multiple new technologies.
• Damon believes its technological competitive advantage is well infused into its brand.
• Damon believes that selling over the internet, shipping direct and owning and eventually operating its own Damon experience centers will provide a key sales and distribution advantage over established players, allowing for high margin retention and a vital information feedback loop from customers that will inform manufacturing and vehicle design, while also providing higher profit margins and lower customer acquisition costs over time.
• Damon believes its ability to generate vehicle reservations directly from consumers to date is a promising indicator for its direct sales model.
• Damon expects to continue to generate an evangelistic brand and following, with a backlog currently extending into 2026.
• Damon was built from the ground up to combine hardware, software, and AI into a single, future-ready system.
• Damon controls both the hardware and software stack, which Damon believes will allow for tighter product experience and stronger margins.
• We believe this will enable the Grafiti Limited business to focus on generating more recurring revenues in the future.
• We believe the Grafiti Limited regression analysis product could also be used for predicting vehicle sharing demand and pricing trends in various markets based on a wide range of variables.
• We believe we are well equipped to compete effectively with other distributors in all of these areas [SAVES business competition].
• Damon Motors long-term objective is to build a premium, high-tech, electric motorcycle company that rivals the largest incumbents in both profit and annual volume, by providing a technologically enhanced riding experience that is not currently available from other manufacturers.
• We are in the process of commercializing Damon I/O as a potential service offering, and we believe that as more Damon I/O powered vehicles are deployed, Damon I/O will grow smarter, creating a network effect that could expand our offering over time.
• Management believes the Company is compliant with all relevant terms of the Act [Small Business Venture Capital Act].
• Management's plans to address the uncertainty that the Company will continue as a going concern include obtaining sufficient debt and equity financing for the Company's operations and development plans.

Industry Context

The global electric vehicle market, particularly for cars, is experiencing rapid growth, with sales exceeding 10 million units in 2022 and significant increases in China, Europe, and the United States. S&P Global Mobility forecasts substantial growth in new EV models in the US by 2026. The broader two-wheel industry is a $127 billion market, with Damon targeting the $11.2 billion medium and heavy motorcycle segment, which is growing at a 7.2% CAGR in North America and Europe. Damon aims to differentiate itself by integrating advanced safety, AI, and software into its electric motorcycles, contrasting with traditional internal combustion engine (ICE) manufacturers who are generally slower to adopt such innovations. The company faces intense competition from both established ICE brands (BMW, Honda, Ducati, Triumph) and other electric motorcycle companies (LiveWire, Zero, Energica). Damon's direct-to-consumer sales model is a departure from industry norms but has proven successful in the electric car sector. The SAVES software distribution business operates in a competitive data analytics market characterized by rapid technological change.

Comparison to Industry Standards

• Damon's HyperDrive platform, with 150 kW of power, is designed to compete directly with the performance of market leaders in the high-performance motorcycle segment, including both internal combustion and electric models.
• The HyperDrive platform aims to support 500-1500cc power equivalent classes of motorcycles, with price points ranging from $20,000 $80,000, positioning it competitively within the premium segment.
• Damon's planned direct-to-consumer sales model is uncommon in the motorcycle industry but is a strategy successfully employed by electric car manufacturers like Tesla, potentially offering higher margins and a direct customer feedback loop compared to traditional dealer franchise systems.
• Damon's integrated approach, combining hardware, software, and AI from the ground up, is presented as a competitive advantage over traditional OEMs, which are typically structured for mechanical machines and are slower to expand into emerging technologies like advanced safety innovation and deep platform machine learning.
• The CoPilot system, with vibrating handlebars for forward collision warning and a proprietary 7" touchscreen display, aims to offer enhanced safety features relative to current electric vehicle-focused competitors such as LiveWire, Zero, and Energica.
• Damon's SAVES product, Sigmaplot, is highlighted for its intuitive and simple user interface and highly customizable graphs, contrasting with competitors like Originlab and Graphpad Prism, which are characterized by more complex user interfaces and a prerequisite for in-depth statistical understanding.

Management Changes

Corporate Governance

Legal Proceedings

• Damon Jay Mercredi Giraud (former director and CEO) filed a civil claim on February 28, 2025, alleging the company failed to honor settlement terms related to his resignation, including a listing bonus and backpay, and that a written settlement agreement fundamentally altered original terms. He also claims to have received a threatening letter from major shareholders. Relief sought includes specific performance of original terms or damages for wrongful dismissal. The company denies the allegations.
• Andy DeFrancesco filed a civil claim on April 11, 2025, alleging a verbal agreement in October 2023 to issue $3.2 million worth of common shares for services, which the company refused to issue. Relief sought includes specific performance or damages for unjust enrichment. The company denies all allegations.
• Moz Holdings Canada Inc. (landlord) filed a civil claim on September 4, 2025, alleging Damon Motors Inc. has unpaid rent of $376,527 for a former manufacturing facility up to and including September 2025. Damon Motors Inc. does not agree with the claim and will file a response denying the allegation.

Related Party Transactions

• Grafiti LLC, controlled by former CEO Nadir Ali, has a Distributor Agreement and an Administrative Support Service Agreement with Grafiti Limited (Damon Inc. subsidiary) for SAVES products and support services. Nadir Ali received $15,000/month for advisory services, a $325,000 fee upon Business Combination closing, and an increased monthly fee of $54,167 for six months post-closing.
• Melanie Figueroa, a director, received $190,000 in consulting services fees and a $175,000 fee upon Business Combination closing, with her monthly fee increasing to $29,167 for six months post-closing. She is also the sole trustee of the Grafiti Holding Inc. Liquidating Trust.
• Wendy Loundermon, a former significant shareholder, received $10,000/month for advisory services, a $150,000 fee upon Business Combination closing, and an increased monthly fee of $25,000 for six months post-closing.
• Jay Giraud, former CEO and director, received 1,391,181 Multiple Voting Shares upon Business Combination closing, which converted to Common Shares upon his resignation. He entered into a Coattail Agreement and Founder Agreement with the company and was subject to a lock-up agreement.
• Streeterville Capital, LLC, a more than 5% shareholder, entered into a secured promissory note agreement for $6,470,000 and a securities purchase agreement for pre-paid purchases of common shares up to $10,000,000. The company is in technical default on the pre-paid security purchase agreement.

Stakeholder Impact

• Shareholders face significant dilution from past and potential future capital raises, reduced liquidity and marketability due to Nasdaq delisting, and high investment risk indicated by the going concern warning. However, there is potential for long-term growth if electric motorcycle development is successful.
• Employees have experienced recent headcount reductions, indicating job insecurity, but the Stock Incentive Plan offers equity-based incentives.
• Customers may experience delays in motorcycle production and delivery, and potential product defects, but are offered advanced, high-performance electric motorcycles with enhanced safety features and a direct-to-consumer model aiming for a superior experience.
• Suppliers and creditors face credit risk due to the company's financial instability, going concern warning, and defaults on certain debt obligations.
• Regulatory bodies are impacted by the company's identified material weaknesses in internal control over financial reporting and ongoing legal proceedings, but the company is committed to compliance with environmental, health, safety, and data privacy regulations.

Next Steps

• Continue to design, develop, and begin manufacturing existing and planned electric vehicles.
• Equip and expand pilot, support R&D, and mass-production manufacturing facilities, potentially in the US and international locations.
• Ramp-up production capacity at manufacturing facilities.
• Build inventories of parts and components for vehicles.
• Develop or secure personal mobility charging partnerships.
• Expand design, research, development, maintenance, and repair capabilities.
• Increase sales and marketing activities and develop distribution infrastructure.
• Design and implement a showroom network.
• Expand general and administrative functions to support growing operations.
• Commercialize Damon I/O, including continued product development, OEM integration, and scaling deployment infrastructure.
• Grafiti Limited to build a broader, long-term customer base by increasing sales of cloud and Macintosh compatible data analytics and statistical visualization software products.
• Evaluate various strategic opportunities, including partnerships with personal mobility product OEMs and providers of complementary technologies and IP.
• Explore opportunities to supplement revenue growth, including accretive acquisitions, minority investments, or joint ventures.
• Complete ride quality and long-term durability testing for motorcycles.
• Complete FCC Title 47 certification for the onboard charger.
• Complete UN 38.3 battery testing and internal battery testing.
• Verify extreme temperature operation.
• Complete brake testing per FMVSS.
• Conduct internal and external review of FMVSS compliance with TUV of Germany.
• Begin the process of obtaining certifications for the HyperSport in 2027.
• Repay the outstanding WSGR promissory note balance in monthly installments by the end of May 31, 2026.
• Evaluate the impact of the One Big Beautiful Bill Act (OBBBA) on consolidated financial statements for future periods.
• File a response denying the allegations in the civil claim from Moz Holdings Canada Inc.

Key Dates

Recommendation

Damon Inc. presents an extremely high-risk investment profile. The company has a history of significant operating losses, an accumulated deficit exceeding $145 million, and a clear "going concern" warning from its auditors, indicating substantial doubt about its ability to continue operations. The recent delisting from Nasdaq to the less liquid OTCID Basic Market is a major negative event, severely impacting market access and investor confidence. Furthermore, the company is embroiled in multiple legal disputes with former executives and a landlord, which could lead to significant financial liabilities. While the electric motorcycle market has growth potential and Damon has innovative technology and strategic partnerships, its unproven ability to scale production, substantial capital requirements, and ongoing financial instability make it a highly speculative investment. The significant dilution from recent warrant exercises and the potential for further dilution from existing financing arrangements also weigh heavily on shareholder value. Given these severe financial and operational challenges, a seasoned investor would likely recommend a strong sell.

Keywords

Electric Motorcycles, EV, Personal Mobility, HyperDrive, HyperSport, HyperFighter, HyperLite, CoPilot, Shift, AI, SaaS, Data Analytics, SAVES Software, SEC Filing, 10-K, Financial Report, Going Concern, Nasdaq Delisting, OTCID Basic Market, Capital Raise, Intellectual Property, Corporate Governance, Risk Factors, Automotive Industry, Technology, British Columbia