Damon Inc(DMN) - 2025 Q2 - Quarterly Report

Electric Motorcycles Development - Damon Motors is developing electric motorcycles with a proprietary 150 kW motor-gearbox and a patented HyperDrive platform, aiming for price points between $20,000 and$80,000[146] - The HyperDrive platform allows for a modular approach, supporting motorcycles equivalent to 500 – 1500cc, with 85% common parts across models[146] - Damon Motors plans to commence commercial production after completing various internal and external tests, including FCC and UN battery testing[149] Business Combination and Subsidiaries - On October 23, 2023, the company completed a business combination with Damon Motors, resulting in Damon Motors becoming a wholly-owned subsidiary[154] - Following the business combination, securityholders of Damon Motors acquired approximately 82% of the outstanding common shares of the combined company[159] - Grafiti Limited, a subsidiary, distributes data analytics software for scientific research, aiming to increase recurring revenues through cloud-compatible products[150][151] Financial Performance - Revenue for the three and six months ended December 31, 2024, was $49,523, compared to$0 for the same periods in 2023, attributed to the consolidation of Grafiti Limited[185] - Cost of revenue for the three and six months ended December 31, 2024, was $21,332, resulting in a gross profit margin of 60$997,333, an increase of $979,989 compared to$17,344 in the same period of 2023[187] - General and administrative expenses for the three months ended December 31, 2024, were $2,182,333, an increase of$368,194 compared to $1,814,139 in the same period of 2023[188] - The company reported a net income of$32,521,108 for the three months ended December 31, 2024, compared to a net loss of $7,130,860 for the same period in 2023[184] - Total operating expenses for the three months ended December 31, 2024, were$5,477,187, compared to $2,223,073 in the same period of 2023[184] - Other non-operating income for the three months ended December 31, 2024, was$37,970,099, compared to a loss of $4,907,787 in the same period of 2023[184] Financing Activities - The company entered into a secured promissory note agreement with Streeterville Capital for$6,470,000, granting security interests in its assets[162] - An additional note purchase agreement with East West for $8,385,000 includes an original issue discount of$1,885,000, with funding scheduled in tranches[163] - The company has entered into a Securities Purchase Agreement with Streeterville for up to $10,000,000, with an initial pre-paid purchase of$2,000,000[174] - The BHI Note has an original principal amount of $8,385,000, with an original issue discount of$1,885,000 and bears interest at 10% per annum[168] - Cash provided by financing activities for the six months ended December 31, 2024, was $6,962,852, down from$8,706,142 in the same period in 2023, reflecting a decrease of $1,743,290[199] Cash Flow and Working Capital - Cash used in operating activities for the six months ended December 31, 2024, was$6,636,484, a decrease from $8,854,640 for the same period in 2023, reflecting efforts to preserve cash[198] - As of December 31, 2024, the company had cash of$788,561 and a working capital deficiency of approximately $10 million, raising concerns about its ability to continue as a going concern[194] - The company experienced negative cash flows from operating activities of approximately$6.6 million for the six months ended December 31, 2024, primarily due to ongoing operating costs and transaction costs related to the business combination[194] Changes in Financial Liabilities - The company incurred a change in the fair value of financial liabilities that increased by approximately $42,903,000 for the six months ended December 31, 2024[195] - For the three months ended December 31, 2024, the company reported a net income of$32,521,108, compared to a net loss of $7,130,860 for the same period in 2023, primarily due to changes in the fair value of financial liabilities[193] - Other non-operating income for the three months ended December 31, 2024, was$37,970,099, an increase of $42,877,886 compared to a loss of$4,907,787 in the same period in 2023[192] Strategic Acquisitions and Growth Strategy - The company is pursuing strategic acquisitions to enhance its personal mobility ecosystem, focusing on technologies that complement its existing offerings[152] - The company’s accumulated deficit and expected future losses may lead to continued operating losses and negative cash flows in the short term as it executes its growth strategy[194] - Proceeds from convertible notes decreased by approximately $8,470,000, while proceeds from other financing sources increased, indicating a mixed funding environment[200] Sales and Marketing Expenses - Sales and marketing expenses decreased to$178,379 for the three months ended December 31, 2024, from $196,660 for the same period in 2023, attributed to reduced sales and marketing activities[191] Trading Information - The combined company commenced trading on the Nasdaq Global Market under the symbol "DMN" on November 18, 2024[158]