Damon Inc.

Item 1A. Risk Factors

In addition to the risk factors below, a descrip and the other information of the risk factors associated with our business is containedset forth in this Form 10-Q, you should carefully consider the risk factors in the Risk Factors section of the Companys registration statement on Form S-1/A filed by the Company on January 31on March 18, 2025, which are incorporated herein by reference. Our business, results of operations and financial condition could be materially adversely affected by these risks.

As a foreign privateThe Company issuer, we are permitted currently subject to follow certain home country corporate governance practices that differ significantly from a delisting determination by the staff of Nasdaq corporate governance listi, and trading standards applicable to U.S. domestic issuers, which may afford less protection to shareholders.

As a foreign of its common shares was halted on Aprivate issuer, we are permitted and intend to follow certain home country corporate governance practices inl 29, 2025. The Company expects that after its common shares are delistead of those required under the d from Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. These home country corporate governance practices, its common shares to begin trading on the OTC Pink Current Market, which may diaffer in significant respectsct the market price and could provide less protection to liquidity of the shareholders than they ws and could have under limit the Nasdaq rules applicableCompanys ability to domestic issuers.

Specifically, we do not intend to adhere to the following raise additional capital.

The Nasdaq corporate governance Stock Market LLC requirements and will ins listead follow thed companies to corporate and securities laws, rules, mply with certain stand regulations of the Province of British Columbia, Canada:

Asards in order to remain listed. On January a result, shareholders will7, 2025, the Company received not have ice from the same rights and protecListing Qualifications as Staff (they would if we complied with  Staff) of Nasdaqs corporate governance requirements for U.S. domestic issuers.

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We may lose our foreign private issuer status in the future, which could result in significant addit that for the 30 consecutive business days from November 18, 2024 to January 6, 2025, the Companys Market Value of Listed Securities (MVLS) was below the minimum of $50 millional costs and expenses and may impede our ability to maintain our required for continued listing on The Nasdaq.

The determination of foreign private issuer status is made annually on  Global Market pursuant to Nasdaq Listing Rule 5450(b)(2)(A) (the last business day of an issuers most recently cMVLS Requirement). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Completed second fisany was provided 180 cal quarter, and, accordingly, the next determination will be madendar days, or until July 7, 2025, to regain compliance with respect to tthe Company on the last business day of December MVLS Requirement.

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On January 22, 2025. If , the Company loses its foreign private issuer status onreceived notice from this determination date,e Staff that then, beginning on the first day  bid price of the fiscal year following the determination date, it would have to comply with U.S. federal proxy rules and Regulation FD, and its officers, directors and principalits common shares had not maintained a minimum closing bid price of $1.00 per shareholders would become subject to the reporting and short-sw required for continued listing profit disclosure and recovery provisions of Section 16 of on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the Exchange ActMinimum Bid Price Requirement). In additionccordance with Listing Rule 5810(c)(3)(A), the Company would lose its ability to rely upon exemptions from certas provided 180 calendar days, or until July 21, 2025, to regain corporate governanmpliance with the Minimum Bid Price rRequirements under .

On March 20, 2025, the Nasdaq listing rules. As a U.S. listCompany received public companynotice from the Staff that is not a foreign private issuer, th, for the 30 consecutive business days from February 3, 2025 to March 19, 2025, the Company may incur significant additional legal, accounting and other expenses that it wouls Market Value of Publicly Held Shares (MVPHS) had not incur asmaintained a foreign privminimum aggregate issuer, as well as increased accoumarket value of $15,000,000 required for conting, reporued listing and other expenses in orderon The Nasdaq Global Market pursuant to maintain a lNasdaq Listing on a U.S. securities exchange. IfRule 5450(b)(2)(C) (the MVPHS Requirement). In accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Company loses its foreign private issuer status and is unable to devote adequate funding and the resources needed was provided 180 calendar days, or until September 16, 2025, to mregaintain compliance with Nasdaqs corporate governance rthe MVPHS Requirements applicable to domestic issuers.

On April 4, 2025, the Company may become unable to maintain its listing onreceived notice (the April 4 Letter) from Nasdaq.

We have a history of operating losses and there is no assurance that the Staff has determined that we will be able to achieve profitability, raise additional financing or continue asas of April 3, 2025, the Companys common shares had a goclosing concern.

We have a history of operating losses and have accumulated a deficit of $115,498,661 as of December 31, 2024, and expect to incur addibid price of $0.10 or less for ten consecutive trading days, triggering applicational future losses. The ability of our company to continue as a going concern is dependent upon our attainin of Listing Rule 5810(c)(3)(A)(iii) which states in part: if during and maintaining profitable oy compliance perations and raising additional capital as needed, but there can be no assuraniod specified in Rule 5810(c)(3)(A), a companys security has a closing bid price that we will be able to raise sufficient financof $0.10 or less for ten consecutive trading.

Our ability to generate positive cash flow from oper days, the Listing Qualifications is dependent upon sustainDepartment shall issue a Staff Delisting targDeted cost reducrminations and generating sufficient under Rule 5810 with revenues. While we have implemented measures tospect to that security. As a reduce non-essential costssult, these reductions alone are insufficien Staff has determined to delist to offset our operating losses. Our management is evaluating options and strategic transactions and continuing to markethe Companys common shares from the Nasdaq Global Market, unless the Company timely requests and promote our product and service offerings appeal of the Staffs determination to increase revenues, however, a Hearings Panel (there is no guar Panel), pursuantee that to these efforts will be successful or that we will be able to achieve or sustain profitability. We have funded our operations  procedures set forth in the Nasdaq Listing Rule 5800 Series.

On Aprimarily with private offerings and debt financing. Our history of operl 25, 2025, the Company received a notificating losses and cash uses, our projections of on letter from the level of cashStaff, stating that will be required for our operations to reach profitability, may impair our ability to raise capital on terms that we consider reasonable and at the levels that we will require over based on its review of the Companys public filings with the SEC, its staff has determined to delist the coming months. We cannot provide any assurance that we will be able to secure addiCompanys securities pursuant to its discretional funding from public or private offerings or debt financings on terms acceptabry authority under Listing Rule to us, if at all. If we are unable to obta5101. Specifically, as set forth in the requisite amount of financing needletter, Nasdaqs staff determined to fund our planned operations, it would have a material adverse effect on our business and abilithat the Companys issuance of securities pursuant to the underwriting agreement dated March 20, 2025, particularly to continue as a going conche Series A warrants exercisable on an altern, and we may have to curtail, or eveate cashless basis as described in to cease, certain operations. If additional funds are rhe Companys prior SEC filings, raised throughs public interest concerns because the issuance of equity securities or convertible debt securities, it will be resulted in substantial dilutive to our son for its shareholders and could result in a decrease in our share price.

We have identified . Accordingly, as set forth in the letter, this material weaknesses in our interter serves as an additional control over financial reporting. If we are unable to remediatebasis for delisting these weaknesses, or otherwise fail to maintain proper and effective Companys securities from Nasdaq.

On April 29, 2025, the Nasdaq staff internal controls, our abilityformed the Company that, pursuant to produce timely and accurate financial statements could be impaired, which could adversely affect our operatthe staffs authority under Listing Rule 4120(a)(5), trading in its shares on Nasdaq has been halted pending results,the our ability to operate our business, our share price and acctcome of the Panel hearing, unless to the capital markets.

We have identified material weakstaff determinesses in our internal control over financial reporting and those weaknesses have led to a to lift the halt prior to the hearing. To enable the Companys conclusimmon that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2024. Our inability to remediate the materishares to trade on an alternative market, the Company has determined to forego its right to appeal weaknesses, our discovery of additional weaknesses, and our Nasdaqs delisting determinability to achieve and maintain effective disclosure controls and procedures and internal control over financialtion. The Nasdaq staff has informed the Company that its common shares will reportsume trading, could adversely affect our results of operations on Nasdaq for one trading day, our share n May 19, 2025, price and investor confidence in ourto suspending the company.

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Sectimon 404 of the Sarbanes-Oxley Actshares as of 2002 requires that companies evaluate and report on the effthe following trading day.

The Company currently expectiveness of their internals that its control over financial reporting. As disclosed mmon shares will begin more detail under Item 4, Controls and Procedures above, we have identifitrading on the OTC Pink Current Market maintained material weaknesses as of December 31by OTC Markets on May 20, 2024. Due to the material weaknesses in our internal control over financial reporting, we have also concluded our disclosure controls and procedures were no5, in accordance with Rule 15c2-11(f)(1) under the Exchange Act. The OTC Pink Current Market will become the OTCID Basic Market effective as of December 3July 1, 2024.

Failure to have effective internal control over financial reporting and disclosure controls and proced5. The Company is also seeking to have its shares posted for trading on the OTCQB Ventures can impair our ability to produce acc Market (OTCQB), though no assurate financial statements on a timely basis and has led and could again leadnce can be provided that the Company will be able to a restatement of our financial statements. If, as a result of satisfy the criteria for trading on the OTCQB or that the ineffectivenessstaff of our internal control over financial reporOTC Markets will approve the posting and disclosure controls and procedures, we cannot provide reliable financial statements, our business decision processes may be adversely affected,of the Companys shares for trading on the OTCQB.

Delisting from the Nasdaq could make trading our business and common sharesults of operations could be harmed, more difficult for investors could lose confidence, potentially leading to declines in our reported financial information and our abilshare price and liquidity to obtai. In additional financing, or additional financing on favorable terms, could be adversely affected.

Our management has taken action to begin remediating, without a Nasdaq market listing, shareholders may have a difficult time getting a quote for the material weaknesses; however, certain remedial actions have not started or have only recentsale or purchase of our shares, the sale or purchase of our shares would likely been undertaken,  made more difficult and while we expect to continue to implement our remediation plans throughout the fiscal year ending June 30, 2025, we cannot be certain as to whenthe trading volume and liquidity of our shares could decline. Delisting from Nasdaq could also remediation will be fully completed. In addition, we could in the future identifysult in negative publicity and make it more difficult for us to raise additional internal control deficiencies that could rise to the level of a material weakness or uncover other errors in financial reporting. Duringcapital. The absence of such a listing may adversely affect the acceptance of our common shares as transaction consideration or the course of ovalue accorded our evaluation, we may identify areas requircommon shares by other parties. Further, following improvement and may be required to designdelisting, we would also incur additional enhanced processes and controls to address issues identified through this review. In addicosts under state blue sky laws in connection, there can be no assurance that such remediation efforts will be successful, that our internal with any sales of our securities. These requirements control ould sever financial reporting will be effective as a resultely limit the market liquidity of these efforts or that any such future deficiencies identified may not be material weaknesses that would be requiredour common shares and the ability of our shareholders to be reportedsell our common shares in future periods.

If we fail to remediatethe secondary market. Once delisted, thesey material weaknesses and maintay come within effectivthe disclosure controls and procedures or internal control over financial reporting, we may notefinition of penny stock as defined in the Exchange Act and would be able to rely on the integritycovered by Rule 15g-9 of our financial results, which could result in inaccurate or the Exchange Act. That Rule imposes additional latsales practice reporting of our financial results, as wquirements on broker-dealers who sell as delays or the inability to meet our future reporting osecurities to persons other than establigations or to comply with SEC ruleshed customers and regulations. This could result in claims or proceedings against us, including by shareholders or the SEC. The defense of any such claims could cause the diversion ofaccredited investors.

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While we currently anticipate our common shares will begin trading on the Companys attention and resources and could cause us to incur significant legal and other expenses even if the matters are resolved in oOTC Pink Current Market after our favor.

Our common shares are delisted onfrom Nasdaq, but we cannotthere is no guarantee that we such trading will be able to satisfy thproceed as expected. If we applicre unable listto resume trading standards going forward.

The Nasdaq Stock Market LLC re, investors will face further limitations in the liquires listed companies todity of our comply with certaimon standards in order to remain listed. On January 7, 2025, we received a letter from the Nasdaq staff providihares, and our ability to raise capital, continue as a going notification that, fconcern, and maintain investor the previous 30 consecutive business days, the Companys Market Value of Listed Securities (MVLS) was below the minimum of $50 millifidence could be materially and adversely affected. If our common required for continued shares are delisting on The ed from Nasdaq Global Market pursuantand our shares are unable to Nasdaq Listresume trading Rule 5450(b)(2)(A) (the MVLS Requirement). The notice has no immediate impact on the listing of the Companys securities on The Nasdaq Global Market at this time.

In accordanceon any market, we may also face cash payment obligations and trigger defaults under our existing financing arrangements with Nasdaq Listing Rule 5810(c)(3)(C), the Company has been provided an initial period of 180 calendar days, or uStreeterville, which could further strain our liquidity position and ability to contil July 7, 2025, to regainnue as a going compliance with the MVLS Requirement. To regain compliancrn.

Our stock price has been volatile, the MVLS of and the Companys commonissuance of shares must be $50 milliupon or more for a minimumthe exercise of 10 consecutive business days at any time before July 7, 2025. During this period, the Companys securities will continue to trade on The Nasdaq Global Market.

If the Company does not regain compliSeries A Warrants has resulted in significant dilution. Additional issuances under our current finance with the MVLS Requiring arrangement by July 7, 2025, Nasdaqs will provide a written notification to th Streeterville or other new issuances could furthe Companyr depress that oe market price of our common shares are subject to delisting. At that time, the Company may appeal .

Following the closing of the Staffs delisting deunderwritten registermination to a Heaed offerings Panel  on March 21, 2025 (the Panel). However, there can be no assurance that, ifOffering), investors began exercising the Company receivir Series a delisting noticeA Warrants on and appeals the delis alternate cashless basis, resulting determination to tin the Panel, such appeal would be successful.

Tissuance of 2,293,412,544 common shares by the Company intends to monitor its MVLS between now and July 7. As of May 19, 2025, and may, if appropriate, evaluate available options to 2,352 Series A Warrants remain outstanding, which may resolve the deficiency under ult in the MVLS Requirement and regain compliance with the MVLS Requirement. Aissuance of up to 45,681 additionally, the Company may consider applying to transfer the list common shares, assuming of its securities to The Nasdaq Capital Market (provided that it then satisfies texercise on an alternative cashless basis at the requirements for floor price of $0.0251.

In continued listing nection that market). Howeverwith the Offering, there can be no assurance floor price under that the Company will be able to regain or maintain compliance with Nasdaq listing criteria.

Additionally, on January 22e June 2024 Note has been adjusted to $0.0251. As of May 19, 2025, we received a letter from the Nasdaq staff provithe outstanding notification that, for the previous 30 consecutive days, the Companys common shares had not maintaineprincipal amount was partially repaid a minimum closing bid price of $1.00 required for continued listing on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the Bid Price Rule). The notice has no immediate impact on the listing of the Companys securities on The Nasdaq Global Market at this time.

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Ind reduced to $4,491,700, with an additional $570,578 in accrued unpaid interest, which may result in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a periodn issuance of 180 calendar days, or until July 21, 2025, to regain201,684,382 common shares assuming Streeterville will compliance withnvert the Bid Price Rule. To regremain compliing balance, the closing price of  under the Companys common shares closesJune 2024 Note at or above $1.00 for a minimumthe floor price of 10 consecutive business days at any time before July 21$0.0251.

Additionally, as of May 19, 2025. During this period, the Companys securities will continue to trade on The Nasdaq Glooutstanding principal bal Market.

If the Company does not regain compliance with the Bid Price Rule by July 21, 2025, the Company may be eligible for an aance under the December 2024 SPA was $3,158,000, with an additional 180-day period to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for market value$97,080 in accrued unpaid interest. Streeterville may make purchases of publicly held common shares and all other initial listing in satisfaction of outstandards for The Nasdaq Capital Market except foring pre-paid purchases pursuant to the bid price requirement, and would need to provide written notice of its intention to cure the bid price deficiency during formula set forth in the December 2024 SPA. If the Company receives additional funding under the second total $10,000,000 compliance period by effecting a reverse stock split, if necessary.

The Company intends to monitormitment or if Streeterville elects to purchase common shares in satisfaction of the closoutstanding pribalance of its common shares between now and July 21, 2025, and may, if appropriate, evaluate available options to under the December 2024 SPA, further issuances of common sharesolve the deficiency and regain compliance with may occur.

In addition to the Bid Price Rule including effectse financing a reverse stock split. Additionallyrrangements, the Company may consider applying to transfer the listissue additional common shares to settle outstanding of its securities to The Nasdaq Cabligations, raise capital Market (provided that it then satisfies the requirements f, or compensate employees and service providers. For listing on that market). However, there can be no assurance that the Company will be able example, in connection with the settlement of certain fees owed to regain or maintain compliance with Nasdaq listing criteria.

Delisting from the Nasdaq Global Market or any Nasdaq market could make trading oura former financial advisor, the Company has agreed to pay either cash or issue common shares more difficult for investors, potentially leading to declines in our share price and liquidity. In addition, without a Nasdaq market listin the amount of $1,000,000 no later than May 21, 2025, based on a pricing, shareholders may have a difficult time getting a quote for the sale or purchase of our shares, the sale or purchase of our shares would likely be made more difficult  formula as described in greater detail in the Companys Current Report on Form 8-K filed with the SEC on March 25, 2025; and the trading volume and liquidity of our shares could decline. Delisting from Nasdaq could alCompany has also result in negative publicity and make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common shares as agreed to register any such issued shares no later than one transaction consideration or ding day following the value accorded our common shares by other parties. Further, if we are delisir issuance. The Company is generally not restricted, we would also incur from issuing additional costs under state blue sky laws in connection with any salmmon shares of our securities. These requirements could se converely limit the market liquidity of our common shares and the ability of our shareholders to sell our tible into or exchangeable for common shares in the secondary market. We cannot assure you that our. Under our Articles and British Columbia common shares, if delisted from Nasdaqrporate law, will be listed on another national securities exchange or quoe are authorized to issue an unlimited on an over-the countnumber quotation system. If our of common shares are delis. Any actual or anticipated, they may come within future issuances, particularly the definition of penny stock as defined in ose at prices below the Exchange Act and would be covered by Rule 15g-9 of the Exchange Act. That Rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors.

current market price, could significantly dilute existing shareholders, depress our share price, and impair our ability to raise capital.

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