S-1: Grafiti Holding Inc. Files for Direct Listing on Nasdaq Amid Proposed Business Combination with Damon Motors

Grafiti Holding Inc. is pursuing a direct listing on Nasdaq while also working towards a business combination with Damon Motors, a high-performance electric motorcycle company.

Summary

• Grafiti Holding Inc. has filed a registration statement for a direct listing of its common shares on the Nasdaq Global Market.
• The company is also engaged in a proposed business combination with Damon Motors, which is subject to several conditions, including court approval and Nasdaq listing approval.
• Grafiti Holding operates the Grafiti UK Business, providing data analytics and statistical visualization software for engineers and scientists.
• The company has entered into a Business Combination Agreement with Damon Motors, a high-performance electric motorcycle company, with the aim of creating a combined entity.
• The business combination is subject to material conditions, including approval of the Business Combination by requisite securities holders of Damon, approval of the issuance of Grafiti Holding common shares to Damon securities holders pursuant to the Business Combination Agreement by a British Columbia court, approval of the listing of the Grafiti Holding common shares on the Nasdaq Stock Market after giving effect to the Business Combination, Damon obtaining lock-up agreements from holders of 95% of its fully diluted outstanding shares excluding certain Damon noteholders and any other securityholders agreed by Grafiti Holding, Damon maintaining a cash balance of at least $3 million as of the time of consummating the Business Combination, and Grafiti Holding and/or Damon having received legally binding commitments for additional financing in the amount of no less than $13,000,000 in aggregate gross proceeds.
• Following the business combination, existing Grafiti Holding shareholders are expected to retain approximately 18% of the outstanding capital stock of the combined company on a fully diluted basis.
• Grafiti Holding has a history of operating losses, with a net loss attributable to shareholders of approximately $1,348,357 for the fiscal year ended June 30, 2024.
• The company is an emerging growth company and has elected to comply with certain reduced public company reporting requirements.
• Grafiti Holding intends to enter into note purchase agreements with certain accredited investors for an aggregate cash purchase price of $13,000,000.
• Grafiti Holding has entered into consulting agreements with Ms. Melanie Figueroa and Ms. Wendy Loundermon, each of whom will receive $175,000 and $150,000 respectively upon closing the Business Combination.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While the company is pursuing a direct listing and a business combination, it also faces financial challenges, including operating losses and the need for additional financing. The risks associated with the business combination and the direct listing contribute to a cautious outlook.

Positives

• The proposed business combination with Damon Motors could create synergies and growth opportunities.
• The direct listing on Nasdaq could provide access to capital and increase the company's visibility.
• The company has a distributor agreement with Grafiti LLC, ensuring a supply of SAVES products.
• The company is actively seeking additional financing to support its operations.

Negatives

• Grafiti Holding has a history of operating losses and may not achieve profitability.
• The business combination is subject to numerous conditions and may not be completed.
• The company faces intense competition in the data analytics and visualization market.
• The company relies on a limited number of key customers, and the loss of one or more could adversely affect operating results.
• The company is dependent on a license from Grafiti LLC, controlled by its CEO, which presents potential conflicts of interest.

Risks

• The direct listing may result in a volatile market price for the company's common shares.
• The company may not be able to successfully integrate the business and operations of Damon Motors.
• The company's ability to execute its business plan may require additional debt or equity financing, which may not be available on reasonable terms or at all.
• The company is subject to numerous legal and regulatory requirements, and any violation could harm its business.
• The company's international business exposes it to geo-political and economic factors, legal and regulatory requirements, public health and other risks associated with doing business in foreign countries.
• The lasting effects of the COVID-19 pandemic, and the potential impact of new pandemics or public health issues, could adversely affect the company's business, operations, financial condition and results of operations.

Future Outlook

Grafiti Holding intends to enter into note purchase agreements with certain accredited investors for an aggregate cash purchase price of $13,000,000 prior to the consummation of the Business Combination.

Industry Context

The announcement reflects the ongoing trend of companies seeking alternative routes to public markets, such as direct listings and SPAC mergers, particularly in the technology and electric vehicle sectors.

Comparison to Industry Standards

• Originlab and Graphpad Prism are the main competitors of the products that Grafiti sells.
• Sigmaplot, on the other hand, has an interface that is as intuitive and simple to use and the statistical analyses available in Sigmaplot can be accessed through an intuitive and guided interface that makes the adoption of it by scientists and engineers less cumbersome and very time efficient.
• Sigmaplot is characterized by the richness of its graphs and their almost infinite customizability relative to our competitors graphing solutions.

Related Party Transactions

• The business of distributing the SAVES products in the UK and certain other European countries depends solely on the license from Grafiti LLC, an entity controlled by Nadir Ali, our Chief Executive Officer and sole director.
• Potential conflicts of interest exist with respect to the intellectual property rights that we license from Grafiti LLC which is controlled by our Chief Executive Officer and sole director, and it is possible our interests and his interests may diverge.
• Grafiti Holding has agreed to pay Melanie Figueroa $15,000 a month for advisory services with respect to her knowledge and expertise related to Companys public company reporting and compliance matters and corporate business development and growth strategies.
• Grafiti Holding has entered into a consulting agreement on September 25, 2024 with Ms. Wendy Loundermon, who currently owns more than 5% of the outstanding common shares.

Stakeholder Impact

• Shareholders of Grafiti Holding will experience substantial dilution upon consummation of the business combination.
• The direct listing and business combination could impact the value of the company's common shares.
• Employees of Grafiti UK and Damon Motors may experience uncertainty about their future roles.
• Customers and suppliers of both companies could be affected by the integration of the two businesses.

Next Steps

• Obtain necessary approvals for the business combination, including court and shareholder approvals.
• Secure the listing of the combined company's common shares on the Nasdaq Stock Market.
• Complete the proposed debt financing transactions.
• Integrate the operations of Grafiti UK and Damon Motors following the business combination.

Key Dates

Keywords

Grafiti Holding, Damon Motors, direct listing, business combination, Nasdaq, SAVES, data analytics, visualization software, electric motorcycles, financial results, risk factors, emerging growth company