Damon Inc. Posts Q3 Loss, Revenue Emerges Amidst Going Concern Warning

TL;DR

**DMNIF is burning cash and needs a major capital injection to survive, despite finally generating some revenue.**

AI Summary

Damon Inc. (DMNIF) reported a net loss of $3,302,459 for the three months ended September 30, 2025, a significant improvement from the $7,412,175 net loss in the same period of 2024. Revenue for the quarter was $80,691, compared to zero revenue in the prior year, indicating the start of commercial activities. Operating expenses increased to $2,866,357 from $1,899,941 year-over-year, driven primarily by a rise in research and development to $1,109,302 and general and administrative expenses to $1,689,370. The company's cash position decreased substantially from $2,479,283 at June 30, 2025, to $682,232 by September 30, 2025. Total liabilities grew to $14,992,300 from $13,970,783, while total stockholders' deficit deepened to $(13,176,409) from $(9,888,085). The filing explicitly states a 'going concern' risk due to recurring losses and negative cash flows, highlighting the need for future financing. A 1-for-125 reverse stock split was effected on July 3, 2025, reducing outstanding shares to 19,603,815.

Why It Matters

Damon Inc.'s emergence of revenue at $80,691, while small, signals a critical shift from a pre-revenue to an early-stage commercial entity, which could be a turning point for investors. However, the deepening stockholders' deficit to $(13,176,409) and the explicit 'going concern' warning underscore significant financial instability, making future capital raises crucial for survival. For employees, the company's ability to secure additional financing directly impacts job security and growth prospects. Customers might face uncertainty regarding long-term product support and innovation if the company's financial health doesn't improve, especially in the competitive electric motorcycle market where established players like Harley-Davidson's LiveWire and Zero Motorcycles pose significant threats.

Risk Assessment

Risk Level: high — Damon Inc. explicitly states a 'going concern' risk due to recurring losses and negative cash flows, with a net loss of $3,302,459 for the quarter. Cash decreased from $2,479,283 to $682,232 in three months, indicating a rapid cash burn rate that necessitates future financing to continue operations.

Analyst Insight

Investors should exercise extreme caution and consider this a highly speculative investment. Await clear evidence of successful capital raises and sustained, significant revenue growth before considering a position, as the current financial state indicates a high risk of further dilution or potential bankruptcy.

Financial Highlights

debt To Equity

N/A

revenue

$80,691

operating Margin

N/A

total Assets

$1,815,891

total Debt

N/A

net Income

$(3,302,459)

eps

N/A

gross Margin

50.0%

cash Position

$682,232

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $80,691 — Revenue (Generated in Q3 2025, up from $0 in Q3 2024, indicating initial commercialization.)
• $(3,302,459) — Net Loss (For Q3 2025, an improvement from $(7,412,175) in Q3 2024, but still substantial.)
• $682,232 — Cash (As of September 30, 2025, down from $2,479,283 at June 30, 2025, reflecting significant cash burn.)
• $14,992,300 — Total Liabilities (As of September 30, 2025, an increase from $13,970,783 at June 30, 2025.)
• $(13,176,409) — Total Stockholders' Deficit (As of September 30, 2025, deepening from $(9,888,085) at June 30, 2025.)
• 1-for-125 — Reverse Stock Split Ratio (Effected on July 3, 2025, reducing outstanding shares.)
• 19,603,815 — Common Shares Outstanding (As of September 30, 2025, after the reverse stock split.)
• $1,109,302 — Research and Development Expenses (For Q3 2025, significantly up from $57,221 in Q3 2024.)
• $1,689,370 — General and Administrative Expenses (For Q3 2025, up from $790,027 in Q3 2024.)
• $(1,759,059) — Cash Used in Operating Activities (For Q3 2025, indicating ongoing operational cash burn.)

Key Players & Entities

• Damon Inc. (company) — registrant and reporting company
• Damon Motors Inc. (company) — wholly-owned subsidiary after business combination
• XTI Aerospace Inc. (company) — former parent company
• Grafiti Holding Inc. (company) — former name of Damon Inc.
• SEC (regulator) — Securities and Exchange Commission
• Nasdaq Global Market (market) — former listing exchange for DMNIF
• OTC Pink Current Market (market) — current listing exchange for DMNIF
• British Columbia (location) — jurisdiction of incorporation
• September 30, 2025 (date) — end of the reported quarterly period
• July 3, 2025 (date) — effective date of reverse stock split

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: The company faces substantial doubt about its ability to continue as a going concern due to recurring net losses and negative cash flows from operations. This necessitates future financing to meet its obligations.
• Significant Cash Burn [high — financial]: Cash decreased from $2,479,283 on June 30, 2025, to $682,232 on September 30, 2025. This rapid depletion of cash reserves highlights the urgent need for capital infusion.
• Increasing Liabilities and Deficit [high — financial]: Total liabilities grew to $14,992,300 from $13,970,783, and the stockholders' deficit widened to $(13,176,409) from $(9,888,085). This deteriorating balance sheet position increases financial risk.
• Rising Operating Expenses [medium — operational]: Operating expenses increased to $2,866,357 from $1,899,941 year-over-year, driven by significant increases in R&D ($1,109,302) and G&A ($1,689,370). While necessary for growth, these rising costs pressure profitability.
• Dependence on New Commercialization [medium — market]: The company's revenue generation is nascent, with $80,691 reported in Q3 2025 after zero revenue in the prior year. Success hinges on scaling these commercial activities effectively.

Industry Context

The electric vehicle (EV) and related technology sector is highly competitive and capital-intensive, with rapid innovation and evolving consumer preferences. Companies like Damon Inc. often require significant R&D investment to develop unique technologies, such as their advanced safety systems. Success depends on scaling production, achieving regulatory approvals, and securing market share against established players and numerous startups.

Regulatory Implications

As a company involved in vehicle technology, Damon Inc. may face stringent safety and environmental regulations. Compliance with these standards is critical for market entry and sustained operations. The 'going concern' disclosure also implies potential scrutiny from regulatory bodies regarding financial stability and disclosure practices.

What Investors Should Do

1. Monitor Future Financing Rounds
2. Analyze Revenue Growth Trajectory
3. Evaluate Expense Management
4. Assess Cash Runway

Key Dates

• 2025-07-03: Reverse Stock Split — A 1-for-125 reverse stock split was enacted, reducing the number of outstanding shares to 19,603,815. This is often done to meet exchange listing requirements or improve share price perception, but can signal underlying financial distress.
• 2025-09-30: End of Q3 2025 — The company reported its first significant revenue of $80,691, but also a substantial net loss of $3,302,459 and a sharp decline in cash reserves to $682,232.
• 2025-06-30: End of Q2 2025 — The company had $2,479,283 in cash and $13,970,783 in total liabilities, with a stockholders' deficit of $(9,888,085).

Glossary

Going Concern

An accounting assumption that a company will continue to operate for the foreseeable future. If there is substantial doubt about this, it must be disclosed. (Damon Inc. explicitly states a 'going concern' risk, indicating significant financial challenges that threaten its ability to continue operations without additional funding.)

Stockholders' Deficit

Occurs when a company's total liabilities exceed its total assets, resulting in a negative equity position. (Damon Inc. has a substantial and growing stockholders' deficit of $(13,176,409), highlighting its negative net worth.)

Reverse Stock Split

A corporate action where a company reduces the total number of its outstanding shares by consolidating them. This increases the per-share price. (Damon Inc. executed a 1-for-125 reverse stock split, significantly reducing its share count from a prior undisclosed number to 19,603,815.)

Accumulated Deficit

The cumulative net losses of a company since its inception that have not been offset by net income. (Damon Inc.'s accumulated deficit is $(149,260,715), reflecting its history of losses.)

Deferred Revenue

Revenue that has been received by a company for goods or services that have not yet been delivered or rendered. (Damon Inc. has $237,612 in deferred revenue, indicating customer payments received in advance for future product delivery or services.)

Year-Over-Year Comparison

Compared to the prior year's Q3, Damon Inc. has transitioned from zero revenue to generating $80,691, a positive step indicating commercialization. However, this revenue comes with a significantly increased operating expense base, leading to a net loss of $3,302,459, an improvement from $7,412,175 but still substantial. The company's financial position has weakened considerably, with cash reserves plummeting and total liabilities and stockholders' deficit increasing, underscoring the heightened financial risks.

Filing Documents

• ea0264080-10q_damon.htm (10-Q) — 571KB
• ea026408001ex31-1_damon.htm (EX-31.1) — 9KB
• ea026408001ex31-2_damon.htm (EX-31.2) — 9KB
• ea026408001ex32-1_damon.htm (EX-32.1) — 4KB
• 0001213900-25-109981.txt ( ) — 4534KB
• dmn-20250930.xsd (EX-101.SCH) — 51KB
• dmn-20250930_cal.xml (EX-101.CAL) — 48KB
• dmn-20250930_def.xml (EX-101.DEF) — 209KB
• dmn-20250930_lab.xml (EX-101.LAB) — 417KB
• dmn-20250930_pre.xml (EX-101.PRE) — 235KB
• ea0264080-10q_damon_htm.xml (XML) — 427KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION F-1 Item 1.

Financial Statements

Financial Statements F-1 Condensed Consolidated Balance Sheets (unaudited) F-2 Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) F-3 Condensed Consolidated Statements of Changes in Stockholders' Deficit (unaudited) F-4 Condensed Consolidated Statements of Cash Flows (unaudited) F-5 Notes to Unaudited Condensed Consolidated Financial Statements F-6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 1 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 8 Item 4.

Controls and Procedures

Controls and Procedures 8

- OTHER INFORMATION

PART II - OTHER INFORMATION 10 Item 1.

Legal Proceedings

Legal Proceedings 10 Item 1A.

Risk Factors

Risk Factors 10 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Mine Safety Disclosures 11 Item 5. Other Information 11 Item 6. Exhibits 11

Signatures

Signatures 12 i SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS REPORT This Quarterly Report on Form 10-Q (this "Form 10-Q") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are based on our management's current expectations, assumptions or forecasts of future events based on information currently available to our management. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these "anticipates," "estimates," "projects," "intends," "plans," "would," "should," "could," "may" or other similar expressions in this Form 10-Q. In particular, these include anticipated products and services; anticipated expenses; and projected financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: our history of losses; our ability to implement our growth strategy and achieve profitability; our limited operating history with recent acquisitions; our ability to obtain adequate financing in the future as needed; our ability to continue as a going concern; our status as a foreign private issuer; our ability to establish and maintain an activ

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

: FINANCIAL STATEMENTS

ITEM 1: FINANCIAL STATEMENTS The accompanying condensed consolidated financial the accounting principles that are generally accepted in the United States of America and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete

financial statements

financial statements. In the opinion of management, the condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented. The results for the period ended September 30, 2025 are not necessarily indicative of the results of operations for the full year. These financial statements and related notes should be read in conjunction with the Company's annual audited consolidated financial statements as at and for the year ended June 30, 2025 and the related notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2025 filed with the SEC on September 30, 2025. F-1 DAMON INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2025 (unaudited) June 30, 2025 ASSETS Current assets Cash $ 682,232 $ 2,479,283 Accounts receivable, net of allowance 80,523 22,131 Other current assets 406,110 846,748 Current assets 1,168,865 3,348,162 Non-current assets Restricted cash 42,967 43,373 Premises lease deposits 133,527 133,532 Property and equipment, net 65,705 81,892 Operating lease right-of-use assets, net 404,827 475,739 Non-current assets 647,026 734,536 Total assets $ 1,815,891 $ 4,082,698 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 5,314,287 $ 4,691,080 Customer deposits 434,885 444,759 Deferred revenue 237,612 204,231 Current portion of operating lease liabilities 229,624 294,475 Current portion of finance lease liabilities 172,693 178,447 Short-term debt 477,519 504,685 Pre-paid security purchase, net of debt discount 3,030,465 2,962,518 Convertible promissory note, net of debt discount 4,977,327 4,553,934 Current liabilities 14,874,412 13,834,129 Non-current liabilities Non-current portion of operating lease l

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