S-1/A: Damon Inc. Files Amendment to Registration Statement for Resale of Common Shares

Damon Inc. has filed an amendment to its registration statement for the resale of up to 18,514,579 common shares by selling securityholders, including Streeterville Capital and Maxim Partners.

Summary

• Damon Inc. has filed an amendment to its registration statement on Form S-1 to register the resale of up to 18,514,579 common shares by selling securityholders.
• The selling securityholders include Streeterville Capital, LLC, which may resell up to 18,000,000 common shares, and Maxim Partners LLC, which may resell up to 514,579 common shares.
• Streeterville's shares include 343,053 shares issued under a Securities Purchase Agreement and up to 17,656,947 shares potentially issuable under the same agreement.
• The Securities Purchase Agreement allows Streeterville to purchase up to $10 million of common shares, with an initial purchase of $2 million and an additional purchase of $600,000.
• The purchase price of the common shares will be the lower of $1.50 or 90% of the lowest daily VWAP during the ten consecutive trading days immediately prior to the purchase notice date, but not less than the floor price, which is equal to 20% of the Minimum Price as defined under Nasdaq Listing Rule 5635(d).
• Maxim Partners LLC received 514,579 common shares for financial advisory services.
• Damon Inc. will not receive any proceeds from the sale of these shares by the selling securityholders.
• The company will bear all costs, expenses and fees in connection with the registration of the common shares, while the selling securityholders will bear all commissions and discounts.
• The company's common shares trade on Nasdaq under the ticker symbol DMN, with a closing price of $0.61 per share on January 30, 2025.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While it highlights the potential for growth and innovation, it also emphasizes the risks associated with the company's early stage, competitive market, and potential for share price dilution. The document also notes that the company has a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future.

Positives

• The registration statement allows the selling securityholders to resell their shares, potentially increasing liquidity in the market.
• The Securities Purchase Agreement provides Damon Inc. with access to up to $10 million in funding.

Negatives

• The potential sale of a large number of shares by the selling securityholders could cause the price of Damon Inc.'s common shares to fall.
• Streeterville may purchase common shares at a price below the current trading price, potentially diluting the ownership of other investors.
• The company will not receive any proceeds from the sale of these shares by the selling securityholders.

Risks

• Sales of a substantial number of securities by the selling securityholders could cause the price of the common shares to fall.
• Streeterville may purchase common shares at a price below the current trading price, and may experience a positive rate of return based on the current trading price, while future investors may not experience a similar rate of return.
• The company may be required to make cash payments or issue a substantial number of common shares under the Securities Purchase Agreement, which could reduce the amount of cash available to fund operations or dilute the ownership percentage held by investors.
• Damon is an early-stage company with a limited operating history and a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future.
• Damon's success will depend on its ability to economically produce its vehicles at scale, and its ability to produce vehicles of sufficient quality and appeal to customers on schedule and at a scale that is unproven.
• Damon may experience significant delays in the design, manufacture, finance, regulatory approval, launch, transportation and delivery of its motorcycles and other potential personal mobility products.
• Damon may not be able to accurately estimate the supply and demand for its vehicles, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue.
• Damon has received only a limited number of reservations for its vehicles, all of which may be cancelled and are fully refundable, and there is no assurance that such reservations will be converted into sales.
• If Damon fails to manage future growth effectively, it may not be able to produce, market, service and sell (or lease) its motorcycles and other potential personal mobility products successfully.
• Damon's business and prospects depend significantly on its ability to build its brand and service its motorcycles and other potential personal mobility products.
• The motorcycle and personal mobility market is highly competitive, and Damon may not be successful in competing in this industry.
• Damon may be adversely affected by the complexity, uncertainties and changes in automotive or internet related Canadian regulations or similar regulations of any countries it is selling motorcycles and other potential personal mobility products into.
• Damon is dependent on its suppliers, some of which are single or limited source suppliers, and the inability of these suppliers to deliver necessary components of Damons vehicles at prices and volumes acceptable to Damon would have a material adverse effect on its business, financial condition, operating results and prospects.
• Damon depends on certain key personnel, and its success will depend on its continued ability to retain and attract qualified management, technical and vehicle engineering personnel.
• Damons business plan is and will be dependent on developing one or more manufacturing facilities or partnering with third parties to fulfill this function, and complex machinery.
• Dependence on a single licensor for our SAVES products and potential adverse changes to terms could negatively impact our financial condition and results of operations.
• Global economic conditions, including inflation and any other financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect Damons business, financial condition, results of operations and prospects.
• Damons risk management efforts may not be effective which could result in unforeseen losses.
• Damon is subject to risks related to customer credit.
• Damons sales and operating results may fluctuate from quarter-to-quarter and from year-to-year as they are affected, among other things, by the seasonal nature of Damons products, fluctuation in Damons operating costs and prevailing market conditions.
• Adverse judgments or settlements in legal proceedings, including those that may arise relating to the Business Combination, could materially harm our business, financial condition, operating results, and cash flows.
• Damons patent applications may not result in issued patents, which may have a material adverse effect on its ability to prevent others from interfering with the commercialization of Damons products.
• Damon may need to defend itself against patent or trademark infringement claims, which may be time-consuming and would cause Damon to incur substantial costs.
• Our international business exposes us to geo-political and economic factors, trade tariffs, legal and regulatory requirements, fluctuations in exchange rates, public health and other risks associated with doing business in foreign countries.
• The lack of availability, reduction or elimination of government and economic incentives or government policies which are favorable for electric vehicles and Canadian produced vehicles could have a material adverse effect on Damons business, financial condition, operating results and prospects.
• The construction and operation of one or more assembly facilities that Damon may seek to establish in the future, are or will be subject to regulatory approvals, and may be subject to delays, cost overruns or may not produce expected benefits.
• Damons vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material adverse effect on Damons business, financial condition, operating results and prospects.
• Failure of information security and privacy concerns could subject Damon to penalties, damage its reputation and brand, and harm its business, financial condition, operating results and prospects.
• Damon may become subject to product liability claims and recalls, which could harm Damons financial condition and liquidity if it is not able to successfully defend or insure against such claims.
• The growth of our SAVES distribution business is dependent on increasing sales to our existing customers and obtaining new customers.
• Defects, errors, or vulnerabilities in our SAVES products or services that we sell or the failure of such products or services to prevent a security breach, could harm our reputation and adversely affect our results of operations.

Future Outlook

The document contains forward-looking statements about the company's market opportunity, strategies, ability to improve and expand capabilities, competition, expected activities and expenditures, adequacy of cash resources, regulatory compliance, plans for future growth and operations, size of addressable market, market trends, and effectiveness of internal control over financial reporting.

Industry Context

The document highlights the competitive nature of the motorcycle and personal mobility market, with competition from both traditional internal combustion engine manufacturers and emerging electric vehicle companies. The document also notes the increasing demand and regulatory push for alternative fuel vehicles.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards, but it does mention that Damon Motors aims to compete with market leaders in the high-performance motorcycle market, whether internal combustion or electric.
• The document also notes that Damon Motors is developing a platform approach to its product line, which is intended to be a capital-efficient path to grow the product line to meet a wide range of future segments and price points, while also supporting a wide range of future motorcycle models and power sizes that share as much as 85 percent common parts.
• The document also notes that Damon Motors is developing a direct-to-consumer sales model, which is different from the predominant current distribution model for motorcycle manufacturers.

Management Changes

Related Party Transactions

• The document discloses a Securities Purchase Agreement with Streeterville Capital, LLC, which is a related party.
• The document discloses a Financial Advisory Agreement with Maxim Group LLC, which is a related party.
• The document discloses a consulting agreement with Nadir Ali, a former officer and director of the Company.
• The document discloses a consulting agreement with Melanie Figueroa, a director of the Company.
• The document discloses a consulting agreement with Wendy Loundermon, a former officer of the Parent.

Stakeholder Impact

• Shareholders may experience dilution and a potential decrease in share price due to the resale of shares by the selling securityholders.
• Employees may be affected by the company's financial performance and ability to execute its business plan.
• Customers may be affected by the company's ability to deliver high-quality products and services on schedule.
• Suppliers may be affected by the company's ability to pay for goods and services.
• Creditors may be affected by the company's ability to repay its debts.

Next Steps

• The company will seek shareholder approval for the issuance of common shares up to the Total Commitment Amount under the Securities Purchase Agreement.
• The company will continue to evaluate various strategic transactions, including acquisitions of companies with personal mobility products, technologies and intellectual property (IP).
• The company will continue to develop and test its electric motorcycles and other personal mobility products.
• The company will continue to work towards the commercial production of its motorcycles.

Key Dates

Keywords

common shares, resale, Streeterville Capital, Maxim Partners, Securities Purchase Agreement, financial advisory services, Nasdaq, electric motorcycles, Damon Inc., capital raise