Damon Inc. Announces Pricing of Upsized $16.5 Million Underwritten Public Offering

Rhea-AI Summary

Damon Inc. (NASDAQ: DMN) has announced the pricing of an upsized $16.5 million public offering, consisting of 126,900,000 units priced at $0.13 per unit. Each unit includes one common share and one Series A warrant.

The Series A warrants will be valid for 2.5 years with an initial exercise price of $0.195 per common share, subject to adjustments. Warrant holders can alternatively exercise on a cashless basis, exchanging each warrant for 2.5 ordinary shares.

The company has granted underwriters a 45-day option to purchase up to an additional 19,035,000 ordinary shares and warrants. The offering is expected to close on March 21, 2025. Maxim Group is serving as the sole book-runner. Proceeds will support working capital, general corporate purposes, R&D, and marketing and sales initiatives.

Positive

• Secured $16.5M in gross proceeds to strengthen working capital
• Funding allocated for R&D and marketing initiatives
• Flexibility provided through warrant cashless exercise option

Negative

• Significant shareholder dilution with 126.9M new units being issued
• Low unit pricing at $0.13 indicates weak market position
• Additional dilution possible through warrant exercises and over-allotment option

Insights

Financial Analyst

Damon Inc.'s $16.5 million public offering represents an extremely dilutive capital raise that will significantly impact existing shareholders. The issuance of 126.9 million units at $0.13 each is particularly concerning when compared to the company's current $3.62 million market capitalization, representing dilution that exceeds the company's entire existing equity value by a factor of approximately 30x.

The warrant structure compounds this dilution concern. Each unit includes a Series A warrant with an initial exercise price of $0.195, but more critically, these warrants contain both price reset provisions and an alternative cashless exercise option allowing investors to exchange each warrant for 2.5 ordinary shares. This cashless feature represents a significant additional dilution mechanism.

While the capital will provide Damon with necessary operating runway for R&D and marketing of their electric motorcycles, the financing terms reflect challenging circumstances. The slight premium to the current share price ($0.13 vs. $0.1244) provides minimal comfort when considering the magnitude of the dilution. The fact that this offering was "upsized" suggests investor demand existed, but the overall structure indicates terms typically associated with companies having financing alternatives.

The use of proceeds for working capital and general corporate purposes, rather than specific growth initiatives, further suggests operational funding needs over strategic expansion plans.

Capital Markets Strategist

This financing transaction reveals concerning dynamics about Damon's capital markets position. The structure—126.9 million units at $0.13 with complex warrant features—represents terms typically reserved for companies with financing options. Several red flags are apparent:

First, the offering size relative to current market capitalization creates massive dilution. At $16.5 million gross proceeds versus a $3.62 million market cap, existing shareholders face ownership dilution far beyond normal capital raises.

Second, the warrant mechanics include protective features for new investors that disadvantage the company. The reset provisions on two future dates suggest downside protection, while the alternative cashless exercise option (2.5 shares per warrant) creates a dilution multiplier effect.

Third, the "upsized" nature actually signals investor demand existed only with these investor-friendly terms. Maxim Group serving as sole book-runner (rather than a syndicate of banks) indicates market interest.

While the capital infusion provides essential runway for operations, R&D, and marketing, the financing terms represent a significant transfer of equity value to new investors. Companies typically accept such dilutive terms only when conventional financing alternatives are unavailable, suggesting potential operational challenges not directly stated in the announcement.

VANCOUVER, BC, March 20, 2025 /PRNewswire/ - Damon Inc. (NASDAQ: DMN) ("Damon" or the "Company"), a designer and developer of electric motorcycles and other personal mobility products that seek to empower the personal mobility sector through innovation, data intelligence and strategic partnerships, today announced the pricing of its public offering of 126,900,000 units at a public offering price of $0.13 per unit. Each unit consists of one common share and one Series A warrant to purchase one common share. In addition, the Company has granted the underwriters a 45-day option to purchase up to an additional 19,035,000 ordinary shares and 19,035,000 Series A warrants to cover over-allotments at the public offering price, less the underwriting discount.

Each Series A Warrant will expire two and one-half (2.5) years from the issuance, will be immediately exercisable upon issuance at an initial exercise price of $0.195 per common share, subject to adjustment on the First Reset Date and the Second Reset Date (as defined in the warrants) and subject to a floor price therein. The warrants may also be exercised on an alternative cashless basis pursuant to which the holder may exchange each warrant for 2.5 ordinary shares.

Gross proceeds to the Company, before deducting underwriting commissions and other offering expenses, are expected to be $16.5 million. We intend to use the net proceeds from this offering for working capital and general corporate purposes, including research and development, as well as marketing and sales of our products. The offering is expected to close on March 21, 2025, subject to the satisfaction of customary closing conditions. 

Maxim Group LLC is acting as sole book-runner in connection with the offering.

A registration statement on Form S-1 (File No. 333-285872) was filed with the U.S. Securities and Exchange Commission ("SEC") and was declared effective by the SEC on March 20, 2025 and a registration statement on Form S-1 filed pursuant to Rule 462(b) of the Securities Act of 1933 was filed with the SEC and became effective upon filing on March 20, 2025 (together, the "registration statement"). A final prospectus relating to the offering will be filed with the SEC and will be available on the SEC's website at http://www.sec.gov. The offering is being made only by means of a prospectus forming part of the effective registration statement. Electronic copies of the prospectus relating to this offering, when available, may also be obtained from Maxim Group LLC, 300 Park Avenue, 16th Floor, New York, New York 10022, Attention: Syndicate Department, by telephone at (212) 895-3745 or by email at syndicate@maximgrp.com.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Damon Inc.

Damon Inc. is a designer and developer of personal mobility products and technology solutions that integrate AI-driven safety systems, smart electrification, and user-driven design to revolutionize sustainable transportation. Operating across four potential revenue verticals - Data Intelligence & Services, Engineering Services, Personal Mobility Products, and Special Projects – Damon believes it is positioned to capture a significant share of the $40B global electric two-wheeler market by 2030¹. The company distinguishes itself through its integrated ecosystem approach, combining advanced data analytics, engineering expertise, and strategic partnerships with OEMs and Tier 1 suppliers. Damon emphasizes accessible mobility solutions while leveraging its proprietary AI-driven safety systems and intelligent energy management technology to deliver superior performance and operational efficiency in the urban and business mobility space. For more information, please visit damon.com.

1 Source McKinsey Report on Micromobility (2022)

Forward Looking Statements

Forward-looking statements in this press release include, but are not limited to, statements relating to our strategic initiatives, revenue expansion plans, business model evolution, and expected efficiency improvements and growth. In developing the forward-looking statements in this press release, we have applied several material assumptions, including the general business and economic conditions of the industries and countries in which Damon operates, and general market conditions. Many risks, uncertainties, and other factors could cause the actual results of Damon to differ materially from the results, performance, achievements, or developments expressed or implied by such forward-looking statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, our ability to satisfy closing conditions for the offering, 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 as needed, our ability to continue as a going concern, our status as a foreign private issuer, our ability to maintain compliance with Nasdaq's continued listing requirements, customer demand for or acceptance of our products and services, the impact of competitive or alternative products, technologies, and pricing, emerging competition and rapidly advancing technology that may outpace our own, our ability to manufacture or distribute products and secure strategic supply and manufacturing arrangements, our ability to protect our intellectual property, impact of any changes in existing or future regulatory and tax regimes applying to our business, our ability to successfully consummate strategic transactions and integrate companies or technologies we acquire, our ability to attract and retain management and employees with specialized knowledge and technical skills, our ability to develop and maintain effective internal controls, general economic conditions and events and the impact they may have on us and our customers, including but not limited to increases in inflation rates and rates of interest, supply chain challenges, increased costs for materials and labor, cybersecurity threats, and conflicts such as those in Russia/Ukraine and Israel/Hamas, our success at managing the risks involved in the foregoing items, and other risk factors discussed in our periodic and current reports and registration statements filed with the U.S. Securities and Exchange Commission and the British Columbia Securities Commission.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the press release or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, events may differ materially from current expectations. Damon disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required pursuant to applicable securities law. All forward-looking statements contained in the press release are expressly qualified in their entirety by this cautionary statement.

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SOURCE Damon Inc.

FAQ

What is the total size and price per unit of Damon's (DMN) public offering?

Damon's public offering consists of 126,900,000 units priced at $0.13 per unit, totaling $16.5 million.

What are the key terms of DMN's Series A warrants in the March 2025 offering?

The Series A warrants expire in 2.5 years, have an initial exercise price of $0.195 per share, and can be exchanged for 2.5 ordinary shares through a cashless exercise option.

How will Damon (DMN) use the proceeds from its $16.5M offering?

Damon will use the proceeds for working capital, general corporate purposes, research and development, and marketing and sales of their products.

What is the over-allotment option in Damon's March 2025 public offering?

Underwriters have a 45-day option to purchase up to 19,035,000 additional ordinary shares and Series A warrants to cover over-allotments.